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Exporting - a world of opportunity

With Brexit looming it’s time to dig out those passports and explore how exporting can boost your business.

Recent figures from the Office for National Statistics(1) revealed that the number of SMEs exporting to overseas markets increased by 6.6% to 236,000 in 2017.

The number one export market for UK goods remained the EU followed by Asia, North America, Africa and Australasia with the primary products being shipped including machinery, vehicles, oil and precious metals. (1B).

These impressive figures have been driven by both Government and industry schemes focused on highlighting the vast opportunities available to businesses by selling their services or goods abroad.

Export strategy

In August the Government launched its new Export Strategy to help move exports as a percentage of GDP from 30% to 35%. In particular it highlighted – given Brexit next March – that approximately 90% of global economic growth in the next 10 to 15 years is expected to be generated outside the EU.

The strategy includes:

  • Connecting UK businesses to overseas buyers, markets and each other
  • Information – access to the right information and practical advice
  • Finance – ensuring funding pools are open such as trade finance and export insurance. Also raising awareness of the £50billion of finance available from UK Export Finance
  • Use of Export Champions to inspire other businesses and make peer-to-peer learning easier

The Institute of Export & International Trade has also launched a ‘Buccaneer’s Guide to Export Success (2) giving, what it describes, all the information and support would be exporters will need such as:

  • Focusing on their export strategy and researching and deciding their market,
  • Understanding customs compliance, shipping documentation, international taxes and all the other requirements their business will have to deal with when selling to a new market

Benefits

The benefits for both exporting firms and for UK PLC as we sail the unchartered waters of Brexit are clear. Recent HMRC figures revealed that total exports from the UK reached £335.6 billion in the third quarter this year, up 4% on the previous year.

Exporting boosts an SME’s productivity, revenues and profits, boosts their reputation, helps them become more innovative and spreads their risks across a wider range of customers. (3)

But despite all the encouraging words, figures and optimism the vast majority of SMEs in the UK prefer to do their business at home. Indeed only 9.8% of SMEs exported in 2017.

Barriers

The Government’s Export Strategy (4) identified some of the main barriers preventing more exporting growth.

These include concerns over:

  • Access to finance such as lack of working capital
  • Limited network & contacts
  • Trade barriers and market access
  • Lack of knowledge and capacity

Confusion over systems and protocols, how to carry out research and determine consumer demand, Intellectual Property, trademarks and being able to find trusted new partners are other concerns.

Case studies

For aisha

Mark Salter, is the founder of halal baby food group for aisha, which has recently started distributing in Benelux. His road to exporting has built on the company’s success in the UK. He says: “It's only now that we've really begun to understand the export market for ambient food, the challenges and how best to approach different markets. It's been a long learning curve whereas the UK market was a far easier win for us,” Salter says. “I'm a believer in getting your home territory right before expanding too thinly and so we back-tracked and focused more on the UK market in our first few years. We've had many hundreds of enquiries to supply our food overseas, but we haven't had the infrastructure, the time, contacts or knowledge to make it happen. Therefore, the vast majority of our sales have been UK based to date.”

Salter said he spent time trying to find credible companies to work with.

“Because different food certifications, documents and registrations are needed for different countries setting up the supply route is far more complex and time consuming than we realised,” he explains. “No one solution fits all therefore it's important to work with credible agents in each target market who can register the products in their territory. It's advisable to work with companies who are already managing the imports and sales of other successful food brands and are recommended by the UK DTI. Insurance is crucial also. We work with a major global insurer who cover sales to all the territories that we trade in with ample public and product liability insurance. For food a £10M liability cover is normally recommended.”

He is confident exports will lead to higher revenues.

“Halal food is a $1.3 trillion global opportunity annually. The UK is very well respected globally for our high-quality food brands & our premium fully traceable ingredients. We should be able to export far more food than we do,” he said.

Simply Ice Cream

Another firm in that sector Simply Ice Cream began exporting in March 2017 to Belgium with a private retailer and then in October when it shipped a pallet to Singapore.

“Both the Belgium contact and the Singaporean contact rang us direct, they organised shipping, so everything was relatively easy,” says founder Sally Newall. “We then started to look into the possibility of export and the advantages/disadvantages and have been on a steep learning curve ever since. Cost is of course a priority. You do need to visit your proposed markets and engage with buyers, check out the competition and assess whether the market is saturated. We currently have a distributor covering Germany, Belgium, Spain, Poland and the Balkan countries. Our focus is now on the Far and Middle East.”

Her advice to others?

“Use all the services DIT offer and another organisation called Open to Export is also worth a look. Research your chosen country thoroughly, again DIT have representatives working all over the world who can help with an initial market study to see whether you are looking to the right area. Be prepared for fairly substantial costs to get it up and running, be prepared to visit your chosen country and chose agents or distributors carefully and always get a solicitor to look at the legalities of the agreement,” she says.

Sources