International Trade

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SMEs know the value of exporting – but are too uncertain to give it a try

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The UK is set to miss the target set by the government in 2012 to raise the level of exports to £1tn by 2020, reiterating complaints from former minister of trade Francis Maude that the goal is a “big stretch”In fact, Cebr forecasts still stand below the £1tn level in 2035. 

The share of SMEs exporting has also declined. It fell from 36 per cent in 2013 to 34 per cent in 2015 for medium firms, with smaller ones experiencing a drop from 26 per cent to 25 per cent. 

Johnathan Quin, CEO and co-founder of World First, explained one of the main motivators for exporting is improving the bottom line. But while it was suggested that trading internationally gave SMEs over £287,00 in revenue over the last 12 months, only five per cent made plans to export in the next five years. This is also despite nine per cent suggesting exports boosted profits by more than 20 per cent.

“British SMEs continue to trail behind EU counterparts when it comes to exporting,” he said. “The UK ranks in the bottom five across Europe when it comes to the share of all exports accounted for by SMEs despite the fact that the nation is one of the best when it comes to absolute level of exports. With SMEs accounting for over 99 per cent of all private sector businesses in the UK, there is significant potential to boost exports by encouraging more SMEs to trade internationally. “

Even if that five per cent export in the next few years, he said, it could add £33.7bn to the UK GDP.

While the ordinary barriers to exporting – language, cultural differences, regulatory challenges and a sense of whether a product or service is suitable for the market – still held true. But a new hurdle has been added to the difficulties SMEs face when trading.

Some 42 per cent now believe the consequences of the Brexit result will have a negative impact on exporting. The global nature of the UK’s product supply chains and a weakening of the pound were cited as worries for business owners. This was coupled with the uncertainty of whether Britain would face a rise in the cost of imports through increased tariffs.

“The fallout from the UK referendum has brought about a significant amount of uncertainty for businesses but, if anything, it reinforces the importance of taking a global view and exploring new markets. As the government’s Brexit negotiations take centre stage over the next few years, we would urge that SMEs are included and actively consulted throughout the process in order to ensure their views and needs are actively considered.”

“It is clear that the UK’s SMEs need much more in terms of inspiration and support to seize the growth opportunities that exist in global markets. The creation of a government minister for scale-ups would go a long way in supporting bosses in their international development and drastically improve this figure.”

Image: Shutterstock

Meanwhile, British SMEs that harness ecommerce and exports have higher business growth confidence than those that do not, according to research firm Capital Economics’ SME Growth Tracker, which was commissioned by Enterprise Nation and Amazon UK.

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