Reading a recent interview with Baroness Jean Coussins, co-chair of the All-Party Parliamentary Group on Modern Languages, our attention was drawn to some research from 2014. This examined the impact that lack of language skills is having on Britain’s ability to export. The research was carried out by James Foreman-Peck and Yi Wang of Cardiff Business School. They were responding to a 2013 recommendation by a House of Lords Select Committee that UKTI should prioritise SME’s ability to deal with language and cultural differences.
What is the size of the problem?
Foreman-Peck and Wang stated that the conditions for worthwhile government interventions in markets to improve efficiency are; a market failure and having a cost-effective solution. In the case of UK exporters the market failure is that they can miss out on profitable opportunities due to lack in language skills. The cost effective solutions suggested include using overseas HE and FE students to undertake projects for firms that will ameliorate the lack of language skills.
They examined trade flows and responses to surveys about exporting from individual companies. The results of the analysis showed that the amount of missed opportunities due to poor language skills and inadequate information is potentially very large. Their estimate of the gross effect on the UK economy was 3.5 percent of GDP. They also showed that investment in language skills could be highly effective in attacking this problem.
The researchers identified markets in which the UK is exporting less than would be expected, using a model that includes a “language barrier effect” that does not vary between countries. The researchers developed a “gravity equation” to work out what expected trade levels should be, depending on GDP, population, distance, language and so on.
Some actual trade levels are greater than predicted by the equations. Conversely, for many countries the equations show poorer performance than expected. These “underperforming” countries include all four of the BRICs (Brazil, India, China and Russia), as well as in France, Germany and Japan.
Are UK companies even aware of their lack of language skills?
The findings also showed that many UK exporters rely on English in their overseas dealings. Some exporters contended that they had not experienced cultural difficulties; interestingly these tended to be the companies without a lack of language skills. Being reliant on using English for exporting, they “don’t know what they don’t know”, and didn’t even realise there opportunities they were missing. Businesses that have more exporting experience are more aware of cultural differences, and of cultural difficulties that may arise.
The analysis demonstrated that language difficulties are the largest single contributor to cultural problems, followed by information, relationship difficulties, and legal problems.
How to combat this lack of language skills?
UKTI already offers services designed to help UK firms gain a better understanding of the ways in which language and cultural diversity can impact on their export performance, and how they can bridge these differences more successfully. A more recent idea being tested out by the UKTI is to develop links with higher education institutes to enable suitable foreign students to undertake placements in UK businesses. The idea is to bridge the language and culture gaps that are hindering export growth.
The research showed that “winging it” when exporting, and relying on customers to speak English is losing companies and the UK economy a very large amount of money annually. Small investments in languages can lead to doors opening to opportunities that were previously unsuspected. Lack of language skills is costly – take the time to learn some of the language of your target markets, invest in translation of materials, or invest in your staff language training – the investment is small compared to the potential gains. Accutranslate and our sister company la Academia are here to help – get in touch with your concerns and we’ll be happy to help you remedy your lack of language skills.