UK manufacturers seek success in BRIC economies

28 June 2011

28 June 2011 | Adam Leach

Emerging markets are considered to be the biggest growth opportunity in 2011, according to 47 per cent of UK manufacturers surveyed by Zurich Insurance.

The HazardWarning Report surveyed 100 senior managers from the manufacturing sector. It discovered the majority favoured tentative movements or expansion into markets such as Brazil, Russia, India and China (BRIC). Some 60 per cent felt their exposure to risk in untested areas was high, resulting in a willing but cautious approach to these markets.

The report said this ‘softly softly’ approach to courting foreign investment will see companies look to gain insight into potential risks and challenges associated with each market, and form alliances with other organisations to ease entry into the market.

The majority (39 per cent) said failure to succeed in those markets would be the single largest barrier to growth. This was followed by 20 per cent who saw the burden of compliance and regulation as the biggest obstacle. The difficulty in attracting talent (15 per cent), the inability to invest in innovation (14 per cent), the availability of credit (8 per cent) and the pressure to reduce the carbon footprint (4 per cent) were also impediments to growth.

More than half (52 per cent) identified their supply chain as one of the three main factors dictating success next year, with unforeseen disruptions cited as a key concern.

CIPS CEO David Noble said: “Business is facing a new era of ‘hard globalisation’ with longer and globally interconnected supply chains. Not understanding the risks inherent in each tier can result in massive failures, not least to reputation, and can be costly to fix.”

In terms of accessing these new markets, just under half (47 per cent) of firms recognised that the onus is on them to take the initiative and benefit from the fast-growing emerging economies, rather than looking to government or regulators.

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