China is an important growth market for the UK, with its worldwide food and drink imports having continued in a positive trend in July to just under £5bn, up from £4.4bn in June. With 2010 figures for UK food and drink exports to China up 28.5% on 2009 figures, manufacturers are increasingly looking at opportunities in this market.

In a joint initiative with the Food & Drink Exporters Association (FDEA) and UK Trade & Investment (UKTI), FDF’s support will ensure companies benefit from an enhanced and strongly branded UK presence at the show; a specially organised trade development visit for non-exhibiting companies to give them a taste of the market; and a meet the buyer initiative enabling companies to meet key customers from the retail and food service sectors.

Charlotte Lawson, Director of Member Services at FDF, said, “The UK manufactures many of the world’s best loved food and drink brands, and demand for our products abroad continues to grow. China, with its growing middle class, has turned from an export country to an import destination. As a growth market for the UK, China cannot be ignored.

“Working with FDEA and UKTI, FDF wants to help UK food and drink manufacturers take the Chinese market by storm by significantly enhancing the UK presence at the FHC exhibition in Shanghai. We aim to support Britain in her endeavour to double trade with China by 2015 to some 62 billion pounds, by supporting business building initiatives which enable UK food and drink manufacturers to gain access to this market.”

So, the message from the FDF seems clear – the Eastern markets are full of promise – maybe we have heard that said somewhere before? Let’s hope UK businesses can achieve something great in these troubled times.

Some would argue, however, that most consumers in the EU do not pontificate in the supermarket aisle and read the label word by word, before popping a product in the trolley or basket. Those consumers are finding it tough in these austerity times and do not really care where the food comes from or how much mono-sodium glutamate it contains. What really drives what food they buy is down to one key ingredient – price. And as we all know, with the huge increases in commodity prices (particularly the oil price) food prices in the EU have gone up a long way in the last few years. Sorry EU, but the consumer’s main concern is, and probably always will be, price – and the cheaper the better. In any event, here in the UK we are much better than some of our EU partners at providing nutritional information on labelling. As the UK’s Food and Drinks Federation (“FDF”) has pointed out in a response to the EU Food Information Proposal. Terry Jones, Director of Communications at the FDF, said:

“The UK food manufacturing sector is well ahead of other EU states on labelling, and we are pleased with the outcome of MEP’s votes on some aspects of the proposal, namely: nutrition labelling, the exemptions granted for small packs and some aspects of the broader approach on legibility – despite moves to introduce a mandatory minimum font size.”

Terry Jones went on to say:  “We are disappointed that MEPs have voted in favour of the mandatory extension of existing rules (e.g. for single ingredient products) on country of origin labelling (COOL), without considering calls from several member states, the European Commission and industry for an impact assessment to define if this would bring added value to the consumer, and the costs, feasibility and practicability of industry to implement such rules.”

So, there you have it. Mum used to know best, but now it seems our MEPs do. They govern what goes on our food labelling. Perhaps the MEPs will also vote in favour of issuing healthy eating menu cards to all EU consumers, so we all know what to cook with our “EU compliant labelled” food? I would not put it past them. As for industry, well, as the statements above indicate, it is yet more red tape and, no doubt, additional compliance costs for their businesses at a time when they can ill afford it. Still, it should keep the label manufacturers happy – or to put it another way – one man’s [labelled] meat is another man’s poison.

Ed Davey said, “ Our objective is to introduce a final Bill in the Second Session, although we will look at the opportunity for introducing the Bill earlier if parliamentary time allows. One reason for publishing the draft Bill as soon as possible is that if parliamentary time allows, we may be able to make it a first Session Bill, but that is not within my control.”

The background to the draft Bill which will set up a “supermarket ombudsman” is that the Groceries Supply Code of Practice was recommended by the Competition Commission following its market inquiry into the supply of groceries and report in April 2008. The Commission concluded that, although the exercise of buying power by grocery retailers was in general a good thing for consumers, it could raise concerns in certain circumstances. For instance, if retailers transfer excessive risks or unexpected costs to their suppliers in the hope of gaining a competitive advantage, it is likely to blunt suppliers’ incentives to invest in new capacity, products and production processes. Which in turn could be bad for consumers, and the Code of Practice is intended to remedy the problem.

The groceries supply code will apply to all companies active in the sector with an annual retail groceries turnover of £1 billion or more. Its provisions are now included in all retailers’ contracts with their grocery suppliers. It gives suppliers greater security, which should encourage them to invest in their operations. In essence, the code is about introducing clear standards and greater certainty.

The Competition Commission concluded that the code would be far more effective if it was enforced by an adjudicator. The idea is to dispel the climate of fear among suppliers, who felt they risked being black listed by the big supermarkets if they invoked the previous Code of Practice. The Commission does not have the power to establish an ombudsman. After failing to win agreement amongst the retailers to establish such a body on a voluntary basis, it asked the previous Government to act. The Coalition Government agrees that the Code of Practice needs to be independently monitored and enforced if it is to succeed.

The “supermarket ombudsman” will act as arbitrator in disputes arising under the code, and will have investigatory powers and, one assumes, powers to fine and censure retailers in the more serious cases of code abuse. We will know more when the draft Bill is published.

But who will ultimately benefit from the new Code and the appointment of an ombudsman? The consumer, the food supplier or both? Only time will tell. But one thing is for sure, the large grocery retailers in the UK will not be hiding under their duvets in fear of the new Bill. The Government will not want to risk being too onerous on them. After all, with a weak UK economy forecast for the foreseeable future, the last thing any Government will want to do is to alienate a sector which continues to increase trade and revenue even in these times of austerity. The big supermarkets provide UK plc with a lot of tax revenue, which is much needed in the Treasury coffers in the current climate. The ombudsman may be on his way, but he is unlikely to be changing too much any time soon.

Well, essentially, the BIS report says the following:

1. Broadly speaking, the report identifies that there has been a better than expected awareness of the key changes in the Act and a higher than anticipated take up of certain measures. 85% of those companies interviewed were aware of the changes under the Act.

2. Whilst there was an acknowledgement that there were costs savings and benefits from simplifying procedures for private companies on resolutions and meetings, over a third of companies interviewed disagreed that company law had been simplified. This is a rather telling statistic in itself given that simplification was one of the main objectives of the Act when the White Paper was issued a number of years back.

3. The report highlights that there is already a need to improve certain areas of the Act – in particular those provisions dealing with directors’ duties and the duty to promote the success of the company, business review and enfranchising indirect investors.

So what can directors glean from this report? Not a great deal really, and it can be argued that at a time of continuing economic uncertainty, the Government should be spending more time and resources on guiding and assisting directors through the maze of this complex piece of legislation, with a view to helping them run their companies more efficiently. No doubt directors will be thinking they would like a helping hand from the Government on the key provisions in the Act rather than have to face the prospect of having to implement further changes in the future. Is this really simplification? Probably not, but we live in an age of over reporting and no doubt there will be more reports to follow. Whatever happens, directors can be certain of one thing – Whitehall will be introducing changes to the Act – you have have been forewarned !

See my article on the Act published in the Director of Finance magazine in March 2010. The article focusses on two important areas for corporates – hospitality and maintaining adequate procedures to prevent bribery.