Common language, culture helps keep
Britain as top European market for US
The United Kingdom, encompassing England, Scotland, Wales and Northern Ireland, continues to be America’s No. 1 export market in Europe.
Linguistic and cultural similarities and close historical ties have helped to create a Trans-Atlantic business relationship without parallel. The United Kingdom remains attractive to US exporters and investors both in its own right and as a gateway to the larger European Union market.
The UK is receptive to American goods and services as a result of the shared cultural heritage and one of the longest standing trading relationships in modern history. With its $1.2 trillion gross domestic product, the UK ranks as America’s fourth largest market worldwide, following Canada, Mexico, and Japan.
In 1999, the United States exported $38.3 billion worth of goods to the UK and imported British goods valued at $39.2 billion.
The United States and the UK are the largest foreign investors in each other’s country. Sixty of the UK’s 500 largest companies are American-owned, and the dollar amount of cumulative British investment in the US is almost equal to US investment in Britain.
The UK has a full range of product-specific sales and distribution channels. Those range from sales subsidiaries of foreign manufacturers to import houses that buy and sell on their own account. Between those two extremes are resellers, commission sales agents, specialized importers, brokers and importing distributors. The distinction between the various marketing channels is not clear-cut, and considerable variation exists even for a single group of similar products.
National laws governing relationships between agents and distributors and their suppliers are broadly harmonized throughout the European Union. EU directives establish the rights and obligations of the principal and the agent, the agent’s entitlement to remuneration, and rules regarding the termination of agency contacts. The law appears to favor the agent over the principal to such an extent that most agency arrangements within the EU have been eliminated in favor of distributorships.
US exporters to the UK should be careful that their prices reflect all of the actual cost components. Shipping, insurance, banking and forwarding charges, storage, distribution, advertising, sales, after-sales service, profit margins and other transaction costs should be examined individually and included in the landed price. In addition to European Union customs duties charged on goods imported from outside the EU, most products sold in Britain are also subject to a 17.5% value-added tax.
Within the services sector, franchising has become an important part of American business activity in Britain. Franchising now accounts for approximately one-third of UK retail sales in those sectors that host franchise operations. More than 40 North American franchise systems currently operate in the UK, with more than 4,000 franchised units employing 30,000 full- and part-time staff. The most popular franchise businesses are in the food and beverage sector, hotels, car rental agencies, printing and photocopying, and automotive services.
Advertising materials prepared for use in the domestic US market may need to be modified for use in the UK. George Bernard Shaw’s adage about two nations divided by a common language is especially applicable here. In addition to obvious differences in spelling and word usage, cultural and legal differences may also come into play. American advertising jargon is often viewed as "pushy" and immodest by British consumers and business people. The British Code of Advertising Practice governs the advertising industry in Britain, and American companies planning an advertising campaign in the UK should be familiar with its provisions.
Best prospects for US exports of non-agricultural goods and services include aircraft and parts, apparel, computer hardware and software, defense equipment, hotel and restaurant equipment, medical equipment, professional services, sporting goods and recreational equipment, and travel and tourism services.
The United Kingdom is often considered to be a good entry point for American firms interested in Europe. The large number of American companies exporting to Britain or using the country as a base for European operations would appear to confirm this perception.
The above article is based in part on information provided by the U.S. Commercial Service in London. For more information on doing business in the United Kingdom, contact the Milwaukee Export Assistance Center at 414-297-3473 or visit the Commercial Service’s Web site at www.usembassy.org.uk/fcs/
UNITED KINGDOM AT A GLANCE:
National capital: London
Form of government: Constitutional monarchy
Languages: English, Welsh, Scottish, Gaelic
Population: 59.0 million (1998 est.)
Population growth rate: 0.25%
GDP per capita: $21,200 (1997)
Literacy rate: 99% of people age 15 and over have completed 5 or more years of schooling
Major industries: Production machinery including machine tools, electric power equipment, automation equipment, railroad equipment, shipbuilding, aircraft, motor vehicles, electronics and communications equipment, metals, chemicals, coal, petroleum, paper and paper products, food processing, textiles, clothing, other consumer goods
Exports to: Germany, 12%; United States, 11%; France, 10%; Netherlands, 8%
Imports from: Germany, 14%; United States, 14%; France, 9%; Netherlands, 6.5%
Major foreign investors: United States, Germany, France, Japan, Korea
Source: CIA World Factbook
BEST PROSPECTS FOR U.S. EXPORTS:
Aircraft and Parts
Apparel
Building Products
Computer Hardware & Software
Defense Equipment
Drugs & Pharmaceuticals
Hotel & Restaurant Equipment
Medical Equipment
Oil and Gas Field Machinery
Professional & Technical Services
Renewable Energy Equipment
Sporting Goods & Recreational Equipment
Water Resource Equipment & Services
Tourism & Travel
Source: U.S. Embassy, Commercial Service, 1999
