Credit Management November 2022

BUSINESS AND INDUSTRY
AUTHOR – Adam Bernstein
Regulatory headaches
As with firms elsewhere, bureaucracy and
regulation are hurdles for both US and UK
businesses chasing international expansion.
Crayton does seem surprised that red tape
was the biggest hurdle that businesses reported
when trading internationally. He details that
some 87 percent said they were experiencing
challenges in working with foreign legal
systems, 80 percent were hindered by barriers to
trade such as tariffs and quotas, and 53 percent
said the volume of regulation in their target
market was an issue. “There are many factors
at play,” says Crayton, “from more rigorous
environmental standards and data protection
rules in response to societal changes, to the reemergence
of protectionism and embargos as a
result of political instability.”
But all is not lost he says, and he advises
starting early when forming a plan. He says that
“the regulatory landscape can appear daunting
and so the answer is to start working through
it as early as possible. Identifying the key legal,
regulatory and compliance issues that need to
be dealt with at each stage of the supply chain,
be that for the manufacturer, distributor,
retailer or an authorised representative.”
In his view, doing this provides time to
overcome any regulatory hurdles and put the
right contractual and other protections in place.
It shouldn’t be forgotten that while technology
can automate many processes, especially those
associated with finance or human resources,
regulatory compliance represents far greater
complexity. As Crayton knows from first-hand
experience, “it requires an in-depth knowledge
of the regulation in question and the markets or
scenarios it applies to.”
And he gives an instance - a US-based medical
devices company with a subsidiary in the UK.
The business sourced products worldwide,
which were stored in a warehouse in mainland
Europe before being shipped to customers
throughout the EU. This meant the company
was subject to overlapping medical devices
regulations, conformity standards and other
requirements that varied from country to
country. The company needed to understand
how they could sell and ship goods – and also
what would happen if there was a fault with a
product.
The solution, he says, was a review of the
supply chain model to map out legal roles
and responsibilities, for example, who was
responsible for ensuring appropriate conformity
assessments had been conducted and the
products marked accordingly?
Once completed the company was given
advice on what registrations, licences and
authorisations were needed at each stage and
what safeguards, procedures and contractual
clauses the company needed in order to fulfil its
responsibilities without unwittingly taking on
undue risk or liability.
❝
“A shared
language,
similar culture
and legal
systems with
commonalities
mean any
changes to
business
models can be
undertaken in
a landscape
that feels less
alien and more
familiar than
most other
locations
around the
world.”
❝
Regulation is undeniably complex but most
of it is there for a reason. It’s also unavoidable
for any business wanting to move goods a round
the world. But as Crayton says, “while it can
be time consuming, it’s a surmountable hurdle
– by understanding the detail and finding
creative commercial solutions there is usually
a way through it and this is enhanced if you
work with advisers who know your sector and
market.”
Strengthening trade ties
Apart from sharing similar challenges, the
survey found that most businesses saw
opportunity in the prospect of increased US-UK
trade.
As before, some 93 percent said they saw
opportunity for increased bilateral trade
between the US Midwest and UK Northern
Powerhouse. On this Crayton thinks such
positivity reflects the common heritage and
familiarity the US and the UK share, as well
as their proximity to major markets: “A shared
language, similar culture and legal systems with
commonalities mean any changes to business
models can be undertaken in a landscape that
feels less alien and more familiar than most
other locations around the world.”
Remarkably, Brexit doesn’t appear to have
discouraged US companies from using the
UK as an entrance into Europe as 54 percent
thought access to Europe was a bilateral trade
opportunity.
However, despite there being many shared
features in the US and UK legal systems, Crayton
says to not assume that what has been successful
at home will work again in a new overseas
market. In other words, and as he says, “doing
some diligence and seeking expert opinion on
the ground is invaluable to check assumptions.
Small changes in the legal, commercial or
taxation environment might not be visible at
first blush but could become serious issues
either immediately or further down the line.”
When respondents talked about access to
markets, knowledge and technology were the
key factors: 65 percent said bilateral trade would
grant access to more advanced production
facilities, 59 percent mentioned that access to
R&D or innovation centres would be a major
advantage, and 57 percent across the UK and the
US highlighted that access to regional markets
were a draw.
Crayton emphasises the power of this and
refers to the UK’s network of High Value Manufacturing
Catapults: “over the past decade, these
centres of industrial innovation, four of which
are located in the north of England, have become
beacons for research, development and
expertise, helping to turn ideas into commercial
applications for the UK and increasingly international
businesses…Manufacturing USA is
blazing a similar path, with four of the current
16 institutes located in the Midwest.”
Brave | Curious | Resilient / www.cicm.com / November 2022 / PAGE 36