Credit Management September 2023

Boom time in India?
MONEYWEEK recently reported that
many are seeing for themselves what
Apple’s CEO Tim Cook commented on –
that “India is at a tipping point... there are
a lot of people coming into the middle
class... the dynamism in the market. The
vibrancy is unbelievable.”
The story referenced Breakingviews
which said that foreign firms used to
complain about India’s “fondness for
import tariffs” and complex taxation of
multinationals. However, those same
firms are moving to India as they seek an
alternative to China. Indeed, JPMorgan
forecasted that within two years one in
four iPhones will be made in India and
with a GDP per capita still less than a fifth
of China’s, there is immense scope for
GO TO ASIA TO GET PAID
EARLY July, Credit Insurer Coface published
its Asia Corporate Payment Survey using
data collected by the company between
November 2022 and April 2023. The
survey sought to 'provide insights into
the evolution of payment behaviour and
credit management practices of about 2,300
companies across the Asia Pacific region.'
The survey found that overall, fewer
businesses reported overdue payments
in 2022; the share of companies reporting
overdue payments fell to 57 percent in 2022
– the lowest in 10 years – from 64 percent
in 2021. That said, it reported that the
duration of payment delays across Asia-
Pacific increased markedly, as 'businesses
were more restrictive with credit terms
amid aggressive rate increases, tighter
OVERSEAS BUSINESS
RISK: UAE
THE Department for Business & Trade
has updated its Overseas business risk
page for the United Arab Emirates (UAE)
on GOV.UK.
In essence, the UAE is the UK’s largest
trading partner in the Middle East,
13th largest export market globally and
19th largest trading partner. The Gulf
Cooperation Council of which the UAE is
a member, is now the UK’s third-biggest
trading partner outside Europe. The
Government here reports that in 2022,
bilateral trade between the UAE and UK
was worth £21.6bn including £14.3bn in
exports. A target set in 2020 seeks £25bn
in annual bilateral trade.
The page notes that key UAE sectors
for UK exporters include infrastructure,
energy, defence and security, cyber,
education and training, financial and
professional services, airports and
aerospace, creative industries, media,
and technology. Over 5,000 UK-registered
firms operate in the UAE.
catch-up growth.
Bloomberg agrees with Tim Cook – that
he is right about Indian ‘dynamism’ -
because two-thirds of India’s 1.4bn people
are of working age and the median age is
just 28 (compared to 38 in China). Such
a demographic requires infrastructure
and jobs to keep growth ahead of the
expanding workforce. If not, mass
unemployment looms.
But if the former becomes true then
the market potential for UK exporters is
beyond huge. Already the world’s fifthlargest
economy and could overtake
Germany and Japan by 2028, India
will soon become a global economic
heavyweight alongside America, China
and the EU.
financial conditions and higher inflation.'
The average payment delay lengthened
from 54 days in 2021 to 67 days.
Overdue payments increased the most
in retail (+15 days), pharmaceuticals (+10.5
days), and energy (+10 days). The energy
and construction sectors posted the longest
average payment delay at 77 days. On the
other hand, agrifood and textile saw the
shortest payment delays with a drop from
60 days in 2021 to 52 days in 2022.
According to Coface’s experience, 80
percent of payments overdue by more than
six months are never paid.
So, fewer Asian firms are seeing trouble,
but those that do are generally taking longer
to pay. And with some sectors faring worse
than others, UK firms need to be careful.
KEYNA – A GOOD
BET IN AFRICA?
A post on Bloomberg commented that “of
all the countries in sub-Saharan Africa to
be optimistic about, the most promising is
Kenya.” It noted that Africa is the “fastestgrowing
continent” and is expected to
be home to 25 percent of the world’s
population by 2050 and international firms
are seeking out a presence in the country.
Bloomberg recognises that nations
such as Nigeria and South Africa have
experienced “major troubles” of late.
However, Kenya has a population of 57m
people, a long coastline, relatively easy
access to the markets and capitals of
China and India, and some of the most
reliable internet access on the continent.
It also is very keen on green energy with
renewables already generating 80 percent
of its electricity which is not surprising
since its climate is ideally suited to solar
power.
That said, with corruption, regulatory
barriers to entry, and political instability
there are issues to counter.
Export success 1: Pet
supplements firm double sales
ACCORDING to a post from the Department
of Business and Trade, VetPlus – a firm
involved in pet nutraceuticals – has
more than doubled its sales in the Indian
region a year after a bureaucratic trade
barrier blocking exports of British pet
feed supplements to India was lifted. The
company now expects sales worth £1.4m
over the next five years.
Market researcher Market Decipher
estimates that the Indian pet food industry
was worth $498m in 2021 and is one of
the fastest-growing markets, globally. It
is expected to grow by an average of 19
percent each year over the next decade.
Export success 2: UKEF
helps UK boat manufacture
A Wirral-based specialist manufacturer of
boats that serves the search and rescue,
defence and security sectors – Marine
Specialised Technology Group (MST) – has
won major international contracts after
receiving £5m in support through UK
Export Finance (UKEF).
As the story outlines, UKEF’s General
Export Facility (GEF) scheme enabled
a £5m loan from NatWest to MST. This
working capital allowed MST to the bond
lines and advanced payment guarantees it
needed to win new, high-value contracts
in Ireland and Italy, the latter of which is a
new market for the manufacturer.
Launched by UKEF in 2021, the GEF
provides exporters with access to flexible
financing. The body has stated that it’s
'already unlocked over £180m of working
capital loans to UK businesses – 92 percent
of which has gone to small and medium
enterprises like MST.'
On top of this is a National Shipbuilding
Strategy with a target of a 45 percent
increase in UK marine engineering exports
between 2022 and 2030. The strategy
saw, in September 2022, UKEF similarly
provide £3m in support to Parkol Marine
Engineering, a family-owned shipbuilding
business based in Yorkshire, to help it
secure exporting opportunities in Ireland.
For the latest exchange rates visit
www.currenciesdirect.com or call 020 7874 9400
HIGH LOW TREND
GBP/EUR 1.17576 1.15035 Down
GBP/USD 1.31387 1.26460 Down
GBP/CHF 1.14082 1.10695 Down
GBP/AUD 1.95560 1.88605 Up
GBP/CAD 1.73299 1.68764 Down
GBP/JPY 183.003 177.389 Up
Currency Exchange Rates for the previous month: 9th July
to 9th August. This data was taken on 10th August and
refers to the month previous to/leading up to 9th August.
Brave | Curious | Resilient / www.cicm.com / September 2023 / PAGE 33