Letter to the Editor

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The UK and the Euro

I noticed that you glossed over the fact that the UK is not participating in the launch of the Euro. For American business, this is a crucially important point. The UK is the largest direct investor in the US (yes, even including Japan) and a disproportionate share of commerce is done with the UK. Their lack of participation in the Euro is extremely inconvenient for web sites doing direct export to Western Europe, having to maintain the second currency.

Another important point is that European businesses will save untold billions (in Euros, of course) by avoiding exchange costs. When I lived over there, I was always exchanging currency from one country to the next and lost my personal money on exchanges because it was so difficult to keep track of the exchange receipts. Finally, you can imagine trying to fill out the expense report.

Finally, I think a more contextual approach is necessary to understand what this means. On January 1, 1993, all inter-community (European Community) customs borders were eliminated. Given the free flow now of personnel, merchandise and, now, a single currency, the barriers to consolidation and expansion for small to medium enterprises will disappear. This will bring on a new set of companies with larger scale to compete with US and other companies. I am convinced that you will see a swell of competitive pressure within the European monetary zone that will expand to other countries within the next decade.

So, what does it mean for US niche-players, (even those that don't do business or plan to do so in Europe? It means "watch out for new European competitors." Find out about them and what you need to do to beat them or they will beat you here! Most European companies are very internationally minded and already deal with the issues of internationalization that most US companies don't. They have a definite advantage. Now that they will be more free to grow to scale in their home markets the competitive threat will increase.

Paolo Byrne (pbyrne@airmail.net)

Read additional articles from Web Marketing Today, Issue 53, February 1, 1999