International Politics Matters, Even To SME's
Updated: Feb 27
So often it seems that foreign policy and the current affairs of far flung nations don’t affect us domestically. That was certainly our thought when President Putin violated the recognised (by most western governments anyway) sovereignty of the Ukraine. The only slight concern obviously being that the conflict could escalate beyond the situation as of today, which remains the imposition of western sanctions and continuing obstinacy from the Russian premier.
Ask many top London estate agents though, and they will tell you that domestically this is having a profound effect on their businesses. The number of Russians registered through Christie’s International Real Estate to buy homes in the city dropped by 70 percent in the last year. The rouble has sunk 16 percent against the dollar this month even after posting an 11 percent rebound on December 17th 2014, and has lost 44% of its value since the start of 2014.
We are a Kent based SME, and we have long considered ourselves somewhat of a barometer for levels of UK economic activity with marketing spend one of the first things to go in a downturn, and then with the first sign of an upturn after the storm is weathered the marketing budget can be the first thing to return as organisations roll the dice and seek to drive the recovery themselves as confidence returns. Last year has seen us grow revenues by around 25%, and though margins remain tight organisations are at least putting themselves ‘out there’ in a search for growth driven in part by their own live event activities.
Now though might we also be a barometer, in the same way those London estate agents are, in demonstrating the changing patterns of international trade as a result of foreign affairs as we have lost one of our exhibitors at ICE totally gaming for 2015, a client who has shown us a great deal of loyalty over the last two years.
They are a Russian based organisation that has had to take the difficult decision to withdraw from the show. This can’t have been an easy decision. They had booked the space, and negotiations go on, but it is likely that there is no way to avoid the financial implications of their original commitment to book. Nevertheless, the cost of hotels (which we have booked for them in the past), foreign travel, stand build (though we have offered to do all we can to minimise cost), and all the other expense involved including other things we supply, for example accompanied transport daily between the event and central London accommodation for their team, entertaining, etc means that the decision not to exhibit looks final. Without a doubt we will feel this hole in our revenues though we continue to have a strong portfolio of clients at the show.
We also take our clients to Russian markets, having built several stands in Moscow recently, from ‘Mosbuild’, to ‘Automechanika’, and energy events such as ‘MIOGE’ and ‘KHIMIA’. We would think it unlikely that our exhibitors are going to be as enthused to explore Russian markets in the coming years given the current state of international relations.
Still in the same way as those estate agents, (and those we are talking about most certainly do not need sympathy; indeed the Oligarchs with money outside of Russia are still shopping!), we look to other markets to fill the void. In central London, buyers from the UAE, and all across the middle east continue to grow, and likewise we see the Dubai World Trade Centre for example posting a record breaking year for 2013 with 2.2 million trade delegates registered as visiting, and early indications are 2014 has been stronger. We are seeing requests to exhibit in the Middle East grow and grow, and likewise organisations from the region are increasingly looking for suppliers in Europe and the UK.
Still; never think that even the smallest international piece of news won’t affect you no matter how small your own business. Listen, think, plan and anticipate. The patterns of international trade are ever changing and it pays to be aware of international events and what they might mean for our businesses so that we can change with them.