Research Reveals International Trade Remains A Strategic Priority For UK Corporate Companies

London - 18 May 2009

A new national research survey conducted by the Economist Intelligence Unit on behalf of The Royal Bank of Scotland (RBS) has revealed that 55% of UK companies are planning to expand into new markets to access additional customers and take advantage of outsourcing opportunities over the next three years.

The results of the survey highlight that international trade remains an essential strategic priority. Almost 60% of respondents see opportunities for geographic expansion in the next three years and more than 50% said that their company plans to enter a new geographic market over the next year. Three quarters of respondents also confirmed they have increased the number of overseas markets products and services over the past three years.

In terms of strategic priorities companies are favouring a deepening and broadening of their geographic reach. In the past, UK companies saw emerging markets primarily as sources of labour, resources and raw materials, but today the primary reason for companies trading overseas is to access new customers. A key finding of the research was that bottom-line improvements will help to fund international expansion. In the context of scare liquidity and increasing costs for the foreseeable future, many businesses are focusing on streamlining operations and preserving cash. A priority amongst respondents in terms of costcutting is performance improvement and process innovation. This is likely to involve a key focus on cash flow, cash management systems, working capital optimisation and tighter credit conditions. The research was carried out among 331 companies across the UK representing a broad range of industries including manufacturing, financial services, professional services, energy, media and information technology. About one half of respondents were from companies with annual revenues below £100 million with the remainder above that threshold.

Iain Scott, editor of the report at the Economist Intelligence Unit, commented: "Our research shows that while few UK executives expect there to be much improvement in economic and market conditions over the next 12 months, international trade remains an essential strategic priority for them. They see more economic challenges at home than abroad over the next three years. Meanwhile, their perception of emerging markets is changing - China, India and other emerging markets are no longer seen simply as sources of cheap raw materials, but also as offering the best prospects for revenue growth. In an environment of tight credit, UK companies we surveyed say they will fund international expansion by focussing on their bottom line - in-house performance improvement and process innovation - as well as by broadening their outsourcing relationships."

John Lyons, Head of Global Transaction Services UK, RBS, commented: “This report highlights how UK businesses are looking to trade themselves out of the current economic cycle and to focus opportunities for sales growth in overseas markets. At RBS, we believe that supporting the financing needs of importers and exporters is core to our business, to the wider economy, and to the working capital strategy of many of our clients. As the UK’s leading corporate bank, we are committed to helping companies of all sizes do business internationally. And because access to timely and correct advice is key to a successful overseas business, RBS has a dedicated network of specialists on-the-ground in over 50 countries with a wealth of experience in international trade, payments and cash management that are able to provide customers with valuable insight to local market conditions as well as the financial backing to help them make the most of each opportunity.”

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