whitepaper: market entry

Copyright © Selling People Ltd, 2013 Contact: www.europa.co.uk 01494 739800 Version 6 of 21

Selling People Version 6 Jan 2013 Written by: Julian Poulter: www.sellingpeople.biz

WHITEPAPER: UK/EMEA MARKET ENTRY A NEW APPROACH FOR IT VENDORS

http://www.sellingpeople.biz/

Copyright © Selling People (SMDI Ltd) Contact: www.sellingpeople.biz 020 3397 3270 Version 6 of 21

Contents

1. Introduction – a new approach .................................................. 3

2. Company set up options ........................................................... 3

3. Outsourcing Methodology ......................................................... 5

4. Overview of Capabilities ............................................................ 6

5. Charging basis and Margin Considerations ............................... 8

6. Benefits ................................................................................... 10

7. Investment .............................................................................. 10

8. Summary ................................................................................ 11

9. About Europa .......................................................................... 11

10. Appendix 1: Sales outsourcing Capabilities ............................ 12

11. Appendix 2a: Map of UK ......................................................... 14

12. Appendix 2b: Map of Europe ................................................... 14

14. Appendix 3: Key Facts and Figures ........................................ 15

15. Appendix 4: EU, USA & Japan key statistics cont…................ 20

16. Appendix 5: References .......................................................... 21


1. Introduction – a new approach When organisations are deciding on a ‘go to market’ strategy, particularly in new territories, there are usually two main choices to make, do you sell direct to end users and set up your own operation or subsidiary to attract customers or develop an indirect sales channel of distributors, agents or resellers? This paper discusses and contrasts these two traditional approaches with the third alternative of sales outsourcing. Sales outsourcing will particularly suit companies who are looking to expand, or set up operations in new territories. Some key facts and figures are also given about the UK and the European Union markets along with some comparisons with Japan and the USA. From a software and technology perspective, the UK is one of the key worldwide IT markets, and any aspiring technology organisation will want to have a presence in the UK. The UK is often used as a landing and jumping off point for expansion into the rest of Europe or EMEA or other English speaking territories.

2. Company set up options One of the first questions to ask when considering an overseas expansion is “do you sell direct to end users and customers”, or “develop a sales channel of distributors and resellers”? The establishment of either a direct or indirect sales operation will need a sales force, even to just ‘set up and prime the pump’ in the indirect sales approach. The vendor organisation’s attitude to risk, availability of fixed and working capital, and knowledge of and access to chosen markets, will determine which approach an organisation prefers. However, the third option is that of sales outsourcing. The principle differences between the three approaches are listed in table 1 below. One of the main reasons to create a distributor, apart from lower upfront costs will be to gain access to the distributor’s existing customers, new markets and domain knowledge, or a combination of all of these. However, the problem with any distributor is that the product marketed by the vendor often becomes secondary to selling that distributor’s own core product or service.

A large software company based in Redwood, CA has many boutique consultancies as ‘partners’ in its business intelligence division. However, getting these partners to focus on software rather than implementation services is a constant challenge.


In many cases your product will be part of a solution involving several products. Systems Integrators (SI’s) can also act as a channel, though they will not usually be tied to a particular vendor, and may recommend several alternative solutions to clients. A direct approach brings greater control and more immediate results at the expense of higher upfront costs and associated risks. Table 1 – Comparison of go to market approaches

Issue Direct Sales Outsourcing Channel**

Ownership of clients Vendor Vendor Distributor

Margin 100% 10-25% 40-50% to distributor

Control of sales cycle 90% high 90% high 10% low

Configuration of solution

90% high 90% high 10% low

Costs of sales resources

High – employees with basics,

commissions, expenses, phones,

cars, holidays

Medium – direct costs often passed

on but limited set up costs

Low or non existent

Risk of loss Medium Medium Small

Risk of high profit Medium Medium Medium

Time to revenue Short Short Medium – 2 stages

Post sales support All All Only 2nd

or 3rd

line

Implementation revenue

All All Licence fees only to vendor

Focus on vendor product

Total Total Partial, will have multiple products

Loyalty 100% Total Loyalty is to the highest margin.

