Creative Britain, Creative Europe

Callum Lee

Two of contemporary commentators’ more popular mantras are that Britain’s economic future is in our knowledge economy sectors such as the creative industries, and that it is in emerging markets, such as China, where the demand for these lie. There are few things that today’s politicians like doing more than being photographed in Mumbai or Beijing, leading media and technology trade delegations and urging British businesses to seize the commercial opportunities. But many of the creative businesses themselves will tell you another story. For those that have tried to work in the BRICs, it has been more a case of frustration and costs than opportunity and profits, with tales of IP theft, negotiations which last forever and go nowhere, high costs and small fees, and insurmountable differences in business practice.

It isn’t just that emerging markets are difficult to do business in.  They’re also not very big. After all, when it comes to the creative industries, even the likes of China are still lightweights. The UK’s total exports of creative goods to China were $158 million dollars in 2011 – just 2% of what we export to the rest of Europe. Even if we achieved an unrealistic growth rate of 10% per year, it would take until 2070 for exports to China to overtake the current figures for the EU. For a British government looking for ‘export-led growth’ and wanting to add $100 million to our overseas creative earnings, they could either try to increase exports to China by 63%… or our exports to Europe by 1%. It’s clear which is the more attainable goal. After all, in contrast to China, Europe has strong protection for Intellectual Property, contracts that can be enforced, a shared business culture, and is cheap and easy to get to.

But which gets the most attention from the UK government? DCMS’s blog reports on trade missions to China, a UK-China summit in Stratford-Upon-Avon and a £100 million marketing campaign. Mentions of Europe, in as much as they feature at all, include a blog on whether the European Union is a “Help, or hindrance?” Our creative businesses are being ill-served in more ways than this, for the European Union is not only our largest market, it is also one of the few credible organisations shaping international policy frameworks for the sector. Intellectual Property Rights are taken seriously and are often surprisingly progressive, while the European Commission’s Open Data initiatives demonstrate a genuine commitment to culture, technology and business growth.

For creative businesses, these are more than just abstract policy debates – they are critical to the future of these industries. What’s more, through the European Commission there are major support and innovation funds that can help businesses to benefit in these fast-changing sectors. The recently launched Horizon 2020 innovation funding is a major opportunity for the UK’s creative industries and historically we have done well at securing these funds. By reshaping them to play to our strengths, such as in creative content, we could do even better.

Of course, the EU is far from perfect. Agriculture expenditure may have come down from being more than the 70% it was in the 1980s to make up 30% of current EC expenditure, but this is still too high and a perverse reflection of Europe’s economic profile. Similarly, the bureaucracy associated with funding and policy has been significantly streamlined in recent years, but still remains daunting to the uninitiated. Yet none of this should hold back the UK’s business and political leaders, and with the launch last year of Creative Europe, the European Commission has negotiated a significant budget increase for creative sector support.

Europe might lack the glamour of the BRICs, but it remains our biggest market opportunity and any forthcoming government serious about growing the creative industries should make it a priority. The following would all help:

  • Promote Europe as the major market opportunity for creative industries – producing focused trade missions targeting markets within the Union and outside. This should particularly include accession states such as Poland that are growing rapidly and have a strong demand for UK cultural products.
  • Install a creative champion for the UK in Brussels. This will help fill the gaps in coverage of the UKTI’s Prime Ministerial Trade Envoys, which seem to cover everywhere but Europe. Their job will be to promote the UK creative industries and shape the EC innovation funds and regulations that support them.
  • We should instigate a Churchill Memorial Foundation-style travelling fellowship grant to help UK policymakers get the most from the latest European thinking, and inform the debates that will shape the long-term future of the sector.

Callum Lee is Deputy Director of the European Creative Business Network, based in Rotterdam
@callumlee

 

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10 thoughts on “Creative Britain, Creative Europe

  1. This contribution from Callum is welcome and important. It sheds light on under-discussed topics, offers a new perspective and will, I hope, help generate a more informed discussion about Europe and what in Brussels are called the ‘CCIs’.

    Two brief comments. First, although things are improving in some parts of the Commission, in the fairly recent past the general quality of policy and business analysis in the EU as it relates to the ‘creative economy’, has been very poor. The 2010 Green Paper on CCIs was embarrassingly bad: aspirationally splendid and high on ambition, but more or less completely ignorant of all relevant business economics.

