Entrepreneurs in UK are generally confident about their prospects for 2011, but are reluctant about expanding their businesses into high-growth emerging markets such as India and China, according to survey by Deloitte titled Entrepreneurship UK: 2010/11. The survey shows that less than 1%, out of the 350 companies surveyed, cite India and Brazil as prospects for significant growth, in addition to just 1.5% that consider China a prospect for growth. This despite the fact that BRIC markets currently represent 70% of global growth and are expected to maintain these growth levels for several years.
While businesses may be losing out on opportunities, they could also be seen as controlling their risk at a time when undue risk-taking is generally not welcome. So while revenues could grow as a result of entering the BRIC markets, there is also the possibility that a foray could be expensive and fruitless. Owners of the larger companies in the survey say they are more likely to attempt to enter these countries than those with sub-5m revenues, as sufficient resources are more readily available and the effect of less successful attempts can be absorbed.
The annual survey of Deloittes owner-manager clients found that 90 per cent expected to increase their revenues in the coming 12 months. However, over 60 per cent of the 350 companies asked expected to generate that growth through domestic sales.
Shanto Ghosh, Principal Economist, Deloitte in India said The survey results are an indication of a general averseness to risk taking behavior by businesses following the global financial crisis. It is also a wake-up call to the emerging economies where short term gains are a primary motive for the expansion of global business into these economies. Hence, when the global economy recovers, businesses will pull out and the emerging signs of these are evident in the survey results.
The shortfall in UK exports in general was shown this week with the publication of official trade figures, which showed a larger-than-expected trade deficit.
The research also talks about a degree of caution among business owners with many stockpiling cash over the past few months. Only 31 per cent of those asked said they had no plans to exit from their business and 21 per cent said they would sell the business as soon as a target value was achieved.