Ministerial Trade Board minutes: November 2018

Attendees and apologies

Also in attendance

Items and actions

Item 1: Welcome and introductions

Mr McKee welcomed attendees offering thanks for their continued commitment to the Board.

Item 2: Apologies, minutes of previous meeting

Minutes of the previous meetings were agreed.

Steve Dunlop had been scheduled to attend but had been required to attend another urgent meeting and sent his apologies.

As a result Brian McBride, GlobalScot specialising in e-commerce, had been approached but was also unable to attend.

Action: Agreed to Steve Dunlop and Brian McBride coming to a future meeting. 

Item 3: Actions from previous meeting

Russell Dalgleish gave an update on the action agreed at the previous meeting to use the membership of Scottish Business Network (SBN) and Scotland House as well as wider network of account managed companies to try and understand from Scottish companies entering London market the types of support and assistance they might need. This would typically be support for SMEs.  

Work to develop the survey is underway in collaboration with Scottish Government (SG) analysts and is due to issue w/c 3 December with results to be returned before Christmas and a report to the first Trade board of the new year. 

The survey will be sent to around 600 companies and will include open questions to encourage expansive feedback that can be further explored. If interesting issues arise the follow up interviews will be conducted to get behind those issues. 

Members were supportive of the survey and agreed to circulate the questionnaire amongst their networks. 

Action: Russell to send the survey question to Trade Board Members for onward circulation to their networks. 

Discussion

The view was expressed that there is still a need to tackle the “exporting” question and the extent to which businesses are using London as a springboard to wider international markets and/or building their capacity to export through selling in to London. 

The cost of accessing the facilities in Scotland House and the potential for any associated cost to be a barrier to businesses making use of these facilities was raised. There was no agreement amongst members on whether this was indeed a barrier, particularly given the travel and accommodation costs associated with doing business in London. It was agreed that the survey would be a good way of finding out whether costs for this type of service were perceived as a barrier. In addition, SG officials agreed to follow up with Scotland House colleagues to circulate membership rates and terms to Trade Board members and to obtain stats for usage of Scotland House. 

Action: SG to obtain details of Scotland House London membership structure and costs as well as usage stats to be circulated to Trade Board members.

There was a feeling that the availability of this type of support was not as widely known amongst businesses as it should be and that perhaps there was a need to consider what more could be done to promote this service. 

Action: SG officials to discuss with Scotland House colleagues and others how to better promote Scotland House. 

Following the agreed action at the last meeting James Withers will be meeting Deirdre McPartlin from Enterprise Ireland in January to explore collaborative opportunities for Scotland and Ireland in food and drink. James had also had the follow up meeting with officials to explore the data analysis underpinning the Export Plan. 

James updated on the outcomes from the current 5 year export plan for the food and drink sector and the development of the next iteration. The transformational element of the plan was appointment of in-market specialists which had really led the shift in export performance. These specialists could devote their time to developing and building relationships with key buyers, customers and agents in market to explore specific opportunities relevant to the business base in Scotland. All sub-sectors within the industry had seen the value of this approach and it is being replicated by the energy sector in partnership between SDI, SG and Opportunity North East. 

Discussion

There was a discussion about when the best stage in companies export journey might be for specialist intervention. Feedback suggests new and experienced companies could both benefit from specialist support. In-market specialists have targets to support new and existing exporters and over 320 companies have benefitted from Food and Drink specialist services. 

This prompted a discussion about which companies the public sector efforts should target and whether we should follow New Zealand’s example, where they support a top tier of around 700 companies believing they have the greatest capacity to grow their export potential within rigorous selection criteria. This issue is being considered further as part of the development of the Export Plan. 

Linda Steedman updated on a recent meeting with Neil Francis, SDI and Ewen Cameron, SDI on how we can help 7500 new businesses undertake international trade. There was discussion at the last meeting about the need to adopt a holistic view on support, so that export advice is part of business growth in the round. The meeting was encouraging as SE have already taken on board feedback about having a single point of entry. There have already been improvements to the website and this will be improved further following the Strategic Board Report having been published which committed to delivering a single portal for support. 

There has been a sense that SE’s strategic plans have not been explicit enough in their references to working with SMEs and it is therefore very difficult for SMEs to see the relevance of the plan and, consequently, to see how the support on offer is applicable to them. There seems to be agreement to having more discussion and input in this space in the next iteration of the strategic plan.

Neil outlined the recent re-organisation of SDI that ensures equal focus on Trade and Investment activity, and that this is also being replicated in overseas offices. The link between innovation and exporting was also made, and Linda is meeting with the team developing the Innovation Action Plan. Surveying companies applying for innovation support to understand their international aspirations was thought to be beneficial in “planting the seed” about exporting, and thereby ensuring that the right kind of support and advice can be made available. 

Action: Trade Board Secretariat to circulate Linda’s note.

Discussion

It was noted that SDI has dedicated support relationships with a lot of companies but there is a structural issue around the company base in Scotland in terms of ambition and leadership. More action is required to persuade more of them to export. It is easier for current exporters to export more, than non-exporters begin exporting. The potential role of trading platforms was also raised as a means of shortening the journey to exporting and other markets. SDI is putting effort into developing approaches to this and consideration of these issues will also form part of the development of the Export Plan. 

There was a further discussion about the kind of support available to businesses when they arrive in-market. It was noted that New Zealand has a useful App that helps companies make contact with other business people and contacts when they arrive in a new market. 

Action: Trade Board Secretariat to get more details on NZ app and to connect with GlobalScot team on future plans for the network. 

There was a discussion about whether something similar might be possible for Scotland, possibly with the GlobalScot network. There is work underway to consider the existing network and the Minister has requested advice. 

