Looking beyond Brexit

1 August 2017

 

For British companies exporting to Europe, the delicate Brexit negotiations ahead are causing some uncertainty. Hopefully, all will end well. But nobody yet knows what agreements will be in place when the UK leaves the EU in March 2019, and there are no guarantees we’ll come away with the kind of tariff-free trading we enjoy today.

Whilst Brexit has muddied the waters for exporters in the short term, some are turning to markets outside the EU in a bid to bolster business and keep exports on track.

Indeed, with a weaker pound, British exports are more attractively priced than ever, which is reflected in analysis from the Office for National Statistics. According to the ONS, exports from the UK have risen by as much as 30% since June 2016, although there has been a slight dip since the beginning of 2017.

Many companies are wary of exporting outside the EU trade zone because it is a much more complicated and risky affair. Yet support is available for companies that take the plunge and explore new markets, especially those that may be more open to trade deals with the UK in the near future.

In a short series of blogs, Routes & Branches takes you through the positives, as well as the challenges, of exporting to three distinct markets outside the EU.

They’ll guide you through the pleasures and pitfalls of trading with India, Singapore (as a gateway to SE Asia) and Chile in South America. The blogs are intended for people who have some experience of exporting, but are hoping to branch out in view of Brexit uncertainty.

In the meantime, here are some questions to consider, to make sure your company is prepared for the significant challenges of trading with non-EU countries.

Is your business ready to export outside the EU?

One of the biggest reasons behind export failure comes when businesses launch their exporting initiatives too early and cannot deliver. This may be because there isn’t enough budget to invest in the exporting process. Or perhaps not much research has been done in the target market, so there is little confidence that the product or service being offered is in demand there.

Remember that exporting to non-EU markets takes some time to set up. Those hoping to go on a trade mission and come back after a week of meetings with a fistful of contracts are usually disappointed. Be prepared to make several trips in the initial stages, and make sure you have a robust infrastructure at home to deal with issues of cultural, language and bureaucratic differences.

Are you fully prepared to deal with failure…and success?

When we embark on an ambitious venture, we usually have a plan in place to deal with any failures; a Plan B. But companies often overlook the prospect of success and then get overloaded when it eventually arrives. Planning is particularly important when exporting to distant lands, as there are many more bureaucracy and localisation issues to deal with than when exporting to the EU. Make sure your plan B includes what happens if you are surprised by your level of success, and need to scale up fast to meet demand.

Have you found a reliable logistics partner?

This is essential if you are exporting goods to foreign markets. Just as in the EU, it’s important to have a logistics partner with a good knowledge of your target market, and with a significant presence there. Choose your partner carefully, and make sure they have the infrastructure to deal with any scale-up when it happens.

Whichever side of the argument you are on, the uncertainty for exporters to the EU will continue for at least two years, and quite possibly beyond. That’s why taking steps to move into non-EU markets now, especially at a time when sterling is competitive, would be a good idea.

 

Routes & Branches supports British companies looking to export to new markets. Contact Jenny Robson (pictured right) for more details.

 

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Jennifer Robson,  Director at Routes and Branches