Whilst the news regarding increased investment for UK exporters in this years budget is extremely positive, there is still a lot of work to be done before the governments 2020 target is achieved.
UK SMEs and businesses, whether they are exporting or not, must have a good understanding of the overseas opportunity and access to the relevant information and resources.
At first glance, 2014 was a mixed year for UK exports. On the one hand we saw missed government targets and uncertainty around the Eurozone, but also a steadily growing UK economy with positive predictions from the IMF and encouragingly, exporter confidence at its highest levels ever.
As UK businesses look to 2015, the autumn statement announcement supports that confidence. International trade is seen as vital to long-term survival by most SMEs and there continues to be high demand for British products. With growth in overseas sales set to increase four times faster than in the UK market and research suggesting that companies exporting internationally are twice as likely to outstrip their counterparts that only trade domestically, there is a strong business case to grow internationally.
Exporters starting out should carefully consider which markets are right for their product. The majority of exporters expand into markets that resemble their own understanding a target markets culture or language is an important factor in determining its attractiveness. The EU is therefore the key destination for UK exports, but with uncertainty around future economic growth, UK exporters should also explore opportunities further afield.
Using the tried-and-tested export curve is something that we advise all fledgling exporters to apply, which involves starting with well established, English-speaking markets such as Australia and Canada. There are great benefits to starting your export journey with these territories, as they have relatively easy customs to navigate and many cultural similarities to the UK. By starting with English-speaking markets, businesses can grow in confidence before progressing to more challenging areas.
For a more sophisticated export business casting the net wider there are exciting, fast growing and emerging markets to capitalise on. China is still the most attractive developing market, and in 2013 overtook the US as the highest global trader. With a population of over 1.3bn people and a reputation as the second biggest consumer of luxury items in the world, China should continue to be a leading choice for those wishing to expand their business overseas. Trading in China can be initially complicated due to regional and cultural differences and customs requirements, however with thorough research and careful planning these barriers can be mitigated.
The MINT countries Mexico, Indonesia, Nigeria and Turkey should also continue to be considered as potential export partners, with exponential growth in terms of wealth and population expected over the next few decades. Additionally, exports to Chile increased by 72 per cent this year, equating to nearly 1.2bn worth of goods. A number of British retailers have seen success in this territory, exporting some of our best-loved Brand Britain products to that market ranging from high quality design products to Earl Grey tea.
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With the right market research, careful planning and an understanding of your audience, success in territories that initially might have not seemed obvious can be achieved. It is no denying that new markets can pose challenges, with the main barriers often cultural aspects, infrastructure and partnerships and distribution channels are an important strategic consideration. But there is also a wealth of resources available, such as DHLs Export Advisor Service, which can provide expert insight into local territories and guidance on the services that bodies such as the UKTI and local Chambers provide.
At DHL we have confidence in the UK export market and remain focused on delivering a world-class service to our customers. Increased investment from the government presents further opportunities for UK businesses and as we enter an election year, it is important that additional uncertainty does not derail the UKs export journey. Well endeavour to build the same confidence in SMEs so that international success and the governments 2020 target can be achieved.