By Daniel Hunter

The difficult UK economy is driving businesses to look overseas for growth, according to a major new joint study by UPS and the Centre for Economics and Business Research (Cebr).

However, despite the strong enthusiasm for international trade among UK firms, the economy remains too reliant on mature market export partners, the research warns.

“There is clearly a huge appetite for offshore trading among UK producers, eager to defy gravity in tough home trading conditions," Cindy Miller, managing director at UPS UK, Ireland & Nordics said.

"Economic reality necessitates that businesses do more to take advantage of expanding markets in Asia and Eastern Europe, rather than rely on our traditional trading partners in Western Europe and the US.”

The UPS and Cebr study is based on opinion research amongst 1,200 UK product-based exporting and non-exporting businesses, supported by economic analysis of international trading patterns, aimed at understanding the current challenges and opportunities that exist for UK producers in doing business overseas.

All Abroad: UK firms look overseas for growth

As a result of difficult domestic trading conditions, nearly four-in-five (78%) non-exporting businesses questioned are increasingly looking overseas for sales opportunities.

More than three-quarters (77%) believe that the UK economy has hit a tipping point, where future growth can only be achieved through export [NE:Q3], and four-fifths (80%) say that starting to export will be critical to the future success of their business.

The vast majority of both non-exporters (90%) and exporters (81%) believe that increasing exports will be essential to the UK's economic recovery.

Onwards and Outwards: Exporters yet to fully capitalise on emerging market growth opportunities

More than four-in-five (83%) exporters believe that high-growth economies will be essential to their company's future survival, growth and success.

The UPS and Cebr study reveals a significant opportunity remains in these regions for exporters, as the UK is still yet to fully capitalise on emerging markets.

UK export growth lags significantly behind demand in the two fastest-growing BRIC export markets — Brazil and Russia, according to the research.

The analysis also shows that only two of the UK’s top 15 export markets were emerging economies (India and China) in 2011, and the country remains heavily dependent on its traditional top five export destinations: USA, Germany, Netherlands, France and Ireland.

Dependence on these economies has decreased only slightly in the past decade, down from 51.2% of all exports in 2001 to 44.6% in 2011.

Exporters expect the fastest growth in overseas demand to come from Central and Eastern Europe in the next two-to-three years (as identified by 30% of exporters), followed by the Indian subcontinent (15%) and the Far East (15%).

Fear factor: Exporters shy away from trade with faraway lands

Exporters identify physical distance as the single greatest barrier holding them back from selling more to high growth regions (as identified by 76% of respondents), followed by corruption (62%) and political instability (55%).

Indeed, the majority (85%) identify increased ease and reliance of transporting goods overseas as a key export enabler.

Almost half (45%) of exporters describe their company as risk-averse in relation to export [E:Q9], and just 2% describe their company as very international in its outlook.

Non-exporters, meanwhile, identify transport and logistics risks (87%), regulatory issues (81%) and the initial capital hurdle (80%) as the top three barriers holding them back from starting to export.

“Exporters must try to overcome perceived hurdles to trading outside of their geographic comfort zones," Cindy Miller added.

"By working with trusted logistics partners on the ground, businesses of any size can develop truly global supply chains.”

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