UK tech companies missing global opportunities

by Tineka Smith| 17 April 2012

Despite lucrative opportunities in BRIC economies, most SME technology companies have no plans to invest in new markets across the next 12 months.

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75% of medium UK technology companies have no plans of investing in these new markets in the next 12 months, according to research by Grant Thornton UK.

The firms report shows that domestic investment is still the number one priority for businesses in ICT.

Markets like the USA, Germany and Australia regularly out do foreign investment compared to companies in the UK's technology sector.

Wendy Hart, Head of Technology at Grant Thornton UK says investors in the UK's technology mid-market should be looking beyond investing in traditional markets to take advantage of emerging global markets.

"Over the last five years the volatility of the global market has inevitably had an impact on the volume of cross-border deals taking place," said Hart.

"Traditional, mature markets such as those in the G7 remain attractive to UK firms because of a familiar business environment, language commonalities and greater access to highly skilled employees. In contrast, outbound investment into fast-growing, tech-friendly economies such as India, China, Brazil and Israel is still relatively low."

Some UK tech businesses are reluctant to invest in economies like China because of its still evolving patent system, which presents risk that products will be copied.

"One of the reasons that UK technology businesses are reluctant to enter China is a fear of copying or reverse-engineering of their products," said Nick Farr, Head of China Britain Business services at Grant Thornton.

"Whilst this is still a risk, as China's patent system evolves there are increasing opportunities for businesses to protect their intellectual property. These opportunities are being noticed. Recent research by the China-Britain Business Council showed that 59% of UK businesses with a presence in China want to increase their R&D activity there."

Grant Thorton has released an expansion index guide that compares exisiting UK investment markets with emerging economies. The data accumulated shows that the markets that hold the biggest opportunities are also the ones that pose the biggest challenge for investors.

"The sheer volume of information that a business has to get to grips with before making an investment into an unfamiliar market can be daunting," said Hart.

"There are three key stages that are vital foundations for a market entry strategy: full assessment of the opportunity available; thorough preparation so that a business is ready for execution; and management of the actual execution itself."

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