EXCLUSIVE: BREXIT HURTING ASIAN BUSINESS


Britain's Prime Minister Boris Johnson scans an item during a visit to Bestway Wholesale on September 30, 2019 in Manchester, United Kingdom.  (Photo by Henry Nicholls - WPA Pool / Getty Images)
Britain's Prime Minister Boris Johnson scans an item during a visit to Bestway Wholesale on September 30, 2019 in Manchester, United Kingdom. (Photo by Henry Nicholls - WPA Pool / Getty Images)

Revealed: Entrepreneurs say EU bureaucracy a ‘nightmare’

By: Barnie Choudhury

SOUTH ASIAN entrepreneurs have revealed how European Union ‘red tape’ is causing a ‘nightmare’ for their businesses.

They have told Eastern Eye how projects are being delayed because of uncertainty over what paperwork is needed.

“We didn’t have clarity on forms until the very end, although we were told which forms existed, but we were not sure whether we need to do it, or don’t need to do it,” said Bharat Shah from Sigma, an independent pharmaceutical company.

“But it’s going to be a much slower process. At the moment, it is a little bit of a nightmare.

“We’ve taken the easy route by selecting some care some carriers into Northern Ireland, because the only export we can do now is Northern Ireland, because it’s accepted within the UK. But our carriers are going to hold our hand. They know the paperwork, but it’s going to cost us money, but that’s how it is.”

It is a similar story in retail.

Bestway Wholesale, a company established in 1976, agreed that the bureaucracy was confusing.

“We have found some difficulty in is exporting to the EU,” said its managing director, Dawood Pervez. “We have been told by some customers, and a variety of different markets, a variety of different requirements.

“If you ask our authorities, they’re unaware of what the requirements would be of all those different markets. So, there is a real danger, that for a period of time, we are not very competitive in terms of exports, whereas it’s easy for the EU countries to target the UK, do the paperwork right for one country and continue their exports.”

Delays

Surinder Arora, the billionaire who runs the Arora Group, which specialises in hotels near airports, said although he expected things to get better, he was facing delays.

“We’ve got a couple of hotels in Gatwick, that are under refurbishment, and I think this is where we are finding that getting the materials is taking longer,” he said.

“So, for example, some of your bathroom tiles, or other fittings may be coming in from Italy or Spain or Portugal, and they’re taking a lot longer, and we just have to work through it.

But it is not just bureaucracy slowing things down, said the hotelier.

“A lot of the businesses, a lot of the haulage companies or other companies, that one does business with, they don’t know themselves, the systems that control the paperwork. What do I need to take something over to France, what’s the procedure?”

Confusion

Business leaders have also painted a picture of government confusion in the lead up to Brexit.

The government relied too heavily on big business to the detriment of small and medium sized enterprises (SME), they told Eastern Eye.

“It [the government] was bombarding people with so much information, not timely, but all speculative,” said Shah.

“We were prepared for a no-deal Brexit, in that sense a £40 million, £50 million turnover gone. There would be redundancies, there would be closure of some of our businesses.

“We lobbied a lot of people in the parliament and a lot of other pharmaceutical bodies on intellectual property. Honestly, it was a brick wall, we hardly got any feedback.”

Bestway Wholesale “has grown to become the UK’s largest independent food and drink wholesaler”, according to its website.

It did not believe the government would have been “crazy enough” to leave the EU without a deal or so called “hard Brexit”.

But it took a lot of “faith and steadfastness”, said Pervez.

“It was obviously left to the very last minute, clearly not ideal for business planning, clearly not ideal for efficient management of a business,” he said.

“Clearly not really a way that anyone wants to manage or run their business, which is a bit
blind faith, with a wish and a hope and a prayer. But that’s really what it boiled down to in the end.”

Even now some south Asian businesses believe that they are able to continue trading with Europe thanks to their trade bodies, rather than the support of government.

The CBI represents 190,000 businesses, which employs seven million people, one-third of Britain’s private sector workforce.

Its president, founder and chair of Cobra Beer, Lord (Karan) Bilimoria, said the CBI predicted problems after the UK finally left the EU on 31 December 2020.

He told Eastern Eye that the government was listening to SMEs through the CBI but agreed they needed more help.

“You’ve got a 20 million pounds SME Brexit business fund,” said the peer. “That’s welcome, but it’s nowhere near enough for all businesses to be able to benefit from. So, SMEs do deserve support.”

Parallel imports

A big challenge facing pharmaceuticals post-Brexit is “parallel imports”. This is where companies can import, often cheaper, generic medicines to the UK, relabel them and resell them at a profit.

“Parallel importation is very, very critical for the UK, pharmacy industry,” said Sam Patel, executive director of Day Lewis, one of the largest independent pharmacy chains in the UK and Europe.

“UK pharmacies up and down the country rely on the ability for the supply chain to procure medicines directly from Europe under licence for repackaging into UK packs.

“Fortunately, the industry associations representing parallel importers were alert to the risk, and they lobbied hard and successfully to ensure that at the outset.”

He told Eastern Eye that the supply chain had been very resilient because “manufacturers have had to take leaps of faith, building up stockpiles to ensure that there’s continuity of supply from Europe”.

And he had this warning for government.

“What’s really critical is that the UK government doesn’t backtrack or change the guidance particularly around how intellectual property and trademarks are legislated to ensure that parallel importation could continue since our departure from the EU.

“Because in the absence of the ability for the pharmacy industry to bring in products from Europe, you may see shortages in the market, and that could have serious health consequences for our patients.”

Brexit negotiations

Some south Asian run companies Eastern Eye spoke to were critical of the government’s handling of Brexit deal negotiations.

