HSBC Global Connections
There is really no mystery surrounding our steadfast support for the UK’s eager and ambitious SMEs and mid-market enterprises (MMEs). It’s this vital sector of the business economy – which contributes a third of the private sector’s GDP and employs the same proportion of our workforce – that’s one of this country’s main growth engines.
The real mystery is why tangible support for this important growth-driving sector is so difficult to get right – but that’s now changing. This is no longer the forgotten army highlighted in last year’s Future Champions report by the CBI. The Government, too, is now focused on helping MMEs to exploit exciting new markets abroad – a goal that HSBC supports, most recently through our Global Connections competition and Manifesto for British Exports publication. The latter makes various policy recommendations based on extensive dialogue with our customers about the barriers they face in reaching out to overseas markets.
Alongside this, we have seen a build-out in confidence with respect to private equity, where Q2 2013 experienced a 100 per cent and 30 per cent increase in deal value and volume respectively compared with Q1 2013.
We are increasing our participation in joint debt/equity deals within the SME sector and, through our shareholding in the Business Growth Fund, further boosting growth capital in UK MMEs.
While the FTSE 100 shows limited growth in its overall employment figures, the 1,000 companies in this report have experienced a 65.4 per cent average increase since 2009. This timely new research highlights this key growth indicator, among others, and showcases the role of our most innovative and fastest-expanding MMEs in leading the economic revival.
Despite tough conditions, our MMEs have continued to grow. Their sales last year were only marginally lower than the much-envied German Mittelstand businesses and well ahead of equivalents in France and Italy. Of these economies, the UK has the largest share of top-performing MMEs.
Of course, none of this ignores the challenges facing our MMEs. There is a need to adapt product lines and manufacturing techniques to fit new markets, and to perpetually hunt for the necessary skills and talent to service demanding clients. And above all, there is a quest – in which we are always ready to assist – for assured and flexible long-term financing to fund both domestic and international expansion.
HSBC is giving companies the chance to enter new markets and establish themselves on a world stage
As Britain leaves behind the worst financial crisis since the 1930s, the nation’s SMEs and mid-market enterprises (MMEs) are expected to be a big driving force in the recovery.
UK policymakers have repeatedly stressed that to put the economy on a sustainable path, a shift is needed from debt-fuelled spending towards manufacturing and exports. HSBC’s Global Connections programme identifies and brings together some of the companies best placed to fulfil those national aspirations through their innovation and talent.
"A strategic imperative is to diversify. You’ve got to rely on more than one territory. It de-risks your business and sales channels"
The programme is looking for smaller British companies that are successful at home, but which also have the ability and ambition to take foreign markets by storm through exports, overseas operations or both. Those companies have huge potential but can still benefit from practical help and advice from the initiative on how to make it big in export markets. In the past three years, HSBC has received more than 5,000 applications and sent 138 of the most promising applicants on international exchanges to some of the world’s fastest-growing markets.
Brazil, Singapore and China have been destinations and those shortlisted companies have benefited from seminars, visits and networking events in some of their target markets.
The 2014 initiative is already under way. It will involve a year-long process to identify those British businesses that deserve to be on the Global Connections programme. Entrants must be UK based and have been operating for two or more years.
The first stage will lead to the selection of regional finalists comprising 30 SMEs with an annual turnover of at least £2 million, along with 15 (MMEs) with an annual turnover of up to £100 million.
138 – The number of companies sent on international exchanges since 2010 as part of HSBC’s Global Connections programme
Leaders of those 45 shortlisted companies across five regions will be invited to take part in an international thought exchange trip to cities around the world in some of the fastest-growing markets.
Not only will they meet executives from successful businesses in the area to hear what it takes to make it in the region, they will also benefit from learning about the ideas and experiences of fellow finalists. Will Butler-Adams, Managing Director of Brompton Bicycle, which was a national winner in the 2013 programme, knows only too well how Global Connections can benefit an organisation.
"It forces you to be bold and think strategically about your business when you have to start pitching to people who don’t know it," he says of the HSBC initiative.
"You’re suddenly standing there naked and it forces you to be confident and test your ideas. It takes you on a very interesting journey in terms of the people you meet."
Brompton, the London-based maker of folding bikes, was already successful, achieving average annual growth of 20 per cent.
But as Will explains, there is always room to learn from others. "It’s about looking at what other companies are doing, just little things. You don’t need many of them and they suddenly resonate," he says.
In 2013, Brompton Bicycle was expected to sell 45,000 bikes in 44 countries, continuing the company’s global expansion
Will’s Global Connections journey took him to Singapore with other 2013 finalists. One of the pivotal moments of the trip was an early morning bike ride with Tim Westwell, co-founder of regional finalist Pukka Herbs.
A chance conversation during which Tim talked about Pukka’s experiences and ambitions in the US was a lightbulb moment for Will, making him rethink Brompton’s strategy for tackling the world’s largest economy.
"We are in America, but we are just trundling along. We’re not selling the brand and communicating what a cool brand it is. We want to start shaking up America and start to pile into New York. I realised I had to send one of my best people out there."
Two of Brompton’s staff will move to New York next year directly as a result of that conversation in Singapore, and Brompton is now aiming to make the US its biggest market (it is currently fifth).
Brompton perfectly captured the essence of the HSBC initiative, which was started with the belief that those businesses willing to venture to overseas markets will be the most successful. In 2013, it will sell about 45,000 bikes in 44 countries.
"A strategic imperative is to diversify. You’ve got to rely on more than one territory. It de-risks your business and sales channels," says Will.
By identifying those entrants who are up to the challenge, the HSBC programme can assist in translating ambitions into reality. That might mean overcoming practical problems, from getting the right information on economic and commercial dynamics to finding the right partners in different territories.
Global Connections also offers busy entrepreneurs and innovators a rare opportunity to stand back from the day-to-day running of a busy business and take a fresh look at strategy among like-minded people.
The programme showcases the best of British business and innovation at a time when the global race for an export-led recovery is most certainly on.