By Max Clarke
Following the Government’s commitment to help small business export to new markets overseas, a new poll of decision-makers in 500 small and medium-sized businesses reveals that UK SMEs remain focussed on exports to the world’s lower growth markets at the expense of developing trade with high-growth emerging markets. The findings are in stark contrast to the latest growth estimates from the World Bank, whose 2011 GDP growth forecast of 6.0% for the world’s developing markets dwarfs 2.3% for OECD countries.
The survey, commissioned by TheCityUK, the independent body promoting UK-wide financial and related professional services, revealed that 27% of small businesses see other EU countries as their main growth markets while 16% are focussed on USA and Canada. That compares with only 11% on China, which recently overtook Japan as the world’s second-largest economy. 9% are focussed on India while Ireland (7%) came in higher than Brazil (6%) and Russia (5%).
The same respondents cited uncertainty around different regulatory systems, exchange rate fluctuations and onerous bureaucracy as the main concerns for SMEs who export or are looking to start exporting their goods and services, issues which the Government’s White Paper “Trade and Investment for Growth” seeks to address in pledging improved access to trade finance, insurance and advice for SMEs seeking to export to new markets.
The survey findings resonate with recent ONS data which identified the US as the UK’s predominant trading partner in December 2010 on 14.9% of trade exports, with China in 9th on 2.4%, behind Ireland, Spain and Italy among others. The World Bank forecasts 2011 growth of 1.4% for the euro zone and 2.8% for the United States compared with 8.7% for China and 8.4% for India.
Chris Cummings, CEO of TheCityUK, comments:”UK SMEs have valuable established trading relationships with developed markets. That is understandable, given perceptions of ease of doing business in them. Emerging markets, on the other hand, are — for some businesses — still a mountain to climb. Yet emerging markets represent their most exciting prospect of a profitable future. This is as true of financial and professional services as of other sectors, and equally true of UK businesses — from the biggest multinationals to seed-corn SMEs — that use our members’ financial and professional expertise. Our long-term economic recovery depends on UK businesses penetrating new markets and removing barriers to them accessing a global customer base.”