UK technology firms shunning emerging markets

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UK technology firms shunning emerging markets

Bill Goodwin

UK technology companies are failing to expand into fast growing markets in Brazil, India, China and Israel, according to research from Grant Thornton.

Three quarters of medium sized UK technology companies have no plans to invest in new markets in the next 12 months, the company claims

10) Jerusalem, Israel

They risk missing out on long-term growth opportunities, said  Wendy Hart head of Grant Thornton’s technology sector group.

“There is a lot of talk about BRICs (Brazil, India and China), and a lot of expectation. But when you actually ask people a direct question, it's not what they are thinking about,” she said.

The research, based on an analysis of mergers and acquisitions, reveals that investment in the UK, is the number one priority for UK technology firms.

Last year, 141  mergers and acquisitions between UK companies took place, higher than any other market.

Top markets for technology firms

India

Significant future potential, but hindered by its political/legal infrastructure, and the difficulty of starting up a business. The economic potential is high, and infrastructure and technology issues are being addressed.

China

Offers the largest market and highest growth forecast. However bureaucracy is a deterrent to setting up start-up companies, and it offers less protection to investors from financial disclosure than other countries.

Brazil

Brazil is among the top countries for new businesses, despite its low ranking for ease of creating start-ups.

Israel

Israel is poised for significant growth as venture-backed economy, with a supportive environment for start-ups. The country has 1,800 active start-ups.

Source: Grant Thornton

UK technology companies prefer to invest in mature markets, such as the USA, Australia and Germany, rather than fast growing emerging economies the research reveals.

“Where people talk about acquisitions, they talk about UK, Northern Europe, Germany and France. Sometimes they have an aspiration to buy in the US,” she said.

However, they risk missing out on rapidly expanding markets fast growing, technology friendly countries, such as India, China, Brazil and Israel, claims the research.

Grant Thornton advises businesses to seek advice from UK government agencies before buying businesses abroad, however.

Creating a new start up from scratch, or setting up a joint venture with an overseas company can be a less risky approach than an acquisition, it says.

In China, concerns over copyright and intellectual property rights, often deter businesses but developments in the patent system are making it easier to protect intellectual property, says Grant Thornton.

IIanit Halperin, head of technology, Grant Thornton Israel, said that although bureaucracy presents a challenge, Israel offers businesses incentives for innovation.


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