In addition to GlobalScots and overseas offices, there was broad agreement that more can be done to connect people with networks in market, including Trade Envoys, University alumni, and other business networks.  

The point was made that University contacts and alumni are also good sources of support, and conversations with Universities Scotland are already underway about leveraging those. Cultural societies can also be a useful in helping make these connections. 

Actions:

• Professor Von Prondzynski agreed to continue conversations and investigations around making these links with universities.
• Linda Steedman agreed to follow up and link to Global Scot network as well. 
• Neil Francis agreed to support these actions.

The discussion moved on to shifting Scotland’s export performance and the need to target the “right companies” and understand whether the composition of Scotland’s export base differs significantly from that of other comparable economies. In particular, whether the bulk of Scotland’s export performance is attributable to a relatively small number of companies. There was recognition that it is always easier to sell more to an existing market than to enter a new one. The role of investors in Scotland as exporters was also raised and recognised as a connection that should be made.  

Eric Balish introduced his paper on export finance (copy circulated in advance of meeting) and outlined the gaps, in particular for SMEs in relation to access to export credit insurance and the consequent impact on the availability of capital from banks for those businesses who are appropriately managing risk exposure. He outlined the approach in the US where corporates buy credit insurance to get finance. Eric is working with colleagues within Scottish Government and the Scottish National Investment Bank (SNIB) to continue to explore options in this area, including whether it might be possible to establish an export credit insurance policy where SNIB is the underwriter. 

Discussion

In discussion it was agreed that it will be important to be clear about the market failure to be addressed, and to understand whether there are any associated State Aid implications from any proposed solution. We should also ensure that this study also looks at any offer and/or failures in the existing UK Export Finance system. It was agreed that options in this area should form part of the Export Plan. 

Other points made in discussion include the need to understand the extent to which non-payment is a barrier to businesses, and whether there are international examples of this type of scheme operating elsewhere. Is there a need for an assessment of how much of a barrier non-payment is? 

Actions:

• SG Trade Support Team to work with Eric Balish to continue scoping out the issues and developing potential solutions for inclusion in the export plan.
• It was agreed there would be benefit to inviting someone from a credit risk agency to speak to the Trade Board at a future meeting – Trade Board Secretariat to investigate options in collaboration with Eric Balish.

Item 4: A Trading Nation: our plan for growing exports

Lesley Ward, DITI and Scott Strain, Head of Trade Promotion, DITI gave an overview of progress to date in the development of A Trading Nation including an update on the data analysis and stakeholder consultation that has been undertaken in the last few months and emerging findings. 

Discussion

It was noted that the analysis as part of the export value gap model and the development of the plan more broadly may provide a useful platform for engaging with comparator countries to look at complimentary propositions that may assist both countries achieve greater penetration of large markets like the US and China. It was also suggested that building links to profile the base of exporting companies in the comparator countries would also be useful. 

Points were raised about the limitations of data analysis and the need, as per the approach being taken, to ensure that all data findings are qualified to ensure that the final recommendations are as robust as possible. 

Both Scotland Food and Drink and the Scotch Whisky Association have completed a lot of analysis around opportunities and market access issues that they agreed to share with the Board. 

Action:  James Withers and Martin Bell to share analysis. 

The role of the Trade Board in supporting the development of both the quantitative and qualitative elements of the analysis and shape of the final actions in the Plan was acknowledged. Trade Board members are already developing some of the strands of activity that are likely to emerge as more concrete actions in the plan. 

There was agreement that having a profile of companies who typically export would be a useful thing, particularly for SMEs, as they are likely to be less sure of whether exporting is for them. Similarly the connection between exports and inward investment was noted, and it was deemed important to understand the proportion of Scotland’s current export performance that is reliant on exports from existing investors as opposed to indigenous Scottish companies and how that compares to other countries. 

The weighting of existing strengths verses new opportunities was also a point to be taken on board in the Plan. 

The board liked the fact that the plan will be a live digital document that is updated annually. A digital format will also us to signpost companies to other sources of support and market intelligence. The live nature of the document allow flexibility to capitalise on emerging opportunities like the Rugby world Cup and Olympics in Japan. 

Companies needed to segment large markets like the US and China as there can be significant structural/cultural/ regulatory differences and preferences between regions and states. These differences can make these markets more of a challenge than they first appear. The importance of having contacts in market who can help businesses to navigate these differences was raised and the China Britain Business Council (CBBC) in particular, was flagged as a useful partner to help identify market opportunities.

The board identified the need for a marketing campaign to promote Scotland overseas and raise awareness of exporting domestically. Scotland is Now could be a good vehicle to deliver this campaign. It was noted that a trade/business pillar for ScotlandisNow is in development. A number of members indicated a willingness to be involved in the development of the collateral. 

Item 5: Brexit update

The Minister provided an update on the Scottish Government’s position in relation to recent developments, in particular the Prime Minister’s deal. He also updated members on the Scottish Government’s ongoing preparedness work and the Brexit readiness support work that has been developed and delivered in partnership with Scottish Enterprise.   

Members reconfirmed the challenges that continuing uncertainty pose from a business perspective. 

Item 6: AOB 

The Minister updated on the on-going campaign to recruit additional members to fill the existing vacancies on the Trade Board to take the numbers back up to the original 12. 

The recruitment process is underway and Officials will undertake a sifting process to identify a shortlist of candidates for circulation to the Members for consideration.

The long term lifespan of the Group was briefly discussed with the Minster’s view that the Group is an ongoing concern with valuable input into the Scottish Government’s work around improving export growth. It was agreed that there is an interest in ensuring the Group continues for the foreseeable future.