Exporters must brace themselves for Brexit, warns Enterprise Ireland
Irish firms cannot wait until 11th hour to diversify into markets other than UK
Enterprise Ireland research and innovation manager Gearóid Mooney: “Sometimes a company might need to hire somebody to lead the entry into a new market.”
Irish exporters need to plan for a hard Brexit and they have to prepare for it now. That’s the advice of research and innovation manager Gearóid Mooney. “While we can’t say at this stage what the outcome of negotiations will be, people should absolutely prepare for a hard Brexit,” he says. “You can’t be over-prepared for something like this. It is vital that Irish firms are not caught out. There is time at the moment but we can’t wait until the 11th hour to make preparations.”
Market diversification along with innovation is the best preparation for the majority of firms, Mooney points out. With this is mind, Enterprise Ireland has developed a Prepare for Brexit plan for clients which includes a tailored support package for companies to adapt existing products, processes and services for euro zone markets.
“We want to encourage as many clients as we can to diversify into new markets,” he adds. “Most companies should do this naturally. Diversity helps companies withstand shocks. However, if the UK is the only export market that a company is exporting to at present, it is very likely that their product or service is going to require a bit of work before it can go to a new market.”
He says that there are a number of key questions that companies need to ask themselves before attempting to enter a new market. “Will the product fit the market? Will consumer tastes be the same as here or in the UK? How will the product’s pricing stack up? Will there be language or regulatory barriers to overcome? Regulation across the euro zone has become a lot more uniform but there may still be a need to make changes to meet the needs of specific markets.”
Branding is also an issue. “You don’t want to end up in the hilarious situation that some companies have,” he says. One of these was the Vauxhall Nova which didn’t go down well in Spain and Latin American markets as a result of nova meaning ‘won’t go’ in Spanish.
“Intellectual property also has to be taken into consideration. Does that travel with you? If you have no intellectual property coverage, you could end up in a dispute as to who holds a patent in a country. Distribution channels have to be looked into as well.”
The good news is that Enterprise Ireland can offer financial and practical assistance towards the costs of addressing these issues. “Our overseas office network is there to help client companies discover these things in advance of entering a new market,” says Mooney. “A company might find it is in the fortunate position where everything is okay but if product needs a bit of tweaking there is financial assistance there to help with that innovation. For example, we had a client happily selling into the German market but then found a customer wanted some changes and we were able to assist them with that.”
He offers another example of an Irish firm which wanted to enter the French financial services market but had to makes changes to comply with that country’s regulatory regime. “Again, we were able to help with that. What a lot of people don’t know is that Business Innovation Grants are available to SMEs who need to change their business model or product or service for a new market.”
Another area where Enterprise Ireland can help is the recruitment of key people. “Sometimes a company might need to hire somebody to lead the entry into a new market. They might be specialists in marketing or have specific local market knowledge. We can help client companies find the skilled people they need to support their diversification efforts with key hire grants and other assistance.”
Diversification is by no means the only action companies should take in preparation for Brexit, however. “Something we can see happening already is changes in currency,” Mooney points out.
“This can hit manufacturing companies with tight margins particularly hard. We are encouraging these companies to look for efficiencies to reduce costs. There is no such thing as being too efficient. Also, if diversification into other euro zone markets doesn’t work out, companies can look for other regions of the UK to export into. That’s a form of diversification as well. In addition, quite a number of our manufacturing client companies take in raw materials from the UK – that’s a natural currency hedge. But for most companies, the best preparation for Brexit is diversification and innovation.”