UK: Your Export Opportunity: Our Insight - Your Guide To Getting Started In Exporting

Last Updated: 25 June 2012
Article by Smith & Williamson

UK TRADE & INVESTMENT

UK Trade & Investment (UKTI) is the Government Department that helps UK-based companies succeed in global markets and assists overseas firms in bringing their high-quality investment to the UK.

UKTI has a global network of 2,400 staff . Its International Trade Advisers (ITAs) around the UK have years of business experience to draw on when advising companies. In 96 markets based in British Embassies and other Diplomatic offices around the world, UKTI staff can off er local, in-market knowledge and expertise.

UKTI has helped many thousands of businesses achieve international success by providing tailored services with specialist support covering a wide range of industries. Its clients consistently cite the importance of UKTI support in helping them to overcome barriers to new overseas business and improve their business performance.

FOREWORD

Even through challenging economic times, there are unparalleled opportunities for British firms around the world as the emerging high growth markets continue to grow. In the UK, if we are to make progress in reducing our trade deficit, we need to encourage more SMEs to take the plunge and export, and to encourage those already doing so to spread their wings. We know that companies which begin to export experience significant gains in productivity and competitiveness. In essence, businesses which get involved in the international market become more dynamic, innovative and successful.

This guide outlines the points you need to consider before venturing into international business. And it tells you where to go for help and guidance.

A great place to start is by talking to your local UKTI International Trade Adviser, who has years of business experience and can give you one-to-one advice. UKTI's staff around the world can provide you with specialist local, in-market intelligence and guidance.

The guide also steers you to other sources of help – from logistics to intellectual property, from cultural issues to getting paid.

Britain's future prosperity will be built on its success in international markets. Exporting provides a major opportunity for growth in the UK economy – and it could be a major opportunity for your company too. Increasing British exports is a national challenge that we must rise to collectively.

IT'S TIME TO GO GLOBAL

Have you ever thought about doing business in overseas markets? If not, or you thought it too difficult, then you might want to think again.

Exporting can help you survive and grow. There are real opportunities to trade internationally; UK products, services and expertise continue to be in demand across the world. There are opportunities – both in traditional, established markets such as Europe and the US, and the high-growth economies of countries such as China, India, Brazil and Russia.

As hosts of the 2012 Olympic and Paralympic Games in London, the eyes of the world are firmly on the UK. This provides a perfect platform for UK companies to showcase their expertise and do business in overseas markets.

This guide aims to help you grow your business internationally. If you haven't exported before, you will probably have lots of questions. As this guide sets out, there is a lot of expert assistance available.

WHY SHOULD I EXPORT?

Why should you take the export plunge?

UK companies which export are responsible for 60 per cent of national productivity growth and more than 70 per cent of UK business research and development. This helps to give them a technical competitive advantage, leading to more sales and opening new markets.

Doing business overseas is a different experience for every company and its benefits will vary greatly depending on the personal profile of each firm.

As well as opening access to new sources of revenue, trading internationally will allow you to spread risk across a wider range of customers, extend the market for specific products and ensure that you are aware of international competition.

In some cases companies are able to offer much more interesting roles for their staff , and to recruit better people as a result.

Exporting can also be a catalyst for innovation. In many cases you will see new ideas and opportunities overseas which will spur you to develop new and modified products to meet the needs of international customers. This can help you to gain and retain a competitive advantage in the UK as well.

Academic research1 confirms that exporting companies:

  • are more productive and innovative than non exporters;
  • are more resilient to an economic downturn;
  • achieve stronger financial performance;
  • have a higher profile and more credibility; and
  • are more likely to stay in business.

A growing trend

More and more UK companies are recognising the benefits of exporting.

Research shows that a growing number of UK firms have increased their export levels. A recent study2 found that the percentage of UK firms doing business overseas rose from 26 per cent to 31 per cent over a two-year period.

Exporting is not just for bigger businesses. A recent survey of around 200 smaller exporters showed that three in every four planned to export more in 2011.3 A separate study found that the proportion of small UK firms exporting increased by 10 per cent in both manufacturing and services over a six-year period.4

Business benefits

Exporting can allow companies to:

  1. Achieve levels of growth not possible domestically.
  2. Increase the resilience of revenues and profits.
  3. Spread business risk.
  4. Achieve economies of scale not possible domestically.
  5. Increase the commercial lifespan of products and services.
  6. Increase the returns on investment in R&D.
  7. Improve financial performance.
  8. Improve productivity.
  9. Boost their profile and recognition internationally.

An increasing number of young UK companies are grabbing international opportunities from an early stage. Almost one in five new firms are currently active abroad – and so have been doing business overseas since they started trading. You too can join this growing club and gain the export advantage.

Case study — New York Delhi

Exports have helped west London snack business New York Delhi more than quadruple its turnover since its launch in 2009.

With support from UK Trade & Investment (UKTI), its premium peanut brand, ViPnuts, is now being supplied to Canada, Eastern Europe, France, Germany, Spain and the US. UKTI has helped New York Delhi go on market visits to meet potential distributors and exhibit at overseas trade shows.

