When offshore isn’t cooking you’ll just burn your fingers

Business

When offshore isn’t cooking you’ll just burn your fingers

Risk is everywhere. There are no safe havens and especially not in the UK, as Famous Brands has learnt

Larry Claasen


How things have changed. When SA companies bought UK assets a few years ago, it was generally seen as a way to reduce their exposure to a “risky” local market.
Over there, people earned hard currency and had a reliable power supply. Here, they had to put up with a pernicious government and a difficult economy.
Nowadays the spectre of doom brought by the UK’s calamitous exit from the EU has all but destroyed the notion that moving there somehow de-risked the SA operation.
In fact, the record shows that in buying British businesses, local companies actually made themselves more vulnerable. Look at Famous Brands. Brexit received a lot of the blame for the poor performance of its Gourmet Burger Kitchen chain.
But maybe Famous Brands should not have bought the chain in the first place. SA executives tend to get a little starry-eyed when looking at opportunities in the UK. They see earnings in pounds being converted into rands. They see a business and social culture they are familiar with. And they assume they can easily replicate what worked here over there.
Perhaps they should rather see the danger that comes with having costs in pounds; that the familiarity they take for granted is blinding them to the hyper competitiveness associated with operating in the UK. And that no business model can just be copied and pasted into another market.
Local business leaders have to start acknowledging that risk is everywhere. There are no safe havens, and especially not in the UK.

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