Sovereign State

How common a market? Victor Selwyn

After the uncertainties of the past thirty years, one can hardly be surprised if a CBI poll among British industry shows a vote for the status quo, a vote to stay in the EEC. Such a vote may not necessarily stem from logic. It certainly does not accord with experience. It reflects more an emotional cry for security. Industry and business have suffered from policy switches, from stop-go-stops, from interest rate escalations to defend sterling — and the industrialist challenge on Europe becomes very much like the target for the TV commercials put out by the insurance industry .. ,"Get the strength of the insurance company around you!" In his case it is . . . "Be strong in the larger unit of the EEC, and in line with the modern myth, the bigger the better, the businessman — and man in the street — feels more secure to feel part of two hundred million than fifty million." Yet, of all people, it is the industrialists and businessmen who can throw most light on the nature and workings of the Common Market and if the CBI wished to conduct a meaningful study, they should have probed beyond the instant answer and established a pattern of experiences and problems, too, to serve as a more viable policy basis.

It would have proved more rewarding if Mr Ralph Bateman, president of the CBI, instead of talking of the "utter folly to turn our back on our largest single market" (my italics) would have sent an independent survey team into the companies (of all sizes) who have, developed their European organisation or begun Continental operations in the past five years — including investment trusts and fund managers, some of whom have burnt their fingers and pulled out. For many it has been a chase of the will o' the wisp. They have looked for the 'Common Market' — and not found it. For the 'Common Market' proves a classic example of the label not matching the contents. It is not a Common Market. It is ten markets, twenty markets, according to the nature of the product. It is selling to France, to West Germany — and its bander — to the Netherlands, to Belgium and its ethnic divisions the Flemish, the Walloons and Brussels — to Denmark, Italy, Luxembourg and Ireland. All separate marketing operations — and Mr Bateman need go no further than a ten-minute cab ride to ICI or Unilever to find this out. Or make phone calls to Ford, General Motors, Procter & Gamble, ITT and IBM — and any other multinational, let alone start on the home list. These companies know just a little about selling in Europe. It is their business — selling throughout the world. They can afford few illusions. Can the CBI? Or do we presume that Mr Bateman, as president, knows so little about selling in Europe? If this is so, small wonder that Britain has problems.

Small wonder, too, that Britain's representatives in chambers of commerce or commercial departments of embassies in Europe have the headaches (less these days, as experience grows and devalued cash declines) of the businessman straight off the plane from Britain, with brief case and umbrella, descending into the visitor's chair with the request, "Well, where is it?" 'It' in this context is the market of 200 million inhabitants, described in official and glossy handouts, eagerly queuing to buy his goods — to the exclusion, of course, of the known local product, or the American or Japanese or even Eastern European.

For a country so dependent on exports, it is astonishing how unprepared its business people can be, how many fail to do their homework before taking the plane to Brussels or Paris or Amsterdam. Not so the continentals who prepared the ground before moving in. Why be surprised if the continental EEC countries sell over £2,000 million worth more to Britain than Britain sells to them?

Yet, having criticised the British for being unprepared, let us ask if we can blame them for believing what they read, especially as the same picture of one market — lucrative, expanding and for some strange reason 'wide-open' (yet dominated by the World's ablest export nation, West Germany) — has been carried in the most authoritative of media, under the by-lines of eminent economists, on radio and television, from HM Government, from the CBI and from the EEC itself. All carry one message .. .

The manufacturer must now think in terms of a 180 million people market — an EEC brochure, to persuade the British to vote for membership.

The European Community is the biggest market for our goods A Pamphlet of the European Movement.

Or the Daily Telegraph's 'Guide to the Common Market' — surely a must for the businessman — an page 62:

Probably the most important piece of preparation, however, is a fundamental change of attitude involving a regard for the whole of Western Europe as one sales area and not as a conglomeration of different countries to be approached seperately.

This is not only untrue. It is grossly irresponsible. It shows no experience whatsoever of

business in Europe. It is astonishing to hear Sir Christopher Soames's pronouncements in the same vein, speaking of one trading unit — when surely he must know after being Ambassador to France and a Commissioner in Brussels, that it is just not so.

Maybe, next time in Brussels, if instead of speaking with the Belgian Prime Minister on European Unity, he might raise instead the problems of companies, such as Ford of Europe. When they launch a new car in Belgium — the heart of the European Community — they are forced to hold one presentation for their Flanders dealers and another in the south for the Walloon — giving the Brussels dealers the option which to attend. It adds $10,000 to Ford's bill.

Or Soames could discuss the problems of the multinationals who have established factories in Flanders and now find it illegal to give orders to their staff in French. Or one can discuss the problem of a manufacturer of mattress covers in Courtrai (Flanders), who for years supplied these covers to a mattress maker in Liege (Walloon). However, the Liege VAT authorities refuse to accept the tax documents from Courtrai. The latter are in Dutch (Flemish), and by law the Courtrai company must send the carbon copy of the original to the purchaser in Liege — where needless to say, the local tax man will not accept any document that is not in French. A Dutch manufacturer jumped in, offering to supply documents in Ancient Greek, if need be, and so took over the trade. This fragmentation of markets forms the current pattern in Western Europe. Certain

Dijon dealerslabel their products from Bur

gundy — and not France. So far from the past fifteen years tending to unity, the trend in the EEC countries has been precisely the reverse — and it is the facts of inter-regional and inter-country hurdles that the British busi

nessman needs to know, when trading and setting up business in Europe — and not political pictures of a non-existent 200 million people market. Votes do not sell goods.

