For many Canadian companies, the UK is seen not only as a high-potential export and investment market, but also a gateway to the European Union.
Canada’s historically strong ties to the UK provide a solid foundation for business expansion into one of Europe’s most stable and growing economies. Services, particularly banking, insurance and business services, are key drivers of the UK’s GDP growth.
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Regional Vice President, Europe, Middle East and Africa,
Export Development Canada
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 UK multinational companies in these sectors whose value chains extend into emerging markets. Once given approved supplier status in the UK, Canadian companies are able to bid on their UK-based partner firms’ international projects. 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 European Union for strict environmental controls. These environmental standards are reflected in legislation and regulation at the EU level, which the UK 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.
Any particular hurdles Canadian companies face in the UK?
Regulatory standards can be a challenge. A good example is CE (Certification Experts) marking, which firms sometimes find difficult to adhere to. Another regulatory issue is in the infrastructure sector. For example, firms will make products to Canadian standards, which can create problems selling into the UK market and even result in them having to set up a manufacturing shop in the UK to meet specific local standards.
Senior Trade Commissioner, UK
Canadian Trade Commissioner Service
What’s the biggest potential obstacle that Canadian businesses face in the UK?
Competition. The UK is a global marketplace and home to a number of leading firms. Canadian companies need to find a way to stand out from the crowd, with innovative products and competitive pricing. A strong value proposition can be the difference between getting noticed or not, and long-term relationship building (and follow-up) are essential for turning opportunities into sales.
What can Canadian firms do to help ensure they meet UK market access requirements?
Companies should begin looking at UK and EU technical and regulatory requirements as part of their initial market analysis. Some of the regulatory requirements can be complex, and companies can lose out on opportunities if they aren’t prepared when an export opportunity arises. Navigating the regulatory environment can be difficult if companies don’t know where to look. Using local experts, including the Canadian Trade Commissioner Service, can help companies be well prepared.
What about establishing joint ventures with UK counterparts as a strategy?
The UK market is relatively accessible for Canadian companies, so joint ventures aren’t as essential as they are in more challenging markets. Most Canadian companies consider distributor/agent arrangements to gain a foothold in the market or invest in the market directly. Both approaches allow companies to increase their exposure to opportunities – a physical presence can prevent bid submission delays and keep Canadian companies top of mind. The Canadian Trade Commissioner Service can support Canadian companies in identifying local distributors and agents to support their export goals.
Senior Manager, UK&I Advisory,
Supply Chain & Operations, Ernst & Young LLP
What’s the biggest supply chain challenge for foreign companies setting up in the UK?
The UK is an open economy and the gateway to Europe, with many companies looking to set up here. As a result there is a high level of competition, so customers expect exceptional service and availability. Understanding customer demand and the corresponding cost to supply it is therefore crucial. Finding and keeping supply chain talent is also a challenge for new businesses. While travel and transport distances are not what they are in North America, competition among logistics partners is high and margins are low, so be precise when articulating your requirements; all additional costs will be passed back to the client.
What’s the best way to keep supply chain costs under control?
Understand your market and your customers. Know how to segment your market and then select an appropriate supply chain strategy to serve each segment.
How do sustainable business practices factor into supply chain management?
This is a big and important topic in the UK and Europe as a whole. There is an ever-increasing body of environmental legislation that impacts any company operating in the UK, such as waste management and carbon footprinting. Businesses need to ensure that the suppliers and partners associated with their operations also comply with EU regulations, so visibility is needed of their upstream activities.
Why should a Canadian company opening a UK office consider public relations?
Ultimately it is about improving the chances of your business development strategy working in a new market that may be unlike anything you have worked in before. The right communications support can ensure that your product or service is properly positioned, that you are using the right channels to engage with the right people and that you get the sales drive that you want.
In general, how are Canadian companies perceived by consumers in the UK?
The UK is a very diverse, open market and in general consumers are guided by the strength of brands and customer offerings, rather than the country of origin. Being Canadian and playing up that heritage may be a positive attribute in some market segments, and it may not matter a jot in others. Overall, I would say that there is a strong but understated bond between Canada and the UK, reflected in a long-standing special relationship. I do think as nations we should shout about that a bit more – rather than both be ‘typically understated.’
What’s the biggest communications mistake made by foreign companies expanding to the UK?
Assuming that the UK is the same as their home market (or only marginally different). Customers, media, business partners or government may be interested or motivated by very different things depending on the sector or segment. The UK is not one market, but varies by business area and geography and your communications need to reflect that. The UK media environment is a unique global setting and organizations often underestimate the intensity of competition for share of voice and the critical, questioning nature of key parts of that landscape.
What is the current state of the UK labour market?
Extremely high demand for talent – especially in early-stage tech or very entrepreneurial cloud, software and SaaS businesses. Therefore a highly differentiated value proposition – and a strong equity offer – are vital in attracting the best talent in the UK.
Which categories of workers are in highest demand?
Technical staff (especially software engineers and solutions architects) are in particularly strong demand and often choose to join as contractors commanding increasingly high rates and salaries (although sign-on bonuses are rare). Commercial hires – especially salespeople – will carefully evaluate the pipeline/revenue opportunity and may well insist on one or two quarters of guaranteed commission. Away from London, wage pressure is slightly less intense; however, the availability of staff/proximity to clients/partners needs to be considered.
Does EU labour mobility make it easier for foreign firms to recruit top talent?
Definitely. London in particular is a popular destination for immigrant staff from other parts of the EU. Hence, it’s generally easy to attract top EU talent to re-locate to London or nearby cities with strong social/cultural offerings. Cost of living, in particular in London, needs to be factored in when preparing attractive employment offers to re-locating hires. Also, families with school-age children may have strong location constraints and/or preferences.
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