    Secondly, the much trumpeted new Creative Europe programme is two thirds good to excellent (the rolled over strands on media and culture) and one third (the old chestnut of ‘access to finance’) fundamentally misconceived – for the same reason as observed above. There was no meaningful consultation with anyone in the UK and one can search in vain for any insightful analysis of the investment context anywhere in its gestation. (Did UKREP have a view?).

    If Callum has helped with this contribution to usher in a new era of serious and informed debate about the European creative economy, I for one would cheer to the rafters.

    PS Has anyone tried to talk to the European Investment Fund? Has anyone ever got a reply?

  2. Although I agree with Martin’s comments, my view is that these European issues are debated much more intensively and openly in other European nations. If we want to influence the quality of their analysis or the funding programmes they have, we need to be in there and showing a real, sustained willingness to learn from and work with our European partners. It takes as long to get from London to Brussels as it does to Manchester, but our government seems to view it as being on another planet.

  3. Luka is, of course, broadly correct: the problem is that we (the UK) are semi-detached. However my experience of attempting repeatedly to engage with Brussels since 2008 has been discouraging, with only a couple of isolated exceptions. My most recent input (in a speech delivered to the Westminster Media Forum) has been to call for some serious flow of funds analysis of the European creative economy – or at least parts of it – along the lines conducted by Analysys Mason in 2008-09 for the old BERR/BIS. That would give us some purchase on the respective roles of subsidy, consumer payments and advertising in funding creative work in the audio-visual space and elsewhere, and thus facilitate a debate which has some commercial resonance.

  4. Thanks for this thought-provoking piece, Callum – it’s a useful corrective to much conventional wisdom on this subject. My colleagues and I have recently been researching this area, so I thought I would add a few further observations.

    First, the patterns of UK creative exports are complicated. Britain’s relative share of each country’s creative imports varies considerably between European countries, for instance, suggesting national factors still matter. Our initial research also suggests that Britain’s relative share is higher in some Asian countries (even though their markets may be smaller overall) than it is in many European ones. Better data is needed to understand and take advantage of the opportunities that exist.

    Second, given that the Government’s resources are not limitless, it may be perfectly reasonable to concentrate efforts on those countries with potential but where the trading environment is difficult. Factors such as weak IP frameworks or import restrictions are more likely to be changed by government-to-government negotiations than by the actions of individual companies. In Europe, which as you say, “has strong protection for Intellectual Property, contracts that can be enforced, a shared business culture, and is cheap and easy to get to” government efforts are likely to have more marginal effects, because there is less that needs fixing. Some of the emerging economies are also more status-conscious than Western ones are, implying ministerial visits and other high-level contacts are likely to open more doors.

    The third point is that only a minority of British creative firms export at all. (One frequently-heard estimate is that only 20% do.) Whatever the reasons for this are, changing that mindset is perhaps the biggest obstacle to increasing our exports, and is one that will have to be addressed primarily in the UK rather than in Brussels or Beijing.

  5. Callum writes a very persuasive argument here for a rebalancing of our priorities in relation to trade with China and Europe. Clearly there is an imbalance towards China and one which appears positively irrational given the figures he shows, but is it necessarily an either/or question?

    The long term trend of Chinese economic growth and indeed the demand within that economy for creative services requires that the UK engages but his analysis suggests that the approach needs recalibration, perhaps toward a a model which might generate more immediate dividends. We might give greater emphasis to inward investment and on boarding of Chinese companies in the UK as a method towards reaching greater export growth. By assisting Chinese business to internationalise we might overcome the immediate cultural hurdles that he highlights so well of doing business in China. Establishing joint-ventures with Chinese business in the UK as a platform to Europe and the world would secure immediate economic benefit as well as long-term trade relations. It would answer a tangible demand for creative services from Chinese businesses – one which perhaps plays to the glamour of our own sectoral strengths – as well as build an international brand for Britain’s creative economy as the go-to place for incubating higher-value added services. 

