International Trade

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The challenges exporters face

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There are nearly 5m SMEs in the UK and their role in the economy is steadily growing, according to the House of Lords. A structural shift is taking place whereby SMEs now contribute more than half of UK employment and 48.8 per cent of turnover.

With the advantage of Britain’s range of international connections, its ethnically diverse population and universal language, UK SMEs are well placed to export. In fact, this is the first time since the reduced levels of December 2011, that more SMEs are reporting increased levels of exports.

But not enough SMEs are exporting. The SME Business Barometer reveals that only 19 per cent of SME employers are currently selling goods or services, or licence their products, outside of the UK. This is a worrying statistic given the economic importance of exporting.

But why are SMEs so reluctant to jump on the export bandwagon?

Difficulty finding and understanding overseas customers 

Over 35 per cent of non-exporters claim they wouldn’t know which export markets to target. Some of their greatest fears ranged from not understanding export documentation, not speaking the language of the country they’re selling in and a lack of overseas offices. 

International credit risk 

One of the number of concerns for a company aiming to export abroad, is the credit worthiness of an international company. 

Lack of finance 

Access to finance is still a key issue when it comes to SMEs, with most believing it will cost them a lot of money to become a global business. As a result of traditional misconceptions, or own experiences buying goods from overseas, most UK non-exporters believe the costs of international trade outweigh the benefits.

Red tape 

Some 25 per cent cited red tape as their key barrier to export. Be it domestic or international, this regulation often creates uncertainty for companies and can detrimentally affect productivity. 

Risk-averse funding

Perhaps the greatest challenges for SMEs in moving from a national to an international operation, is overcoming exchange rate fluctuations, dealing with the cultural, legal and language barriers, coping with extended payment terms and maintaining a healthy cash flow.

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