17/05/2011

By Clive Drinkwater, Director of North West at UK Trade & Investment

There is growing evidence that export-led economic recovery is no empty mantra but a realistic aspiration – and SMEs (Small and medium enterprises) should take note, writes Clive Drinkwater, UKTI Regional Director for the Northwest.

Increasing export orders and growth in SME confidence indicate that the messages of the benefits of exporting (for companies’ productivity, profitability, longevity, innovation and product development), particularly in current circumstances, are hitting home.

In the latest CBI quarterly SME Trends Survey, 23% of firms said export orders were up; the ONS says exports grew 11.7% in the past year; and a survey by courier DHL Express shows nearly half of SMEs selling abroad expect exports to grow in the second quarter.

That said, we need a step change in how we go about growing exports in a sustainable way, with a strategy for emerging markets as well as traditional developed ones. There is a plan that businesses can follow though:

1. Take advantage of the competitive pound

a. Not that long ago there were nearly 2 US dollars to the pound, now it’s 1.64. The Euro is at 1.14, rather than around 1.40. This puts British firms in an advantageous position compared to US and European counterparts.

2. Seek out growth sectors

a. Some industries have hardly noticed a downturn and there is the promise of real growth in:

i. Medical/Bio/Pharma

ii. Energy

iii. Environmental technologies

iv. ICT

v. Digital/Creative

3. BRICs and beyond

a. Look at emerging markets, where middle classes are expanding rapidly and spending on goods and services hitherto associated with developed world consumers. Naturally, these economies include Brazil, Russia, India and China (BRICs), but even in China and India, the biggest opportunities may lie outside the traditional trading centres, in the fast-growing provincial and so-called second-tier cities.

b. Consider others, such as Mexico, South Africa, Ukraine, Indonesia, Malaysia, Singapore, and Saudi Arabia. Did you know that Qatar, Turkmenistan, Ethiopia and Mozambique featured in the top ten fastest-growing economies of 2010? These markets may not match China or India in terms of population, but their progress in market reforms, trade liberalisation and governance will weigh more heavily in company investment decisions.

c. And don’t forget South Korea, where economic growth is comparable to India (and faster than Russia, Japan, or Mexico), and the EU/South Korea Free Trade Agreement, creating an extra £500 million of business (at least) for UK companies, comes into force on 1 July, with virtually all trade tariffs to be removed over five years.

4. Don’t ignore the huge European market on your doorstep

a. Last year saw good growth in Germany, Sweden and Poland and others, where you will benefit from strengthening economies and the competitive pound.

5. Look at yourself

a. Every market presents unique challenges, and effective exporting requires a sound base of research, complemented by appropriate internal resource and skills. It also requires adaptability. Different business practices, culture, market entry requirements, even something as simple a different mains voltage, all need to be considered, so differentiate your product or service offer accordingly.

And remember, exporting needn’t be scary. Although we are in a great position to achieve an export-led recovery it will not happen by chance. Bodies like UK Trade & Investment offer a range of services to help businesses succeed, helping them prepare, find the right markets and make the right contacts.

Expansion into new territories, in the UK or overseas, is a key element of the growth criteria for this year’s National Business Awards in partnership with Orange. If you have expanded your customer base in the last year, and achieved growth in new markets, tell your story by entering the National Business Awards. Enter online at www.nationalbusinessawards.co.uk or call the entry team for guidance on 020 7234 8755. Also, if you need information and advice on establishing operations overseas, visit www.ukti.gov.uk.


Watch the video featuring Martin Hodges, Head of Trade Finance at Santander discussing the facilities when trading overseas.

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