Too Few UK SMEs Are Exporting And Too Few Are Multilingual

Only one in five domestic SMEs are planning to trade overseas and they could pay price for monolingualism, suggests new research from Regus.

Too many UK SMEs are giving international trade the cold shoulder despite compelling evidence that firms of all sizes operating overseas are weathering the economic crisis better than those solely focused on the home market. And with non-EU exports coming under the spotlight, the research pinpoints a rising challenge for SMEs: managers’ lack of foreign language skills, or in the words of Education Secretary Michael Gove, the nation’s “perverse pride” in monolingualism. 

Monolingual Brits are already finding themselves beaten to international business and marketing jobs by foreign candidates with superior language skills. These are the findings of a new study from global workplace provider Regus.Only a fifth (21%) of the UK’s SMEs plan to dip their toes into overseas markets in the next two years compared to 38% in France and 24% in Germany. Reliance on the UK’s strong domestic market may have sufficed in the past but exports play an increasingly important role in today’s economy; the CBI recently reported that by building up an export presence outside Europe, the UK economy could grow by £20 billion.

Language skills in BRIC countries & South America are a necessity

Over two-fifths of SMEs (43%) do not believe local language fluency to be critical to overseas business success. Over a third (37%) would not require an expat manager appointed to run their overseas operations to speak the local language - presumably due to the dearth of multilingual candidates. Although it is true that UK firms can often rely on English as the ‘lingua franca’ of business, fluency in the customers’ language brings a wealth of commercial and cultural advantages – and when trading with the BRIC countries and South America, language skills are frequently elevated from advantage to necessity.The research canvassed the views of 2700 business owners and managers in the UK, and found that only 35% of firms appointing an expat to manage overseas operations require them to be fluent in the local language. One reason may be that they simply cannot find a sufficient pool of multilingual British candidates. Less than half of firms (44%) give expat managers a cultural briefing prior to their move overseas. An above average proportion of firms (57%) choose to staff foreign operations with local managers, which may reflect a specific cultural strategy but is more likely to be influenced by the lack of foreign language-speaking ‘home-grown’ talent.

UK companies who export are more profitable

Nick Baird, CEO of UK Trade & Investment, comments: “The evidence outlined in this report corroborates UK Trade & Investment data that show that companies who export to any country, in any financial climate in the long term, perform better and are more profitable than those who do not. The report will reinforce the importance of exports in SMEs’ consciousness. Nationally, exports contribute 60 per cent of UK productivity growth and play a vital part of our prosperity and economic stability.“In the current economic climate, no business can afford to sit still. The good news is that more and more SMEs are becoming export aware. But they can and must do better to seize opportunities in high growth markets. UK Trade & Investment supports British companies’ efforts to take advantage of these and other opportunities."

Fluency in languages helps our national competitiveness

Stephan Chambers, MBA Programme Director, Saïd Business School, University of Oxford comments: “Despite the near ubiquity of English in world business, it’s clear that there will be an increasing premium on managers who speak Mandarin, Spanish, Portuguese, Arabic or Russian as the centres of business power move inexorably towards the new economic powerhouses of China and elsewhere. Fluency in languages other than our own must help insight and understanding and, in turn, our national competitiveness.”Celia Donne, Regional Director at Regus adds: “Our new report makes it clear that UK firms who have diversified overseas are faring better in the current economic climate than those who have stayed within their home markets. This chimes with many commentators’ views that exports play an increasingly vital role in economic stability."“Staffing decisions and language capabilities are a real sticking point. Many UK firms rely on English as the ‘lingua franca’ of business, but speaking the customer’s language helps build lasting relationships that make commercial dealings run smoother, and could even prove a decisive factor in winning new business. All indicators suggest that UK firms must reduce their reliance on English to capitalise on the opportunities presented by the world’s growth markets. If the British workforce cannot plug the skills gap, then foreign candidates with language skills will be first to the job opportunities.”

A copy of the full report 'The Export Imperative' is available via Slideshare>>