An overview of doing business in London
A short article on the pros and cons of doing business in London, why so many are successful, and some pitfalls to avoid. Also a few tips, including proper etiquette if you plan to do business in London.
Many people are under the impression that London is a financial centre comparable to others, like New York, and Tokyo, however that comparison is not an accurate one. London’s foreign exchange market is in fact the world’s largest, larger than New York and Tokyo combined with $504 billion turnover daily. Seven hundred and twenty international banks and global securities houses are headquartered in London. The next down the list is Frankfurt with 300 to 400 of these financial institutions. Paris has 270, and New York City has 250. Of the largest 500 companies in Europe over 20% call London home. London was voted the best City for business in Europe for 15 straight years starting in the 1990’s. Let’s examine a few of the reasons why, and what makes London the Banking and Business centre for The World.
The workforce of London is generally ambitious, with a good work ethic making it an attractive option for doing business. They are also well educated thanks to world class schools in and around London. Diversity brings together many different business philosophies from many different cultures with over 300 languages and people from every part of the world living and working in London. The infrastructure of London provides efficient transportation from just about any point A to point B within Greater London. The tube, or train lines and buses, move over a million people from home to work and back again on any given day. These factors and many others give London a leg up attracting business.
The obvious perks of doing business in London such as the large number of financial and other business support institutions, an abundance of activities available, an educated workforce and a rich history make a case for London well before getting into any incentive based reasons to consider this great business city. Also consider the population of the area with over twelve million potential customers within an hour or two’s commute of you depending on what type of business you are in, and doing business in London is one of the easier business decisions you’re apt to make.
If you are going to open or move a business to London, or if you are just a beginner in the business world and live in London, there are a few unwritten rules you should know when doing business in the City. London executives are a little more formal than those in other countries. The unspoken rules followed properly can help you to fit in with your new customers, partners, buyers, or suppliers or whomever you do business with in London.
To start with, politeness and courtesy are basic elements of the business world in London, and indeed the UK overall. Communication may not mean what you think if does if you do not pay close attention. Indirectness and evasive responses are common place. You must know how to read body language, facial expressions, and be able to read between the lines for clear communication. Ask for more clarity only when it is absolutely necessary, as this is how it’s done in London. A good sense of humour is important in a London business setting. While most executives are serious people, never underestimate the need for a little levity occasionally.
Emotional out bursts of any kind are unacceptable in the London business world. Punctuality is required for business meetings. First names may be used with colleagues after a short period, but senior managers should give permission before you call them by their first name. Meetings should be structured, but not overly so. The beginning and the end of meetings allow for a little social chit-chat in an understated manner. Exchanging business cards occurs usually at the end of a first meeting, but that’s not written in stone, it can also be at the outset of a meeting. Other things that many executives from other cultures would consider minutia, are very important in the UK and therefore London business meetings. Don’t fold your arms in front of you at a meeting, it is take as a sign of disinterest. Do shake hands at initial meetings. Don’t ask anyone how much money they make, and if invited to an associate’s home socially, show up 10 to 20 minutes late ….seriously, it’s considered rude to arrive early.
The information above should not give you the idea that opening any business in the London is going to make you rich, or even be certain you’ll succeed at all. Nearly the same percentage of businesses fail in the UK as just about anywhere else. The one big disadvantage of doing business in London is the corporate tax structure. The necessary evil that pays for the infrastructure your business so desperately needs can also adversely affect your success. The taxes are offset somewhat by lower costs of financing companies in London, but the corporate tax structure must be measured globally and compared to other locations around the world that London competes with for businesses.
Today, E-commerce makes it easier to relocate businesses anywhere in the world, without physically picking up and moving everything. The past five years have seen the situation of UK corporate taxes deteriorate to where some large businesses have already moved. The Netherlands and Ireland are attractive options due to their lower corporate tax rates. London and the UK recognize that businesses will begin a mass exodus if their tax burden isn’t adjusted soon. No one expects it to happen instantly, but it needs to be implemented fairly soon for London to defend its “Best City for Business” title in the years to come.