The economic rise of China is a story most of us are at least partly familiar with, but the potential of the BRICS group to shape global trade is a story that’s unfolding before our eyes. While China is the most influential member, each of the five emerging economies has a voice that Britain can ill afford to ignore. Building relationships in these markets is a priority for many Wolfestone clients, and effective localisation is an essential part of their strategy. For Britain as a whole, the question of how to engage the BRICS group is a central one.
The “BRIC” group of Brazil, Russia, India and China was first posited in a Goldman Sachs research report in 2001. A decade on, South Africa became the fifth member, attending the group’s annual heads of state meeting in Beijing in April 2011. As manufacturers they are rich sources of raw materials and labour. As importers they are home to increasingly sophisticated and aspirational consumers. The latest BRICS conference, held in Delhi one week ago, saw the group move closer to forming a central bank, not only serving each other but also supporting the development of emerging southern hemisphere economies. If an east/west political divide defined the second half of the twentieth century, the BRICS group seems intent on ensuring that a north/south economic divide won’t define the first half of the twenty first. Add this news to the stated intention of the group to increase intra-BRICS trade to $500 billion by 2015 and Britain, along with the rest of Europe, could be forgiven for feeling left out in the cold.
British exporters should note, though, that these five nations don’t speak with one voice. Their governance is vastly different, with the democracies of Brazil, India and South Africa contrasting with authoritarian rule in China and Russia. And a framework for co-operation doesn’t take away the potential for competition. As an example, India suffers from a widening trade deficit, and for the country to develop a manufacturing sector it needs to make inroads in markets that China currently dominates. These emerging powerhouses have a lot to gain from working together where they have interests in common, but there are crucial differences stopping the BRICS from putting up a wall between themselves and the likes of Britain.
In recent years this country has taken every opportunity to reach out to emerging economies. Britain has the stated aim of doubling trade with China by 2015 to £62 billion pounds, and last summer David Cameron announced £1.4bn of trade agreements between the two countries. As part of this agreement, China lifted a ban on UK poultry, and British exporters were granted increased access to Chinese markets in architecture, civil engineering and research and development.
The British Government has strived to improve links with South Africa, and the Prime Minister made it clear on a 2011 visit that while Britain is committed to ongoing African aid programmes, he sees trade as the best way forward for the continent. South Africa’s vibrant culture was on display two summers ago during the football World Cup, and British exporters are currently competing to supply a range of services to organisers of 2014’s football World Cup in Brazil and Winter Olympics in Russia. In fact, from the 2008 Olympics to the 2018 World Cup, the BRICS nations have secured the right to showcase their development by hosting a string of the world’s major sporting events interrupted only by this summer’s London Olympics.
If any market illustrates the appeal of the BRICS economies, it might be the Russian automotive sector. Light vehicle sales in the Russian automotive market increased by 39% in 2011. The latest annual figures show overall UK exports to Russia increasing by 51% year on year, to a current annual value of £3.45 billion. This isn’t an isolated surge. Since 2001, UK-Russia trade has been growing by an average of 21% per annum. Crucially for Wolfestone’s clients, the country is in urgent need of up-to-date manufacturing equipment. For all their recent advances, 70% of Russia’s existing capital assets are outdated.
In 2011 Britain exported goods to the value of just over £20 billion to the five BRICS nations. This combined figure is far less than the value of our exports to either the USA or Germany, our two leading trade partners. Taking the long view, though, the BRICS voices will only grow louder and their economic influence more overt. The message for British exporters is clear; these markets are accessible. Penetrating them requires persistence and professionalism, and the support of a suitable translation and localisation partner will help you find your market.
The BRICS nations are strong individually but they come together when they have interests in common. When Wolfestone clients come to us it’s because they’ve made a similar judgment, that working with the right partner will get them where they want to be. We help them to build with the BRICS.
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