Snapshots of global business
British Chambers of Commerce
Exporting is good for Britain – and it’s official.
Who says so? You do. And that’s reflected in a major survey on international trade carried out recently by the British Chambers of Commerce. More than 8,000 businesses responded showing that more and more are setting their sights overseas as sales dwindle in the domestic market.
Nearly a third of companies are now in the export business. And that’s shot up from only a fifth a year ago. That’s a big leap forward. Increasing numbers of businesses now appreciate the need to rebalance the economy by selling more of their goods and services abroad.
On a more sober note, the survey found that a number of hurdles face firms wanting to get into international trade. Among these are the upfront costs and added risks involved. And a third of companies in the survey said that getting access to finance was “highly influential” in deciding if and when to export. Many businesses faced by reduced sales actually shy away from exporting.
Even so, it’s clear that when cash-flow dips on the home front, companies which do have the experience, know-how, organisation and contacts to sell abroad look overseas to develop or grow markets there.
The BCC – and indeed many businesses – insist that the government has to do much more to make finance available to business if exporting is indeed to reshape the British business landscape. Alongside getting the cash, is greater help with trade promotion to cut the costs of getting on to the export ladder.
Red tape and the UK’s transport connections are other key considerations.
UK Trade & Investment
There’s never been a better time to trade internationally whether you’re a seasoned pro or a novice. That’s the upbeat word from the government-backed UK Trade & Investment which works in close co-operation with UK Chambers to stimulate and promote overseas trade.
Research shows quite simply that exporting firms are more productive than those who just sell at home. They get better financial results and are more likely to stay in business. A recent survey showed that firms beginning to export gained a 34 per cent increase in productivity and those already exporting were 11.4 per cent more likely to survive. What better reason to sell abroad?
Plenty of other benefits emerged, too. Exporters achieve levels of growth not possible domestically, increase the resilience of their revenues and profits, achieve economies of scale not possible domestically and increase the commercial lifespan of their products and services. Not only that. They also increase the returns on their investment in Research & Development. (A sample of 400 firms polled revealed that exporters invest, on average, an additional £65,000 on R&D.)
Heather Booth di Giovanni, Director of Economics and Evaluation at UKTI, commented: “The evidence about the business benefits which can be achieved through exporting is clear and compelling. In the context of a depressed British market, the benefits of sustained revenues from a well diversified portfolio of overseas customers are even more vital. We should not forget that there are opportunities overseas which are still growing, and that new opportunities are constantly opening up. With the benefit of UKTI’s expert help, negotiating the challenges of unfamiliar markets overseas can be much more rewarding and less daunting than many companies might anticipate.”
The world is still “BRIC-ing” it, according to professional services firm PwC. The powerhouse economies of Brazil, Russia, India and China continue to drive world economic growth in 2012. They’re still growing much faster than any of the more developed economies. Although there was something of a slowdown last year, these key countries have plenty of scope for fiscal and monetary stimulus measures.
PwC predict that opportunities include lower inflation and interest rate cuts, government reforms to support the domestic economy and stable inflows of capital to continue in the long term.
Grant Thornton UK LLP
Business confidence is gradually returning – and exports are playing a leading role in this long-running drama. So says Grant Thornton in its latest survey in conjunction with the Institute of Chartered Accountants in England and Wales.
There was a distinct upswing in business confidence in the first quarter with the economy finally dragging itself out of recession and returning to growth later this year.
However, the Business Confidence Monitor shows that despite that, the recovery may remain fragile for some time and the economy may continue its zig-zag path over the next twelve months.
But optimism is distinct with turnover and profit growth expectations up slightly and an end to the downward trend of capital investment. Interestingly, firms in the IT and Communications sectors remain distinctly more upbeat than other sectors.
Scott Barnes, CEO of Grant Thornton, cautiously added: “Any improvement in the key performance indicators in the Business Confidence Monitor are of course positive. Profits, turnover and exports are all increasing but at nowhere near the rate seen pre-recession. Businesses are beginning to realise that this environment may be the norm for some time and are reviewing business plans accordingly.”
Richard Jeffrey, The Guardian
Why limit yourself to selling to just one per cent of the global economy, asks Guardian blogger and director of the Business Growth Hub Richard Jeffrey? That’s what the UK represents on the global stage. Why even limit yourself to the seven per cent which makes up the European Union? As he points out, it doesn’t exactly add up to an ambitious plan for growth, does it?
UK products, services and expertise continue to be in demand all across the planet – despite aggressive competition from other quarters. Doing business overseas has additional benefits besides the bottom line. Exporting boosts innovation, competitiveness and productivity.
Mr Jeffrey agrees with the prevailing view that opportunities continue to abound in the BRIC economies and will continue to do so as international trade spreads beyond the bigger cities to more far-flung regions.
He adds: “Exporting is no different to domestic trade in the sense that businesses will face a combination of challenges that must be overcome in order to turn a profit. These will differ depending upon the size of the firm, the industry in which it operates, the makeup of its customer base and, of course, the general economic backdrop.
“Just as with local trading, successful exporting depends first on recognising which potential barriers businesses are likely to face – both those uniform challenges that all exporters are likely to face and those that are specific to a particular organisation.”