The United Kingdom was among Canada’s top destinations for merchandise and services exports in 2014, as well as Canada’s third largest destination for direct investment. Charles Edgeworth, EDC’s Chief Representative for the U.K., offers his personal insight for Canadian businesses looking to enter this important market.
Where will Canadian businesses find opportunities in this market?
The big areas that EDC has traditionally focused on are ICT and extractives – mining plus oil and gas. We continue to see these sectors as important given key U.K. multinational companies in these sectors whose value chains extend into emerging markets. Once given approved supplier status in the U.K., Canadian companies are able to bid on these (UK-based partner) firms’ international projects. Although this is not an exhaustive list, we also see specific opportunities in aerospace and defence, agri-food, infrastructure and life sciences.
What socio-economic factors are driving these opportunities?
Strong preferences in the EU for strict environmental controls. These environmental standards are reflected in legislation and regulation at the EU level, which the U.K. must conform with. A good example is the EU’s renewables directive, which mandates that 20 per cent of all energy consumed in the EU must come from renewable sources by 2020. Individual states have set up government incentives for firms undertaking projects, which Canadian firms can take advantage of directly and indirectly. Regional demographics, like in other areas, are also creating demand for innovative firms in the medical devices industry catering to older demographics. High fiscal deficits, along with and partly the result of health-care cost inflation, also create opportunities for innovative health care providers in this industry.
Any particular hurdles Canadian companies face in the UK?
Regulatory standards can be a challenge. A good example is Certification Experts (CE) marking, which firms sometimes find difficult to adhere to. (CE stands for Conformité Européenne, and confirms a product meets all applicable European health, safety, performance and environmental requirements. See also: Access 500 Million Consumers With CE Mark Compliance.)
Another regulatory issue is in the infrastructure sector. For example, firms will make products to Canadian standards, which can create problems selling into the U.K. market and even result in them having to set up a manufacturing shop in the U.K. to meet specific local standards.
Establishing lines of credit in market with a local bank can be challenging for Canadian companies that have no financial track record in the U.K. Often, firms lack information related to tax, accounting and other regulatory issues. For this, EDC strongly recommends the local Canadian Trade Commissioner Services, which have extensive expertise in these areas.
What essentials are required to succeed in the UK?
Take time to understand all the regulations, which will have to be complied with to enter and transact in this market. Understand market preferences, and engage an accountant and lawyer with local market expertise. Don’t think of the U.K. only as a springboard, it is also an attractive market in itself. Don’t forget, the UK has regional socio-economic and cultural diversities between the north, south, east and west. Each is a distinct market.