Transparency of operation

High, full visibility High, full visibility Low

Access to existing customers

No Probably not Yes, probably

** Many different channel models exist (VAR, Super VAR, Reseller, Agent, Distributor) and this paper does not attempt to define or explain all of them, however the general principles of a distribution model are assumed. For these reasons many vendors only use the channel when they cannot afford the investment, or when specific domain or geographic knowledge, such as setting up overseas is required. The vendor may also reserve an option to buy out the distributor, or a division, at some future point when the business becomes established. Sales outsourcing maybe used for establishing both models, and is an alternative method of setting up your chosen distribution or go to market method.

One of the main reasons for using an outsourcer (or distributor) is to gain access to knowledge of the local market and conditions.


Unlike the USA the conditions across the EU vary widely. Whilst there are many commonalities for business across the EU there are still plenty of local differences especially with regard to salaries and employment law as well as culture and regulation.

A local distributor is likely to also bring to the table a selection of customers and prospects to which the new product can be quickly introduced.

An outsourcer can bring existing customers and the more extensive sales force typically employed by the outsourcer, compared to a typical start up, can provide access to many accounts and contacts. Some outsourcers pitch themselves as experts in a particular sector to which they have significant knowledge of, along with access to contacts.

3. Outsourcing Methodology The overall approach to an outsourcing engagement typically consists of four main phases:

a. Preparation – Scan & Plan b. Launch / Test & Review c. Initial Operations d. Full operations

Figure 1 – Sales Outsourcing Methodology


The key phases are discussed in brief then in more detail below.

Preparation

The initial Preparation phase is concerned with developing a comprehensive sales and marketing plan for the commissioning organisation. This may just cover a short initial period but would usually provide an outline of operations over 1-2 years. The key part of this preparation phase is an intensive sales workshop where all aspects of the engagement are discussed and defined. This phase may also incorporate elements of desk and field based market research, especially for new products or new markets. The remaining component of the Preparation phase is to complete the remaining items of set up that are required to get the engagement going: logistics, training, recruitment etc.

Launch or Test

Following the Preparation, a longer Launch or Test phase is then undertaken where the emphasis is on getting in front of as many prospects as possible to outline the proposition(s) in detail and build pipeline. In the Launch or Test phase the emphasis is on selling and closing deals, but in these early stages, significant review and feedback is maintained to track progress. At the end of the Launch phase the results are reviewed and a decision can be made on progressing to the next phase and the sales plan can be updated if necessary with the live metrics.

Initial Operations

The Initial Operations phase is now all about generating sales orders and ramping up the sales operation. If the plan calls for five fields sales personnel within one year the Launch phase may only use one full time equivalent (FTE). The resource may in fact be split into two for extended coverage, segmentation or comparison purposes. This is part of the flexibility of a sales outsourced solution. Now in the Initial Operations additional resources can now be brought to bear.

Full Operations

The Full Operations phase can be an extension of the Initial Operations or the client may wish to set up their own subsidiary or distribution channel and the outsourcing be phased out or be used to support certain aspects of the sales function. Many clients may also choose to take the now established sales operation in house once an early sales footprint has been established.

4. Overview of Capabilities Sales outsourcing usually consists of one or more of the following principal elements present in any sales organisation:

Sales resources

Sales management and sales direction


Lead generation

Marketing

Systems and processes (CRM, sales process, lead qualification etc)

Facilities Full details of these capabilities are given in Appendix 1. The diagram below shows how the capabilities fit in helping produce the sales funnel. Sales outsourcing can offer the advantages of both the direct and indirect models. The key features of an outsourced sales solution should include:

Results focused on activity, pipeline and sales orders. Whilst an outsourcer would expect to be paid partly on time especially in the early stages they are focused as far as practicable in achieving the results agreed Rapid - Rapid set up in a matter of days and weeks rather than months of a typical recruitment or in-house operation Flexible – solutions that can be modified quickly, or over time, to react to changing conditions. Resources can be increased or decreased at short notice according to campaigns or results

Diagram showing overview of sales capabilities in the sales funnel

Expertise – Professional approach, utilizing predominantly existing staff and local office facilities Cost effective – Low upfront costs (no recruitment costs) and reduced long term commitments and no employee relationships resulting in lower initial risks Methodology – Using a proven and common sales process/methodology and systems increase the quality and ensures valuable leads are not lost


The majority of resources used on any new project should be from the outsourcer’s existing proven sales resources.