From the British viewpoint there are undoubted advantages in trade with Western Europe: geographical proximity, high standards of living, well organised banking, commercial and distribution systems. However, the marketing project, of selling into Europe, bristles with problems:

(i) It is not one market — but many, each to be tackled separately at considerably cost, heightened by Britain's devalued currency,

(ii) The markets are fiercely competitive, dominated by Western Germany and France. All research studies show considerable awareness of German products in particular but less than half that awareness of British products, including British beliefs in its City institutions, insurance, machine tools and manufactured products, beliefs not held by Europeans.

(iii) The capital equipment markets remain acutely nationalistic. A survey measured 94 per cent of major government contracts going to the nationals of the awarding country. This is not a problem that can be tackled by Britain Weeks or even expensive advertising. We are dealing with deeply-held emotional attitudes, beyond the reach of the ad-man.

(iv) The exporter is faced with a multiplicity of legal and commercial systems, necessitating the use of local lawyers and accountants. He is also faced with a fundamental difference in basic business attitudes, viz. the British concept of gentleman's agreements just does not work in Western Europe or in most of the world for that matter.

(v) Apart from the multiplicity of systems, there are the multiplicity of regulations. No one really knows what will happen in every circumstance. A French president put it tersely, "There are so many rules in France, that one could not possibly obey them all at the same time."

(vi) There are in each country technical regulations that impede imports, This is a world-wide problem — except for those selling to Britain. The British being gentlemen do not go in for this sort of thing. The French, loud in proclamations of unity, are the experts on technical regulations, from food labelling to retrospective truck specifications, that literally stopped Mercedes, Fiat and Volvo in their tracks. The new regulations were published on January 6, operative from five days before. One need hardly ask if the partly nationalised French truck industry knew of the regulations beforehand.

The EEC claims as one of its main aims harmonisation of regulations to overcome this problem. They have not succeeded. Sixteen were produced for the pharmaceutical market. Fifteen cannot be operated. The remaining one was so general as not to make any impact. A Swiss pharmaceutical chief described the attempted harmonisation as a 'stupid procedure', conducted by two sets of civil servants, French and German, lacking first-hand experience of production and controls in their own country let alone the other countries of the EEC.

What then has the EEC achieved since 1959? How far has industry and business been helped? A pamphlet entitled Facts, published by Britain in Europe, runs a bold headline, 'The Success Story', and underneath carries a sub-head, 'Removing barriers between countries', with copy describing goods moving freely across Western Europe, Has the author ventured further than a day-trip to Boulogne — and even then not looked too closely at the quayside?

A car trip across Western Europe passed queues of lorries, waiting a day or more, at each frontier, France into Belgium, Netherlands into Germany. Try driving even a light van with one's office records across the EEC territory, with a dispute on one's hands at each frontier — and be prepared to pay something, usually VAT on one's own property.

Every month the Commission in Brussels issues thirty metres (nearly 100 feet) of new regulations. The translation and printing costs alone total £5 million a month. British anxious tax-payers, who contribute, please note.

The EEC area abounds with legends of getting goods past the now 'non-existent' barriers of Western Europe. One British metal manufacturer, his goods not for sale but destined for a trade fair and stuck at a Dutch-Belgian frontier post, had to send an assistant with a car to the customs house loaded with six crates of champagne as the start-point of 'negotiations. The trouble stemmed from the British forwarding agent believing what he read about the free flow of goods across frontiers and not routing the , goods direct. It is experiences like this that

make many businessmen angry with official pronouncements, compliance with which would entail cash losses and time delays.

One fiction the British businessman also learns is that of a 'European' company. It is a non-starter. The EEC has not helped. It has certainly misled. It conveys the concept — as do its writers — of creating European companies to serve 200 million people, Again it is not true. The number of truly European companies can be counted on the fingers of one hand, leaving out the thumb. And this group of four giants includes Dunlop-Pirelli with its attendant problems.

What the British businessman learns is that if he establishes a company in Belgium, it is a Belgian company; if in the Netherlands, it is Dutch and so on. Wherever he bases the company it belongs to that country — and, most important, it will be regarded as such wherever he goes.

All this is not news to the multinationals or the larger corporations in Britain — all of whom have been long established in each of the EEC countries — and know the near impossibility even of one Benelux operation, let alone one EEC operation. (None have the EEC as one marketing unit.) Procter & Gamble, America's leading detergent makers, were forced to revert to separate operations in Belgium and Holland after trying one Benelux complex. A British pharmaceutical house manages this venture onlyby having an Australian director driving flat out from one country to the other twice a week. The problem is that one could hardly have a Dutchman running Brussels or a Belgian directing Amsterdam. And to show how divisions go deep in the Common Market territory, the Flemish-Walloon line in Belgium, reinforced year by year since the war by successive legislation, is the line on which the Roman legions halted over 1,600 years ago. Today, people moving out to Brussels suburbs have to ensure that the school in the commune where they buy •their house, teaches the language they want for their children. It could be French. It will more likely be Dutch.

A history book and a tribal map of a thousand years ago could prove most useful assets to the marketing man in Europe. In the absence of an external war old divisions emerge. This is the reality of Europe — and the history book and the old map may well prove more productive aids than CBI pronouncements or exhortations from EEC Commissioners! Or even exhortations from Governments in Great Britain!