Tuesday, March 8, 2011


Given today's scathing critique of WAG by Dr Bernd Atenshtaed, of German Industry UK, I thought I would bring forward the recommendations from the Economic Commission regarding internationalisation of the Welsh economy.

As Dr Atenshtaed stated, too little is being done by the Welsh Assembly Government to promote exports. Worst still, he said that WAG was too pre-occupied with reorganisation rather than delivering results.

In the past, some of us have said that the ERP is a case of simply rearranging the deckchairs on the Titanic.

Given that this point has been now reinforced by German manufacturers in Wales, what can be done?

This is what the Economic Commission suggests.

The Challenge

To encourage a more international approach to business that again makes Wales the most favoured location for inward investors whilst also supporting Welsh businesses in their exporting activities to ensure they take full advantage of the opportunities presented by a growing global economy.

The evidence

A study from the European Commission [1] has shown the benefits of internationalisation by small companies for the development of local economies. The report maps the level of internationalisation of small firms in Europe and identifies the main barriers and advantages of the internationalisation process. It found that internationally-active SMEs report an employment growth of 7 per cent whereas the figure was 1 per cent for those without any international activities. It also discovered a strong relationship between internationalisation and innovation - 26 per cent of internationally active SMEs introduced products or services that were new for their sector in their country as compared to 8 per cent for other small businesses. Given this, it is worrying that, compared with many other regions, Wales barely engages in the global economy. The percentage of Welsh companies engaged in exporting is only 2.1 per cent - the lowest of any UK region - and well below the UK average of 3.4 per cent.

The Way Forward

Wales should take a leaf out of Scotland’s book, which is far more advanced in terms of internationalisation policies. Some potential policy options include the following:
  • Development of specific internationalisation business support programmes, few of which exists at present within Wales, on the lines of the International Strategy Development programme in Scotland
  • WAG could help to identify and map key global communities of practice, and then make companies better aware of these communities. 
  • International network development should be supported by establishing new modes of overseas missions which provide financial assistance to fund international customers, suppliers, collaborators and associates to undertake visits to Wales to develop strong relationships with Welsh companies. 
  • There needs to be greater co-operation with UKTI in terms of supporting trade missions business support 
  • Welsh SMEs should be supported in developing other types of international links such as licensing, alliances and joint ventures.

Case Study

International Strategy Development Programme

Focused on developing international vision and business strategy, the International Strategy Development Programme is designed to accelerate the global growth of companies. Companies should have an ambitious top team with the vision and capacity to formulate and implement an international strategy, and be seeking to internationalise or increase the number of international markets in which they operate. To qualify for support, they should have a turnover of circa £2 million or more, with significant potential for growth, have their Head Office in Scotland (or demonstrate that they are strategically controlled from Scotland) and be committed to spending the time and resource to undertake the project and implement any action plan. The International Strategy Development Programme has been designed to accelerate the international growth of ambitious companies. The main focus is to develop a sustainable international strategy having considered the various options available to the company. There will also be a focus on building management team capability within the company to ensure the strategy can be delivered. The Programme is delivered on an individual company basis and will involve the senior management team. Support is flexible with between 10 and 20 days consultancy support available to assist in developing an international strategy.

[1] "Internationalisation of European SMEs”