Combining all of the above services, lead generation, sales resource, direction and perhaps marketing, results in a fully outsourced sales solution.

Outsourcing to a third party provides for all day to day decisions and activities to be handled by the outsourcing company, to include interaction with all the client company’s departments. The designated project or sales manager will form a key part of the client’s management team.

The outsourcing company can vary key elements of the sales function over time, lead generation, operational and management resources, according to specific business needs. For example, additional resources can be acquired for a specific campaign, both in terms of the lead generation and follow up sales resource.

A full sales outsourcing arrangement compares very favorably with trying to recruit one or more full time people to cover all of these activities. Activities will be focused and carried out continuously, rather than being carried out by one all rounder, with the resultant feast and famine situation, regarding lead generation, that inevitably results.

Ultimately, an outsourced contract is usually based on revenue performance. It includes a basic retainer and commission or bonuses based on the revenue/margin delivered. The commission only sales approach rarely performs well. Go to www.sellingpeople.biz and download or request our white paper entitled “Commission Only Sales” for more information on that topic.

5. Charging basis and Margin Considerations

There are many aspects to an organization’s sales and marketing effort. When choosing sales channels to market there are three main approaches:

Direct sales effort internally: The vendor’s own sales and marketing team.

Enlist partners/distributors/VAR’s/resellers etc: Third party companies, whose business is aligned or complimentary to the vendor’s, and will naturally open up opportunities for product/service sales. They may even pay for the privilege of selling your product if you are a market leader. Third parties are not part of your business they are a separate channel.

Sales outsourcing service providers are companies that will sell products or services on your behalf within their range of expertise for a fee and usually a commission. They become part of the vendor’s business rather than a separate channel.

The key differences between the three models are their comparative costs and risk/reward ratios. Outsourcing is positioned somewhere in the middle of these three options. For example:


Option Upfront cost Risk Commission paid

Direct/Internal High High Low (2-15%)

Partner model Zero other than training, management time etc.

Very low High (35-55%)

Outsourcing Low Medium Medium (10-30%)

Commission rates vary widely between engagements and these figures are purely illustrative.

Where the product or service is high value or complex, the partner model initially tends to be very unproductive and rarely is anything sold within the first year. In these cases, an outsourcing sales solution can be far more productive. Where IT products are sold through distribution channels, margins and financial models are highly variable and are beyond the scope of this paper.

There are many aspects to negotiating a sales outsourcing contract, some of the variables include: equity, commission, base rates, market exclusivity, timescales, sales support and marketing spend etc.

There are several main types of sales outsourcing contract engagement. All of them should provide a rapid, flexible and responsive solution, with low initial costs:

Time and materials basis – where the costs of the outsourcer are passed on, plus a margin, to the vendor. Costs are fully detailed; the contract is very transparent and would normally have a termination or variation clause period of only two to four weeks. Commission is paid, but only at the rate at which a sales executive could earn – usually 5-10 percent in software. This mode of operation is very relevant in a start-up, or test marketing phase, where there is no track record of sales success provided by the vendor. Deliverables – in this case the contract identifies key deliverables and payment is based on achieving these. The delivery targets could be activity based such as Surveys with senior decision makers or meetings or could be based on pipeline or orders. Base + commission – is essentially a variation on time and materials, but the sales fees charged are costs less a margin of typically 20-30%. Alternatively the base could be a reflection of the management costs + the overheads and facilities – essentially the fixed costs. Therefore the outsourcer will only make a sensible profit if “product” is sold and commission/margin shared between the vendor and outsourcer. Set up, planning and training costs would normally be charged at the beginning. Commission only has no external ongoing fixed costs to the vendor, though there could be, and usually is, a negotiated set up cost, particularly in new markets or with new products. When sales are made a relatively high commission (25-80%) is paid to the outsourcer, similar to the rates paid for a distributor. Sometimes quite high rates can be paid in the early deals to recoup


some of the investment costs. This will however provide the lowest profit, but lowest financial risk, to the vendor as more commission / percentage of margin is being paid out.

