'What I’ve learnt about Brexit so far and trading within the EU (and more on JNI BV)' - JNI UK's CEO
My last ‘how-to’/‘lessons learnt’ article did really well, far better than I expected it would. It was on how JNI London managed to adapt to the changes the world witnessed over the last couple of months. And, though I’m completely fed up with the word pivot I titled it ‘What I learnt when I ‘did a pivot’’ with JNI.
If you didn’t get a chance to read it, and you want to, you can access it here.
I’ve had loads of messages from readers and existing clients - showing support, asking for more detailed advice, thanking me for the insight – and it’s really been quite amazing.
I didn’t think I’d be writing another so soon but, as I read some of the questions, I realised that there was something I needed to go into more detail about Brexit.
I talked a great deal about how the coronavirus had changed the landscape, within the branded merchandise industry specifically, but across the board; in all areas of industry. And I delved into how we adapted, as dynamically as we could, to those changes.
But Brexit is just as huge a development for us, and for every business that trades in Europe. We’ve adapted to it also, learnt lots in the process and secured for ourselves a stable position in Europe. So, for those that might learn something from JNI London’s experience or are simply interested, here’s how.
The establishment of JNI BV
In a previous article, we explained how the United Kingdom’s exit from the European Union prompted our creation of JNI BV. Jack Nadel International BV – short for ‘Besloten Vennootschap’ which is the Dutch equivalent of a private limited company – was a response to the changes many British companies will have to similarly adapt to if they are to continue doing business with Europe.
The British Government has put considerable resources into educating and informing the public of how Brexit will impact British corporations. All of us who are resident here - and watch the television - will have seen the ad campaign. Hard-working professionals, in hard hats or overalls, telling us that Brexit is coming, that British business has to prepare for extra paperwork and new legal requirements.
Those were the slogans, and they were certainly right that it could take longer than you think!
The British government could not go into the specifics of these ‘new rules’. They did not break down how this would impact the varied industries that comprise the British economy. They could not, I suppose, in a thirty second advert.
The adverts hinted at extra paperwork, new legal requirements and potential alterations to operational or supply trains. They didn’t mention any new “service” fees or how duties would impact delivering into or receiving goods from the EU.
So, before January 1st and the official date of our exit, we created a company within the European Union, in the Netherlands. We secured for ourselves duty free trade with the whole of Europe, reduced trading costs in the EU and, as a result, continued good deals for our clients. We knew, before Brexit, that this would be best for our business and we’re very glad we did so.
But the picture of how Brexit would impact our company and our industry as a whole was still unclear. It is a little clearer now. So, for those that are interested, here’s what I’ve learnt about Britain’s new relationship with Europe and how it relates to the promotional products industry.
What have we learnt?
We are now a little over a fortnight into this new world defined by new rules. And we have some idea about their impact. At JNI UK and JNI NL, we’ve learnt some lessons, seen some of the results and are now better placed to give a more informed insight into how Brexit will affect the branded merchandising industry.
The EU remains, even with the United Kingdom’s exit, one of the world’s largest trading blocs. It is the top trading partner for around 80 different countries. It also boasts a population size of almost 400 million people and is comprised of some of the wealthiest peoples in the world.
It is, as a result, a hugely important market for the globe’s biggest brands. At JNI, we’ve always been committed to trading within Europe and we’ve benefitted hugely from Britain’s access to Europe’s markets.
Our clients want that access, they want the ability to build the profile of their brand with potential customers in Europe and that is as important to them now as it was two years ago.
As a result of the new rules, however, access for British companies is harder to attain and, as we’ve found out, more costly.
There is now a €15 service charge placed on deliveries into Europe and, along with duties, that significantly raises the price per unit of every promotional piece delivered to Europe from the UK. A speaker, for example, which costs €25 per unit, doubles in price when it is delivered to our clients’ potential customers and employees.
That’s a huge outlay, and its magnified to an astronomical fee when we scale up. Many of our clients, the globe’s biggest brands, would be looking to deliver thousands of units and, critically, since we are currently still in the midst of a global pandemic, those thousands of deliveries would all be to the homes of each important individual rather than to offices or event venues.
These fees, as well as the now complex administrative requirements placed on delivery from the UK to the EU, have made process untenable for some firms. DPD, the parcel delivery firm, have suspended delivery from the UK to the EU until they’ve managed to better ‘review’ this process.
M&S and Debenhams have reported similar problems with the former suggesting that the new tariff fees may hamper the business they do within Europe.
JNI BV ensures our clients have continued access to the European Market, and continued low prices
Establishing a European subsidiary isn’t an option for every Britain-based company. For us, fortunately, it was. We had to adapt and I’m sure our clients will be happy we did so. Not only can we ensure that their merchandising campaigns aren’t made more expensive by tariffs, we’re also able to keep delivery costs low.
If you read my last article, you’ll know that we’ve moved the delivery of promotional pieces online. Physical events were the main method for delivering a piece of branded merchandise to our client’s stakeholders. Coronavirus related restrictions of course put an end to those.
So now, our industry delivers each item to the homes of those that are important to our clients. From our European base in Amsterdam, we’re able to conduct those deliveries without being subjected to the 21% sales tax added to sales originating from outside the EU.
I know that this method of adapting to our new relationship with Europe isn’t available to every British firm. But for those that are considering it as an option, I hope JNI’s example provides some insight. For our clients, I hope that the creation of JNI BV gives them confidence that we will be able to ensure they have continued access and manageable costs in their brand-building efforts within the EU.
Thanks for reading!