    There is no doubt that resources could be more effectively deployed in developing trade relations within Europe and if it is a question of scarce resources to have to focus trade mission budgets on those markets which will deliver greater return the so be it, but if it is a priority to build a stronger export-led economy and stimulate private sector led growth then more resources will be required to make in-roads into multiple markets. We should least of all overlook the public diplomacy and soft power benefits that trade missions of this kind can generate for brand Britain with future economic superpowers such as China, and there is no doubt that the creative economy has the strength of offer to lead in this area in China as well as other BRIC markets. Importantly stronger links to Europe and pooled resources might be the answer, with the right partnership with Europe we might make greater in-roads into these markets rather than tripping over each other in Beijing and Shanghai.

  6. The only “consultation” I can recall over the Creative Europe financing mechanism centred around the House of Lords committee which looked at the EC’s proposals. Initially the Treasury was against the proposal (partly they thought it would increase the EU overall budget, a Tory redline and then that there were other funding mechanism in the EC). DCMS seemed neutral to the whole CE package and Vaizey was neither pro nor anti.. just following orders on “no overall increase in the EU budget”. from what I can recall there was no-one as witness from the creative industries at the committee hearings. The film industry was far more effective in lobbying, as they were at the recent CE launch event at the British Library organised by ACE and the British Council who will share the new UK Creative Europe desk.
    I’m not sure there is a larger more detailed debate in other EU countries. What is clear however is that British are less well represented in the many European cultural networks and conferences than other member states. Not just the government. Brussels is only 2 hours from London as pointed out but the lack of an industry lobbying group for the UK in Brussels I suspect is a weakness. It certainly can’t rely on UKREP who would only get involved when it is too late for influence. Not mentioning names but Phillipe Kern of KEA picks up far more business and consultancy…and influence I suspect.
    I think Callum is right to point out the importance on Europe!

  7. Thanks Callum,

    A really good, thought-provoking piece.

    It left me thinking that:

    1. Politicians/entrepreneurs travel to India/China not just for exports, but also to encourage inward investment. Factor that into the benefit to the UK’s creative economy and there is a different story.

    2. They also go because they know that cultural/creative diplomacy unlocks other forms of trade and political influence.

    3. The lack of a reference to the USA seemed strange. Is trade to and investment from Europe bigger than those with our cousins over the water?

    • Great points! Here are some responses.

      1. On investment, I suspect my point stands. I don’t have figures for creative industries, but there is data on general investment. Here is one comparison: China is investing in 70 projects in the UK with the promise of 1016 new jobs; boring old bureaucratic and troubled France… is investing in 93 projects promising 5243 new jobs – five times as many. The total figures for Europe are obviously significantly higher (UKTI Inward Investment Report 2012/13).

      2. On soft power – Europe is the most effective voice we have in these markets. China may not pick up the phone to Cameron, but it does care about Europe. If we want the Chinese to adapt and strengthen their IP laws for instance, then we need to do it through the EU rather than unilaterally.

      3. And on the missing USA… The stats below show that although creative goods exports are lower, per capita they are higher.

      UK exports of creative goods in US$ Millions (with per million pop in brackets)
      …to china – 158 (0.1)
      …to france – 1186 (18.0)
      …to USA – 3844 (12.2)
      …to europe – 6962 (10.4)

      This data is from the UNCTAD trade stats (2011) as are almost all the figures on the original blog post.

  8. Cheers Callum,

    The insight offers up a pragmatic sense of perspective amid all the frenzied, and according to your sources, somewhat blinkered and rose-tinted pro-China rhetoric at present. As you rightly say, there are certain highly nuanced historical connectivities between UK creative/cultural exports and the appetites of the wider EU – increasing exports is more a question of exploiting existing markets rather than developing new ones – this should, you’d think, mitigate risk and be an easier sell policy and investment wise.

    That’s not to suggest of course that opportunity doesn’t present itself in China – the capacity for innovation in the creative and cultural industries, and therefore the longevity and growth potential of certain sectors, is dependent in part upon as yet undiscovered market need. China is therefore a huge, growing, as you say, largely untapped audience, where the potential for new forms to emerge and take hold is, potentially, significant.

    If the EU is our ‘bread and butter’ export market, then China is dangling a glistening, if somewhat elusive, carrot.

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