Despite recent gains made by Sterling against the Dollar and to a lesser extent the Euro, historically low exchange rates mean that exporting represents an excellent opportunity for UK manufacturers to branch out and grow their market. MHA’s latest manufacturing and engineering report research (https://bit.ly/2pPlvGE), which surveyed over 460 people in the manufacturing and engineering sectors, showed that only 51% of the respondents are exporting, which means a significant amount are not taking advantage of overseas opportunities.
Perhaps worryingly, given the results of the EU Referendum, of those exporting, 96% export to the Eurozone. Other destinations are, however, gaining popularity. Asia is the second most popular exporting destination, with 62% exporting there (a 15% increase on last year), followed by 61% exporting to the United States.
Scale of the opportunity
The export opportunity for UK manufacturers must not be ignored, and the sector is in a strong position to benefit from its global renown in terms of quality and technical excellence. The lower pound means goods from the UK are more competitively priced and more attractive to foreign buyers. Expanding beyond the UK gives manufacturers a greater stage to access new consumers and can greatly enhance a company’s profile and profitability. For example, the USA alone imports $2.2 trillion per annum, but currently the United Kingdom only accounts for around 2.5% of this total.
Barriers to export
Exporting can be daunting for many companies. Our survey found that one of the main barriers stopping manufacturers from exporting is finding and understanding local partners. Also cited are lack of resources and time. For manufacturers, compared to those in service industries, there are also the additional logistical issues of transporting goods across the world. Putting the right support systems in place is crucial to overcoming these barriers. A careful plan of attack is required, but the potential benefits of exporting are vast and worthy of serious consideration.
Factors to consider in order to successfully start exporting goods
There are a number of internal and external steps you must take to make sure your business is export ready.
The first stage is to identify the right overseas markets for your product. For example, new entrants will want to know what local competition there already is and what restrictions there may be on their products, as well as tariffs and other border controls that could potentially hinder exporters.
There are tools available such as Google Market Finder that can provide a high level view, as well as the Department for International Trade’s country guides or its Overseas Market Introduction Service. The British Chambers of Commerce is also a good source of information.
Once you’ve identified an overseas market, it’s vital to obtain an understanding of what it’s like to do business there from experts with local knowledge. This will help you determine the best route to market – agency, direct selling or distributor.
There are a number of initiatives set up and backed by the government that could prove to be invaluable. ‘Open to Export’ is a free resource for new exporters – an online information service from the Institute of Export & International Trade – dedicated to helping small UK businesses get ready to export and expand internationally. In addition ‘Exporting is Great’ helps businesses target international customers and understand international markets.
There are also many practical aspects to consider:
Can your internal accounts system deal with multiple currencies?
Is your website multilingual and ready for a range of international clients?
How you are going to finance your exports and export goods?
What customs procedures will you need to comply with?
Are there any duties to be paid or licences needed?
Is your intellectual property protected?
Are contracts robust for international trade?
How will you finance your exports – can UK Export Finance help?
With growing demand for UK exports, now really is the time to expand your business prospects. There is a wealth of support available to help you along the way.
In the current environment where globalisation is transforming the business world at an unprecedented rate, companies that ignore exports market will quickly fall behind. Manufacturers who can identify overseas markets, logistically prepare and take full advantage of the various initiatives available can benefit from this considerable growth opportunity.