Michael Sheridan, one of Britain's top design experts, will be landing in China today to expand his fledgling Shanghai office. Mr Sheridan is a world leader in retail interiors. His company, Sheridan & Co, designs and makes the retail furniture that is used by luxury companies such as LVMH and Estée Lauder to sell their goods. His business is UK-based with a factory in Market Harborough, employing about 63 craftsmen, with another 30 or so people working in London and New York.
Business is going great guns. This year, Mr Sheridan will deal with more than 100 global brands, and sales will top £10m. He is expanding in Shanghai because he must be where the clients are. Companies such as Gucci and Procter & Gamble want his team on the ground designing the point-of-sales and shop displays in the stores where they sell – whether it be Beijing or China's prosperous northern cities.
It's where the action is going to be for the next few decades. Forecasts show the Chinese will over take the Americans as the world's biggest consumers of luxury goods by 2015, and that by 2020 the Chinese will be buying half of all luxury goods being produced. Clients also need all the local intelligence they can because the market is changing fast. For example, the Chinese government is cracking down on what the big overseas brands names are selling.
In an interesting twist, China's politicians are increasingly worried about the "hedonism" that is being displayed by the country's fabulously rich new entrepreneurs so they are demanding that global firms such as LVMH also sell cheaper lines. Hermès, for example, is starting a less expensive diffusion line under the Shanghai brand. There is also growing demand for Mr Sheridan's products from indigenous Chinese companies that are now moving up into the luxury market. "Made in China" is no longer the ubiquitous label found on cheap imported toys.
Indeed, China's fashion giant, Bosideng, opened its first West End store last week ahead of the Olympic rush of Chinese into London. Eve, a Chinese fashion label, is aiming to be China's Alexander McQueen, and has plans to open in the UK next year. As Mr Sheridan explains, these new Chinese labels have to say made in London and Bejiing to give them authenticity.
So it's a great time for him to be on his business trip – everyone is overdosing on the Olympics high, and the Chinese will by now have scooped up most of the gold medals so they should be in a good mood. Britain's creative reputation is on a high too – whether it be Thomas Heatherwick's magnificent burning cauldron for the opening ceremony or the efforts by the British Business Embassy to push the UK's creative industries, which contribute £100bn – around 8 per cent – to GDP, not far short of our financial services industry.
But here's the sting in the tail. To finance his new Shanghai office, Mr Sheridan went to NatWest, his bank of 30 years, to ask for a loan facility of £250,000 to ring-fence the Chinese enterprise, but hopes not to use the facility. He offered adequate personal guarantees and sought the Government's Enterprise Fund Guarantee to support the loan. You've guessed. NatWest – part of the state-backed Royal Bank of Scotland – refused the request, claiming the guarantees are not enough and the EFG does not cover overseas expansion.
His Leicestershire bank manager said he was going away on holiday, and suggested that if he wants to appeal against the decision, he should phone the NatWest business hotline.
Instead of getting mad, Mr Sheridan got even. He put in the same request to Clydesdale – owned by National Australia Bank – which has agreed the facility and offered better terms for his main business as well. So now he and his wife Julien, who is chief executive, have closed the NatWest account.
What bugs him most is that as one of the country's 4.7 million SMEs, he is doing what everyone, from Government down, tells him to do – stop being parochial and expand overseas. Remember that CBI speech from William Hague a few months ago that urged business to get out and sell?
Well, most of them have. Mr Sheridan reckons this recession has changed thinking irrevocably; every small businessman or woman he knows is trying every trick in the book to win business. Here's a sweet irony: he is also working with Quintessentially British, a new touring exhibition being organised by the concierge-to-events group to showcase the best of British design, culture, fashion and luxury brands in Brazil, Russia, India and China. Starting in Moscow next March, it is being backed with huge pomp by the Prime Minister's office, the UK Trade & Investment, the Foreign Office, the British Council and Bafta to name a few.
Mr Sheridan is helping design the exhibitions and create the pop-up shops, which will be left behind after the tour for a British Eccentrics exhibition aimed at pushing exports by British SMEs such as Jade Jagger and Jo Malone. It's great the Government is leading the charge to help SMEs expand but if the finance – particularly for exporting abroad – is not in place to support them, there's a danger that all these efforts are a busted flush.
Mr Sheridan blames the banks for putting the brakes on SME expansion, claiming they are slow and Dickensian in approach, often taking the wrong measure of risk, particularly for smaller companies such as his.
"I don't want to touch the bank's money, because we hope we can finance this out of working capital, but we do need the facility," he says. "If companies like mine find it difficult to finance expansion into countries such as China, where we know big growth is coming from, how are we going to compete as a nation?"
It's a view echoed by Sir Martin Sorrell, the chief executive of marketing agency WPP. He warned at one of the British Embassy conferences on the creative services last week that London's creative industries can't afford to be arrogant or complacent as the Chinese will soon be producing their own ad agencies, perhaps even better than ours, and won't need UK expertise.
The Olympics have again reminded us of the brilliance of British design and technology, from Brunel to Heatherwick. It's for the banks now to take a more daring approach to risk, to start learning how measure risk on trade and adventure.
If we are not careful, the Chinese will see a missed opportunity and start exporting their banks, as well as their new luxury shops, over here.Reuse content