Managing Director Nina Uppal says: "We are truly going global. Because of the excellent advice, support and contacts provided by UKTI, New York Delhi has been catapulted into the global market, giving it the sort of exposure I had only dreamt of. We have already caught the eye of a couple of giant food multinationals.

" I always knew we had an excellent product and brand, but it was really about how we shouted about it, and UKTI helped us do this."

www.newyorkdelhi.com

WHERE SHOULD I EXPORT TO?

There is an abundance of opportunities for UK exporters – and plenty of support to help you take advantage of them.

The UK is a major trading nation, able to capitalise on the single market through the European Union (EU), as well as being 'socially close' in terms of culture and language to a number of major international markets – including the US.

Many UK firms begin exporting by entering established markets such as these. The EU, with its open borders and shared import/export procedures, provides UK companies with unrestricted access to more than 500 million consumers, while the US continues to be our number-one export market, offering opportunities across a wide range of sectors.

High-growth markets

UK exporters are also increasingly embracing the myriad opportunities offered by the world's emerging economies – many of which are experiencing rapid rates of growth. Such high-growth markets include the 'BRICs' (Brazil, Russia, India and China), whose dynamic economies will provide a wealth of prospects for UK firms in the coming decades.

In addition to the BRICs, there are other fast-growing markets with great potential, such as the so-called CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). These often smaller markets have much to offer, and UKTI International Trade Advisers (ITAs) are well placed to guide exporters on how to select the best territory to target.

Growth in such markets is driven by rapidly rising populations and GDP levels. Research has shown that the middle classes in China and India, for example, are set to increase household expenditure fourfold over the next 20 years.5 The Chinese middle class is forecast to grow from 172 million to 314 million in the next five years – more than the entire population of the US.6

These rapid growth rates, combined with progress in infrastructure, communication networks and global co-operation, are making doing business in high-growth markets increasingly commonplace for UK exporters. For example, since 2002, the number of UK companies exporting to China and India in the construction and IT sectors has increased by over 100 per cent.

You don't have to be an experienced exporter to enter a high-growth market. Two in five of the smallest exporters (with fewer than 10 employees) already do business in at least one high-growth market.7

Aid-funded business

As well as working with specific geographic markets, there are also huge opportunities for UK companies in aid-funded business – that is, the contracts awarded by multilateral agencies such as the UN and World Bank to support projects in the developing world. Much of the implementation of these aid-funded projects is contracted out to the private sector, representing significant business opportunities for consultants, works contractors and suppliers of goods and services.

Every year, multilateral agencies spend some US$60 billion on everything from tents to telecommunications. The UK currently gains between 4 and 17 per cent of this aid-funded business, with the most sought after expertise being in the healthcare, construction, consultancy, ICT, environmental and transport sectors.

Case study — Kat Maconie

Exports have been a key way for British footwear designer Kat Maconie to build her business. Having received support from UK Trade & Investment, her label can now be found in leading fashion stores across the world, including Brazil, Europe, Japan and the US.

" I knew I'd have to produce large quantities of shoes early on to get a decent price point," says Maconie. "I had to grow the business quickly and my best chance of doing this was to look beyond the UK.

" UKTI's support has been crucial. The international trade adviser really understood what I was trying to achieve and had a very good insight into the nature of my business.

" The UKTI-organised seminars were really helpful, while the support I had in meeting the costs of travelling to new markets was invaluable – I would not have been able to fund such visits on my own."

www.katmaconie.com

Case study — Skyline-IFE Ltd

International business has really taken off for Suffolk-based in-fl ight entertainment company Skyline-IFE.

Since enrolling on UK Trade & Investment's Passport to Export programme and attending major airline industry exhibitions overseas, the small firm has won clients in Norway and Sweden and is bidding for work in the Middle East.

Managing Director Richard Barsby says: "It is relatively new for us to be selling in this way and Passport to Export was one of the things that gave us the confidence to go ahead. The service is tailor made for small businesses like ours because it made us take a considered look at our strategies and plans."

He adds: "We know that trading conditions are going to get very challenging in the coming year but, with the backing of UKTI, we believe we are well placed to come through. We're now very busy presenting new proposals to prospective clients."

www.skyline-ife.com

To read this guide in full, please click here.

Footnotes

1 Harris, R. and Q. Cher Li (2007), Firm Level Empirical Study of the Contribution of Exporting to UK Productivity Growth and Hart et al Impact of Trade Services on R&D – Aston University August 2009

2 Study of the Relationship Between Innovation, Exporting and the Use of E-Commerce, Harris and Li, 2010.

3 UKTI/IOD Doing Business Overseas survey, July/August 2010.

4 Study of the Relationship Between Innovation, Exporting and the Use of E-Commerce, Harris and Li, 2010.

5 BIS Economics Paper No.8, UK Trade Performance: Patterns in UK and Global Trade Growth, November 2010

6 HSBC, October 2010

7 NIESR Analysis of the International Business Strategies, Barriers and Awareness Monitoring Survey, March 2010, and OMB Research, PIMS Qualitative Follow-up Study of Business Needs in Emerging Markets, June 2006

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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