While corporate UK was intensely opposed to parting the European Union, their strategies tell a marginally different story. In a nutshell, UK firms follow the general European style in diversification. Their method to internationalisation is very different. In contrast to their European counterparts, they look for markets mainly outside of Europe. Noticeably, they are not as impressed by the prospects created within Europe by the twin policies of market liberalization and harmonisation, which are planned to expand the global competitiveness of European companies.
The two defence contractors Thales (French) and BAE Systems (British) State-owned Thales had an explicit European growth approach dating back to the 1980’s. it was born when its predecessor Thomson-CSF managed the defence electronics activities of Philips and acquired the UK’s Racal Electronics. Between 1993-2007, foreign sales in Europe jumped from 27% to 57%, while foreign sales outside Europe dropped from 39% to 17%.
BAE Systems, at the start, seemed to go down a similar path. The British Aerospace and Germany’s DASA in 1995, had plans to form a solid European champion to counter the power of U.S. defence contractors. However, the British company chose in 1999 to merge with UK’s Marconi Electronic Systems. Increase in Europe was not rejected per se, but prospects in the United States were simply too appealing. By 2004, further European acquisitions or joint ventures were written off altogether. Between 1993 and 2007, sales outside Europe boosted from 38 to 66% while those in Europe declined from 28 to 12%.
Between the early 1990s and the instant aftermath of the global financial crisis, British intra-European sales swayed around 7 to 8% of total sales. German companies doubled their intra-European sales from about 10 to 20%. For companies from other European countries, the increase of intra-European sales was not quite so intense, but even Spanish and Italian companies were above 15%, proportionally selling double as much in Europe than British firms.
Rather than bringing British companies nearer to continental Europe, European integration seems to have pushed them to look elsewhere. This meant that by 2010 the sales of British firms outside of Europe were alike to those of their German and French counterparts – at around 24%– this involved some catching up from a comparatively low base of 13%. For the 100 largest companies, the pattern was even more pronounced. Sales in Europe decreased from 21 to 12% of total sales, while they raised from 29 to 55% outside Europe.
The uniqueness of British internationalisation is, Brexit foretold. History, should not be miscalculated here. While a British company tycoon will think of Rudyard Kipling’s India when a deal in the subcontinent is suggested, pictures of Stalin’s communist regime will cloud their thinking over a similar proposal stemming from Hungary.
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