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As more economies around the world open up and companies bring employees back to the office, global expansion plans that may have been put on hold last year are now taking shape. It can be challenging to know where to start, but here are some key factors to consider when expanding your operations into new countries.
The best countries to do business with right now
British businesses face the challenge of turning a profit and growing revenues despite the decline in the pound making it potentially more costly to buy from abroad. Importing from America for example is now more expensive with the pound rate 13% down against the dollar compared with one year ago.
On the flip side, this of course means that for Americans, British goods have become 13% cheaper and a more attractive import option.
The US isnít the only country where British businesses could be cashing in on the opportunity of selling to customers in new destinations. Hereís 5 other countries where British goods could be welcomed with open arms thanks to the change in the value of the pound.
British companies should find it fairly simple to expand to New Zealand thanks to a similar legal and financial system to the UK. It has a population of 4.6 million and its economy was worth around £140 billion in 2016. New Zealandís top imports from the UK are vehicles, machinery, print products such as books and pharmaceutical products. Creative industries such as film production and music are also an important contributor to the economy. The British pound rate being down 21% against the New Zealand dollar is another reason why these two countries can benefit from growth in trade.
With cultural and historical links to the UK, Canada remains an obvious option for British exporters. Around 700 UK companies already do business there with a wealth of products being exported including petroleum products, aerospace parts, gold, spirits and tractors. It could be a good base to start from before entering the US market. However, you may not think itís necessary Ė the pound rate is down 18% on the Canadian dollar compared to this time last year Ė meaning itís cheaper for Canadians to do business with you, even more so than US businesses.
Norway boasts a sophisticated and well-heeled population of consumers. Top exports into the country from the UK currently include industrial and electrical machinery, chemicals and animal and vegetable bi-products. People living there are well-educated and will pay big money for luxurious, well-designed products. Companies specialising in clothing, gifts and interiors should consider expanding here. The pound rate has fallen 16% against the Norwegian Krone in the past year Ė which could put businesses selling there in a strong position.
A population with a high amount of personal wealth, this really is the time for UK businesses to get their goods out to Japan. Consumers are switched on to new products and services and many have a large disposable income. Although machinery and chemicals are currently the biggest exports, businesses specialising in fashion, food and drink and design could really take off here too. In 2020, the Olympic and Paralympic Games is also being held in Tokyo and Japanese firms are turning to UK companies for their experience following the 2012 London games. Potentially lucrative sectors include safety and security, communications, design and training. Itís an excellent chance to get established in one of the richest countries in the world.
A destination with vast natural resources, South Africa is a strong gateway to the rest of the continent. Issues such as poverty and crime are still prevalent, but there is a fast-growing middle class set of consumers too. And with the pound rate dropping 28% against the South African rand in the past year, British companies could benefit from exploring this market. Top UK exports to South Africa include road vehicles, beverages and medicinal and pharmaceutical products. The country is spending billions on its infrastructure and those within the energy, transport, healthcare and education could find good opportunities.
Find out more about sending money to these top export destinations with FairFX. Weíre committed to giving all clients the best rate possible, along with flexible and personalised service.