6. Benefits

In summary, the benefits of adopting an outsourced sales approach in establishing a presence in the UK/EMEA are many and varied:

The use of experienced sales professionals to establish and drive the sales effort.

Flexibility - an efficient use of differing sales resources split between lead generation and tele-sales, sales and marketing and administration.

Reduced initial investment with no recruitment fees.

Use of outsourcers office and facilities.

Provision of an early operations/test marketing phase, which can be used for proof of concept prior to additional investment and resource becoming committed.

Required resource may be varied, and increased or decreased at short notice.

No employee overheads – just a monthly invoice.

Minimum call on existing management time.

The outsourcer may also be able to procure additional leads from within the associate network and knowledge of the target prospects.

Immediate access to proven processes and supporting systems provides speedy results and reduced set up times.

7. Investment The cost of a sales engagement can vary significantly. Normally, in the early stages projects can be varied or terminated subject to a four week notice period – hence reducing the risk to the client organisation. In any engagement the sales plan that is created includes a detailed cost and revenue target spreadsheet, this acts as the budget plan for the engagement. Typical guide rates are given for a variety of services in the table below (UK rates 2008):

Service Item Daily rates

Daily rate for lead generation – 10-15 surveys* per day £150-£300

Daily rate for research/data cleansing £100 - 150

Project management and set up for projects £250- £400

Data purchasing , normally 40p per record for eternal license with emails £400 per 1000

Sales resources for tele sales / tele-marketing £100-350

Sales resources for field work £150 -£450

Rental of campaign management / e-Marketing system £25 -£75 per user per

month


Sales Management £300-£450

Sales consulting £600-£1500 * A survey is a full conversation with a decision maker.

8. Summary Sales outsourcing is a relatively new phenomenon in the IT industry, though has been prevalent in other industries for many years such a financial services and pharmaceutical. There are pros and cons of sales outsourcing, as there are with the traditional direct or indirect models. For some companies the attractiveness of outsourcing this important business process will be compelling. For companies setting up in new territories such as the UK and EU the outsourcing model should be given full consideration.

9. About Selling People Selling People was founded in 2003 and has rapidly become Europe’s leading sales outsourcing agency. SP has provided market evaluation, lead generation and sales outsourcing services to a variety of companies. Selling People is UK based but is part of the Branch Service operation with offices in 20 countries and 60+ sales executives allowing us to put together pan European solutions. We operate in many sectors but our specialism is the demanding IT software sales sector. Within that sector we have particular expertise in: Business intelligence & knowledge management

Help Desk & service management CRM & customer service ERP

We maintain our own intelligence/data gathering system and watch and research the above sectors as well as the UK’s top 100 IT spenders and the Mergers and Acquisitions market in the UK, as these are often key to our clients. Selling People operates using a number of full time employed sales and telemarketing executives, including in-house project and sales management. We supplement this with external associate resources to extend our skills and geographic coverage. Our external network consists of approximately 200 associates allowing us to operate in many sectors and geographic areas.

Selling People Ltd

Unit 12, The Power House

Higham Mead

Chesham

Buckinghamshire

Phone: 020 3397 3270

Email: [email protected]

Web site: www.sellingpeople.biz

http://www.branchservice.com/

http://www.sellingpeople.biz/


HP5 2AH

10. Appendix 1: Sales outsourcing Capabilities

See our Whitepaper: Sales Outsourcing Alternatives for more information on

these topics. The diagram below shows graphically the main functions usually required in an outsourced sales function.

The key functions are now discussed in turn – sales executives, sales management, lead generation, facilities & processes

Sales Executives

Front line sales personnel are clearly at the heart of any sales operation. These resources are called many names: account managers, business development managers, sales consultants depending on the organisation or role, here we refer simply to sales executive. Sales executives have traditionally been recruited on a full time employment basis. The upside is quite apparent but the downsides are often less obvious. For example, there is a high cost and hence risk if full time sales resources fails to give the required return on investment, particularly in the often, overpaid IT sector. The worst acquisition a business can make is an expensive sales recruit who does not sell anything and leaves after six months, resulting in wasted time, effort investment, salary payment and hefty recruitment fees.