Bharat Shah, co-founder of Sigma, is concerned there is no deal for parallel exports.

“Europe does not recognise the UK patents, so we would be infringing the trademark in Europe,” he said.

“Our business of parallel export was roughly about £2 million a month. That is very little compared to a lot of other operators.

“There are no figures, but we in our industry accept that it is at around £600 to £700 million a year, quite a lot of people involved in that business.

“So, there will be repercussions if those businesses are not going to operate with people being made redundant.”

Shah said that his company set up a Brexit committee to plan for leaving the EU.

But he felt his firm was often in the dark about what would change once Britain exited, and he gives the government four out of 10 when it came to communicating its strategy.

“The regulators have been very clear and very concise on what is required,” he said. “But as far as the Department of Trade are concerned, they have treated medicines in the same way as other commodities.

“The Department of Health have been sounding out shortages and panic into what would happen if there was a hard Brexit. I think they have been not giving very clear messages. They could have done it better. Most people I’ve met have been confused.”

Bigger voice needed

For some south Asian firms, the lack of government engagement with SMEs meant that the media concentrated on the big business, leaving them with less of a voice.

“It is concerning that when we’re looking at the press analysis, and the press pressure on government and policymakers that the narrative is very much at a very high level,” said Patel.

“So, we’ve lots of discussion around, for example, for the car industry. Now clearly, the car industry employs lots of people here in the UK, but so do hundreds and thousands of other industries. It’s been difficult for pharmacy to be heard.

“Pharmacy is quite technical, it’s a regulated industry to healthcare industry, and nuances about how Brexit could impact us haven’t really gone into the detail.”

It is not just in pharmacy.

Bestway Wholesale has a UK turnover of £2.5 billion.

It has 65 Bestway and Batleys depots across Britain, and it supplies more than 70,000 independent retailers and 40,000 catering and foodservice outlets.

Even so, it could not advise the government on Brexit or the current pandemic challenges.

“Only the largest businesses, with the largest corporate affairs teams, engage adequately with government,” said Pervez. “I also feel government tends to engage with large businesses in reverse.”

“They [the government] get the response from those businesses, and they get the depth of response thereafter, which therefore means a lot of information is passed between the larger businesses and government, and they might be more aware of what’s going on.

“They [large business] might also therefore, provide feedback and therefore sculpt the response in a way that enables them to benefit better. The communications with our sector and our channel, in general, is not very good.”

South Asian contribution

Pervez is backed up in observations by British-Indian hotelier and construction tycoon, Surinder Arora, whose company also owns land near Heathrow, Gatwick and Stansted.

“The lack of communication, and lack of certainty and direction is really where we paid the price,” said Arora when asked about the way the government handled Brexit.

“I’m not saying give us any favouritism. But they shouldn’t also forget about us as well, and I think enough hasn’t been done. If you look at the effort [of] the Asian businesses, and what they also add to the GDP [gross domestic product], what they also bring a from an employment point of view, all those are huge pluses.”

No-one knows the exact amount that south Asian businesses contribute to the UK economy.

In 2018, the Federation of Small Businesses put the figure for minority companies at £25 billion.

This contrasted sharply with the Manchester-based Institute of Asian Professionals in 2005 declaring that Asian businesses accounted for £105 billion or 10 per cent of our country’s economy.

But the latest government small business survey suggests that five percent of small medium enterprises are led by ethnic minorities.

The pandemic has also made a difference with businesses counting the cost of a series of lock downs, which began a year ago this week.

“In the olden days, there always used to be the joke about the corner shop being open 24 hours and seven days a week,” said Arora.

“Our guys and gals are hardworking, and it’s not just our guys. I do see that, now the Europeans, the African businesses, people are hardworking, especially now with the virus, we’re having to work even harder.

“But just to get more presence out there more, from a Brexit point of view and vaccine point of view, we all need to club together.”

Government messaging

Dawood Pervez, managing director of Bestway Wholesale, was in the same year at Eton as business secretary, Kwasi Kwarteng.

He has this advice for his old school friend.

“Government needs to find a way to engage with private businesses, and to engage with small and medium sized enterprises. You’ve seen how important they are to the UK. And what you’re also seeing is a pretty bad state of affairs on high streets.

“Hopefully, you will want to, as a government, foster entrepreneurship, and foster entrepreneurship in the high streets. The best way to do that is to engage with specialists in that sector, not necessarily to go and talk to Tesco.”

Lord Bilimoria said SMEs did have and continue to have a seat at the top table thanks to the CBI.

“We have an SME council, and our new economic vision and we’re about to release in the coming months on Britain’s economic vision for the next decade, the 2030 vision,” he said. “We have consulted throughout including with entrepreneurs and SMEs in coming up with ambition.”

He believed that the key to success would be the government continuing to listen to his association.

“We really worked hard with the government and said, please listen to us, let there not be a cliff edge or it will stifle the recovery. And now the job retention scheme is going all the way up to September.

“So, the government has listened to us, and when it’s listened to us in collaboration with business, it has really worked, and the pandemic has been a great example of that.”

The Cabinet Office told Eastern Eye that it knew some businesses were facing challenges.

A government spokesperson said, “We are operating export helplines, running webinars with experts and offering businesses support via our network of 300 international trade advisers.

“South Asian businesses can also benefit from our £20 million SME Brexit Support Fund to help small businesses adjust to new trade rules with the EU.

“We have also announced that full import border checks will be delayed until 1 January 2022, to avoid any unnecessary risk to the UK’s economy as we recover
from the pandemic.”

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