Recent news reports claim that UK food exports have
nosedived in early 2021 because of Brexit and
weaker demand across Europe as restaurants, hotels and other hospitality
outlets closed during the pandemic. In
future, UK food exporters, including those in the South West, will have to shift
their focus away from customers in the European Union and explore new markets. Here,
Dr Hunter talks about the opportunities offered to SMEs and the regional food
industry through trade and the establishment of freeports.
Capitalising on trade
In our globalised world, businesses need to
explore new markets to grow and compete. The trade of goods and services across
national borders is the defining process through which businesses can engage on
a bigger stage. My research explores how innovation and growth can benefit from
the relational and structural dimensions of social capital.
Social capital looks at the
network of relationships among people who live and work in a particular society
or marketplace. It explores how these relationships ensure the growth
of entrepreneurial firms and enhanced supply chain relations. There has been considerable
interest in social capital recently, as we investigate disparities in the
performance of organisations, networks of operators, and societies.
Relational social capital covers the highly developed relationships of cooperation and
collaboration between firms, institutions
and people. These are based on shared norms and trust. Structural social
capital explores gaps or holes, between different clusters or groups that can
hinder the exchange of information, resources and knowledge, harming competitiveness.
Bridging these structural holes through interactions with new and unfamiliar
contacts and networks however can enhance competitive advantage. It also
encourages social innovation.
I have supported businesses in establishing
strong links with other organisations to grow or expand their market reach. Beyond
the direct trade benefits, these relationships can build stronger, more
beneficial and sustainable societies. In the food sector particularly,
diversity can foster new markets and new processes, furthering
internationalisation of UK food processors in countries and market segments
that would otherwise be very difficult to penetrate. This includes building
strong partnerships for aid-funded business such as supplying food to UN
Chain Trade and Freeports
The government recently announced the launch
of freeports in the UK. Freeports are a trade concept rather than a ‘port’ as
the name may imply.
Usually located around an airport or seaport, or a defined
transport corridor, goods and services entering a freeport are exempt from tax
charges that would usually be paid to the government. In trade terms,
relationship building based on norms and trust is a process taking place in
international supply chains. Fragmented global production systems operate in
line with norms and standards that support the seamless movement of goods and
services across borders. Supply chains are the foundation of competition in the
international trading system.
The key for SMEs in respect of freeports is
to develop competitiveness in clusters of innovation with global reach, to
share resources and develop resilience. For sectors such as food production
where supply systems are fragmented across small players, SMEs are more exposed
to competition. The Office for National Statistics recently confirmed that the food
sector has made the largest contribution to the UK economy, approximately 10%
over the past decade. However, the scope for domestic growth is limited to
quality improvement as consumers’ intake capacity has flattened. This implies
that growth will come from internationalisation, especially beyond the EU. Opportunities
exist particularly around port areas with food flows, such as Tilbury, to
expand and strengthen the supply chain trade of the UK food sector.
Support to SMEs
One consideration in creating a
freeport is its potential to stimulate economic opportunities, particularly in
regions of deprivation or unfulfilled potential.
This offers some regions a
platform to develop and strengthen their position nationally and globally. The
freeport enhances exports using trade infrastructure and
technology. Exporters can take advantage of existing trade procedures without employees
needing to travel internationally or to set up a trading subsidiary or overseas
Freeports offer particular benefits to SMEs. They
can simplify planning, reduce customs costs and potentially offer tax breaks to
encourage private investment and job creation in locations where this might
otherwise be extremely challenging. Trading internationally often increases
business costs and risks. Navigating the necessary bureaucracy and managing
documentation can be prohibitively expensive and time consuming for small
businesses. Arranging the logistics can be burdensome. Using the infrastructure
of a freeport can alleviate some of these business headaches. For SMEs in the
food sector, sharing a supply chain infrastructure handling cold, frozen,
chilled and dry foodstuffs will bring economies of scale and strengthen their
competitiveness in the global supply chain.
Businesses Innovation and process
SMEs are very innovative. Having limited
resources at their disposal, they have to develop creative approaches and
SME business leaders, with limited numbers of employees to rely on,
are often involved in most decision-making processes. Their focus on the day-to-day
management and operations leaves little time to investigate new and enter
overseas markets and business improvement. We have experience and expertise at Plymouth
Business School that can benefit small businesses in addressing barriers to
market entry. We can also support them in integrating new trade processes with
their existing operations and we have developed toolkits aimed at SMEs.
My background in finance
and management consultancy helps when I advise businesses who rely on numerous organisations
to deliver products and services. This
includes enhancing profitability by analysing margins and identifying problem
areas or developing frameworks to improve business processes. This can enable effective
coordination between various teams and departments to share real-time
information and ensure processes are effective and efficient. This can improve long-term
profitability and competitiveness, offering better job security for employees.
Brexit was particularly challenging for SMEs.
My expertise has helped some SMEs address recurrent trade barriers affecting
transport and warehousing operations, resulting in a centralised and
coordinated system of supply. This provides more predictability in the supply
chain and limits the risk of disruption.
Building on regional expertise
The South West produces high quality food
that could be enjoyed by consumers and diners across the globe, including many
top destinations outside of the EU. The contribution of exports to value added
for the region remains low; we need to address this. The region’s ‘natural
capital’, our stock of natural assets, has huge potential. Together this gives
us a strong foundation on which to improve prosperity across the South West through
agri-trade and agri-tech, ensuring this natural advantage runs through
everything we do.