Sales Management / Direction

Where the outsourced sales solution is more than a single person then some element of management will be required. Even where there is only one person involved, certain aspects of an engagement will also fall under the ‘management’ function. Outsourcing sales direction can provide an experienced sales director at a fraction of the cost of in house equivalents. There are many aspects to sales direction, the basic functions include:

An accurate weekly/monthly forecast and process review.

Weekly management to coach and direct the sales effort.

Strategic sessions to help with overall business growth and planning, including the review or determination of value propositions.

Creating a sales manual defining how the sales function operates in the company.

Sales resource/recruitment, for example, the candidate selection process.

Contribution towards company ‘best practice’ methods for operating a sales function. This can include resourcing, the sales model (how we sell), the sales cycle (the route to a sale) and sales process - including departmental interfaces (vital in a professional service operation), forecasting and reviewing processes.

Lead Generation and Marketing

Outsourcing lead generation to a capable company ensures the aforementioned services are provided and managed professionally. A lead generation contract ensures your chosen service provider focuses staff attention on using their core skills to increase your revenue, without diverting your sales force from the areas of the sales cycle, where they are most effective.

Facilities

The outsourcer should provide local market facilities such as office and phones in order for the client to have a definite physical presence in its chosen markets.

Processes

An outsourcer should bring to the table a variety of systems and processes to quickly enable best practice sales and marketing to be implemented.


11. Appendix 2a: Map of UK See also: http://www.ukti.gov.uk/investintheuk/investorsmap.html

12. Appendix 2b: Map of Europe

http://www.ukti.gov.uk/investintheuk/investorsmap.html


14. Appendix 3: Key Facts and Figures

During the days of the British Empire the UK economy was the largest in the world and the first to industrialise (or industrialize, ushering in the Industrial Revolution). Although it has declined in significance since, the UK is still the sixth largest economy in the world by purchasing power parity.

It is a member of the G7 (now expanding to the G8 and G20), the European Union (although not the European Economic and Monetary Union -EMU - or Euro) and the OECD (Organisation for Economic Cooperation and Development). It is also the founding member of the Commonwealth, the association formed by former British Empire states. The British Economy is one of the most globalised (or globalized) economies in the world, thanks in no small part to the City of London, considered to be the largest financial center in the world.

The economy of the United Kingdom of Great Britain includes the economies of England, Scotland, Wales and Northern Ireland. The Isle of Man and the Channel Isles are part of the British Isles and have offshore banking status.

The Bank of England had cut interest rates to 1.0 per cent by the end of 2008, and that is expected to drop to 0.5 per cent for most of 2009 and 2010.

UK budget deficit stood at 5.3 per cent of GDP in 2008. With economic stimulus packages and bank bailouts being worked on, that is expected to balloon to 11.3 per cent of GDP in 2009 and 13 per cent of GDP in 2010.

In 2008, the UK had the 43rd largest relative national public debt, at 47.2 per cent of GDP. This figure could rise to 58.5 per cent of GDP by 2009 and 70 per cent of GDP in 2010, thanks to the projected budget deficits of 2009-2010.

Inflation had ramped up to 3.6 per cent in 2008, but has dropped back with the economic collapse and is expected to be 0.4 per cent in 2009 and 0.8 per cent in 2010. It had the 58th lowest inflation rate in the world at end 2008.

The 3-month Treasury rate has similarly dropped, from 5.5 per cent in 2008 to an expected 1.3 per cent in 2009 and 2010.

The unemployment rate had reached 6.3 per cent in the UK by the end of 2008 according to the Office of National Statistics, reaching close to 2 million unemployed. This figure is likely to grow to the 2.5 million – 3 million figures, or 8-10 per cent.

The UK has the third highest current account deficit in the world of US$186 billion. It has a large trade deficit in manufacturing and has become a net importer of energy and North Sea extraction declines. It runs $468.7 billion of exports (9th in the world export rankings) and $654.7 billion of imports (6th in the world).

http://www.economywatch.com/world_economy/united-kingdom/



It was the 2nd largest recipient of foreign direct investment (FDI) in 2007 (although the figure has dropped since), and one of the most competitive in Europe for business and tax.

UK GDP Data The UK economy is the 5th largest in the world and 2nd largest in Europe with GDP of US$2.279 trillion (6th largest by PPP GDP).

GDP growth was 1.1 per cent in 2008 but it is expected to contract in coming years, with GDP growth forecasts of -3.2 per cent in 2009 and -1.1 per cent in 2010.

The UK has a population of 61m and a GDP per capita is US$37.4k, which makes it the 30th richest country in the world, above the European Union average of US$33.8k.

UK GDP by industrial sector:

Services Sector - 76.2 per cent of UK GDP Industry & Manufacturing - 22.8 per cent of UK GDP Agriculture - 0.9 per cent of UK GDP

UK Economic History

The UK was once the largest economy in the world. At its peak during the nineteenth century it ran the British Empire - and one quarter of the world. Its global mercantile system transported people, resources and capital, generating vast profits for the Empire.

Since the end of World War II the UK has been weakened by the costs of war, the end of the Empire and the Republic of Ireland leaving the United Kingdom.

In recent times, there have been two periods of strong economic performance. The first resulted from the Prime Ministership of Margaret Thatcher, who famously broke the unions and ushered in free market reforms that helped the UK to shed its ‘Sick Man of Europe’ mantle.

The second came about when the ‘New Labour’ government came to power in 1997, with Gordon Brown serving as both Chancellor of the Exchequer Gordon Brown and later Prime Minister, inheriting and expanding a period of continuous economic growth from 1992 to 2007.

UK Economy 2001-2007 The UK experienced a double bubble in both housing and the stock markets from 2001 - 2007.

Credit was cheap and easy, regulation lax and rules broken. Fuelled by mortgages of up to 125 per cent, house prices tripled in some areas during that period and the London Stock Exchange (LSE) reached record highs.





Home prices peaked in the third quarter of 2007 and the long decline set in. Unable to get wholesale funding UK bank Northern Rock was forced to turn to the Bank of England as lender of last resort in September 2007. This led to the first run on a British bank in generations, and forced the government eventually to nationalise the bank.

UK Economy 2008 Northern Rock did not mark the end of the British government’s involvement in the financial sector.

It was forced to nationalise Bradford & Bingley, help Alliance & Leicester and HBOS get bought, and provide capital, funding and underwriting worth more than 400 billion GBP to both over-leveraged giants like RBS and Lloyds TSB, and relatively stronger groups like Barclays, HSBC and Standard Chartered.

By Q2 2008 the UK was officially in recession and Sterling had dropped more than 30 per cent against the other main currencies.

With consumer confidence dropping and unemployment rising, the auto and retail sector were the next victims of recession. Household names in the High St including Woolworths, Zavvi (the former Virgin Megastores), MFI, Adams and Waterfords Wedgewood went into receivership by Christmas 2008.

UK Economy 2009 The British economy in 2009 was declining at an even quicker rate than originally suspected.

All sectors of the UK economy seem to be struggling, with consumer confidence, the housing market, employment and manufacturing either at the lowest point, or dropping faster than ever previously recorded.

Seeking to overcome blame for the recession and the fall out from his previous statements that he had tamed the ‘Boom and Bust’ cycle, Prime Minster Gordon Brown announced a major economic stimulus package. It will add to already high debt levels above 40 per cent of GDP, leading to speculation that Britain’s sovereign debt ratings would be downgraded and to further slides int eh value of sterling.

By the end of 2009, the UK economy is expected to have contracted 3.2 per cent (although some economists are revising that figure further downwards), with UK public debt rising to a staggering 70 per cent.

UK Economy 2010 Forecast Forecasting in the midst of such economic uncertainty and financial upheaval is, to put it mildly, a challenge.

The consensus for 2010 has now shifted to flat to negative growth. Forecasts range from 0 per cent to -5 per cent growth, with the median in the -1 to -2 per cent range, although most economists state that major downside risks remain.




The Bank of England Interest Rate, Inflation and the three month Treasury rate are expected to stay low at under 1 per cent, under 1 per cent and 1.3 per cent respectively.

The budget balance is forecast to grow dangerously to -13 per cent of GDP, which would take UK national public debt above 70 per cent of GDP.

UK Monetary and Fiscal Policy As of Q1 2009, the Bank of England has already cut Interest Rates to a historic low of 1.0 per cent, with a drop to 0.5 per cent or even 0 likely.

Further measures are probably needed, and this will include quantative easing, in other words printing more money.

During Gordon Brown’s stint as Chancellor, the Labour Party officially adopted the Golden Rule and the Sustainable Investment Rule in fiscal policy, which state that deficit over an economic cycle should only be used for future investment, and only up to a national debt of 40 per cent of GDP.

By the end of 2008 estimated public debt had already risen to 42 per cent, and could rise to 70 per cent of GDP by 2010, meaning that the rules have gone out of the window as fighting the recession takes priority. Keynesian economics says this is the right thing to do, but it leaves the British government finances dangerously over leveraged - and over leverage was, after all, what got us into this mess in the first place.

UK Real Estate, UK Property Market The UK real estate or property market has been growing for most of the years since 1992. Between 2000 and 2007 alone, some areas saw median prices trebling in value. Since the third quarter of 2007, prices have fallen every month, reaching record levels of price drops and record lows in terms of new sales.

Speculators were a big part of the growth of that market, with Buy-To-Let buyers making up as much as 50 per cent of house purchases in London before the crash. This effectively priced new home buyers out of the market.

Although prices have now dropped back to affordable levels, fears of further falls, rising unemployment and reluctance among beleaguered banks to lend continue to restrict the market.

UK Tax The UK taxation system involves taxes applied by both the central government and local government. Central government collects tax through Her Majesties Revenue and Customs (HM Revenue & Customs) department, in the form of income tax, national insurance, VAT (value added tax), corporation tax and fuel duty.

Local government receives grants from central government, and additionally collects revenue from business rates, council tax and fees such as on-street parking.








Source: http://www.economywatch.com/world_economy/united-kingdom/


15. Appendix 4: EU, USA & Japan key statistics cont…

EU25 EU15 Euro-Zone US Japan

Area 1 3,893 1 3,154 1 2,456 1 9,631 5 378 3 (2003 thousands, km sq) Population 1

(2003 millions)

454.56 1 380.36 1 306.70 1 293.03 5 127.62 3

Density 1 116.8 120.6 124.9 30.4 5 337.6 3 (2003 km sq)

Unemployment Rate 1

(2003

standardized) 2002 8.9% 1 7.7% 1 8.4% 1 5.8% 4 5.4%

2003 9.1% 1 8.1% 1 8.9% 1 6.0% 4 5.3% GDP 1 11,017 1 10,522 1 8,209 1 11,000 6 4,301 8 (2003, current prices,

USD billions)

GDP increase, 2002-03 1 0.9% 1 0.8% 1 0.5% 1 3.1% 6 2.7% 8 GDP per Capita 1 24,027 1 27,511 1 26,595 1 37,756 2 33,720 2 (2003, in

PPS/inhabitant)

Inflation Rate 1 2.0% 2 2.0% 2 2.1% 2 1.6% 4 -0.2% 2 (Annual 2003)

Total Imports 1 1,047 1* 1,570 2 2,848 2 1,517 7 477 2 (2003 USD billions) Total Exports 1 1,250 1* 1,633 2 3,025 2 1,021 7 597 2 (2003 USD billions)

World Import Share 1 14.0% 2 22.4% 2 40.6% 2 22.9% 2 6.8% 2 World Export Share 1 13.1% 2 23.3% 2 43.1% 2 13.8% 2 8.5% 2

EU-25: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France,

Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,

Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United Kingdom.

The 10 additional countries joined the European Union on May 1st 2004.

EU-15: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,

Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom.

Euro-Zone: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy,

Luxembourg, Netherlands, Portugal, Spain.

Sources:

1. EUROSTAT (European Union Statistical Office). Free Dat:

http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/. 2. IMF (International Monetary Fund):

http://www.imf.org/external/index.htm 3. World Bank: http://www.worldbank.org/


16. Appendix 5: References

UK Government contacts UKTI, FCO

http://www.ukti.gov.uk/home.html?guid=none

UK Inward investment report 2010

http://www.ukti.gov.uk/investintheuk/investintheukhome/news/114034.html

Business Link – www.businesslink.gov.uk

Trade associations:

CBI – www.cbi.org.uk

IoD – www.iod.com

USA Embassy in the UK – www.usembassy.org.uk

http://www.ukti.gov.uk/home.html?guid=none

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