Exporting is good for Britain and for individual businesses, but many owners are daunted by the challenges. At this year’s GTR UK Trade and Export Finance conference, Santander’s Mark Ling joined others to discuss the support available to exporters from trade bodies and government and how export support and access to finance can be improved.

Export is one of the key performance indicators of the UK economy and efforts to encourage small and medium-sized businesses to sell into overseas markets lie at the heart of the UK government’s strategy to boost growth and rebalance the economy.

Against this backdrop, the annual GTR UK Trade and Export Finance conference on June 15, 2016, provided a crucial platform for banks, industry bodies and government agencies to discuss the opportunities and challenges. “It really has emerged as the pre-eminent export conference in the UK,” says Santander’s Head of International Trade and Working Capital, Mark Ling.

The debate this year was lively and wide-ranging, with support for business from government agencies – notably UK Export Finance (UKEF) and UK Trade and Investment – a key discussion point. “There has been a significant improvement in capacity at UKEF and that was welcomed at the conference,” says Ling.

The challenges faced by small and medium-sized companies were high on the agenda – and in particular the complexity of the financial ecosystem. “Many SMEs would like to be able access financial support from a single source – a one-stop-shop solution,” says Ling. “It’s unlikely that any organisation could provide everything. But what you could have is a virtual one-stop-shop where one provider acts as a gateway to other services.”

The bigger picture
Boosting UK export performance is a priority. In his 2012 Budget, George Osborne set a target to increase the value of exports to £1tn by 2020. It’s an ambitious goal but what we’ve seen over the last few years is an increase in exports across most regions of the UK.

According to an analysis of Office For National Statistics figures carried out by Santander Corporate and Commercial and published in March 2016, the number of firms exporting goods and services from the UK rose by 5% between 2012 and 2014 to a total of 221,300.

The analysis shows that more than half of Britain’s exporters are located in London, the South East and the East of England. But there has been strong growth in export activity in other regions. For instance, the number of exporting businesses in Wales increased by 32% in the period and there were 21% and 17% rises in Yorkshire & Humberside and Scotland respectively. Meanwhile in the East Midlands and North West the growth rates were 12% and 11%.

“Our analysis shows some strong growth in the number of British firms that export, particularly with regards to the services sector”, says John Carroll, Head of Product Management & International Business at Santander. “However, it is vital that more firms focus on international trade as a primary driver of growth.”

Examining the benefits
The primary reason for exporting is to reach not only new customers but also a much wider pool of potential buyers. However, benefits reaped by exporters extend beyond higher sales and profits.

According to figures published in Bringing home the benefits – a UK government/UKTI report published in 2013 – 34% of companies become more productive within a year of exporting and 70% of businesses said exporting had driven innovation and the upgrade of products. Crucially, the UKTI research found that exporters were 11.4% more likely to survive if doing business overseas.

UKTI also found a growing interest in high-growth markets such as China, Asia and Latin America. And although these have a reputation for being ‘difficult’ for small firms, they are certainly not impossible to address.

The challenges
Despite the benefits, it is undoubtedly true that selling overseas can be daunting for a business that has never done it before.

Research by Santander shows that the initial challenge lies in identifying potential markets. Most entrepreneurs begin with at least some knowledge of their domestic markets. For instance, an exporter selling to consumers in the retail market probably has a broad idea of target stockists, the kind of goods they sell and their customer base. When addressing an overseas market, there’s a whole new learning curve – one that starts with an assessment of whether goods produced for the UK customer have the potential to sell in, say, China, the UAE or Brazil.

The first indication that a market has potential might be contact from a prospective buyer and a few small incremental sales. But to address the market more comprehensively, you’ll need an understanding of: customers and their preferences; the workings of the market in terms of competitors and distribution channels; and regulatory requirements and tariff regimes. There will also usually be a need to find people on the ground to work with, such as distributors, legal advisers and marketing agencies.

Pinning all this down can be difficult from a distance of hundreds or thousands of miles and some aspects of the market might be less than obvious. So how do you get a feel for your customers and partners from a desk in Coventry or Exeter? To address this, Santander has developed a Trade Network; the Network leverages Santander’s local networks of third parties in the markets in which it operates, to connect businesses with the right support overseas.

Accessing the knowledge
When the British Chambers of Commerce (BCC) asked businesses what they need to encourage them to export (in the 2015 report Export: the engine of growth), 11% of respondents said they needed more knowledge and 20% said they would benefit from better access to agents and distributors. Meanwhile 26% called for increased funding.

Knowledge of the target market is key. The question is, where does that knowledge and connectivity come from? The good news is that help is available. For instance, UKTI gives information for just about all the world’s trading nations.

Santander is also committed to helping exporters. We can help businesses to find and connect with opportunities overseas and to overcome the barriers typically associated with international trade, such as a lack of knowledge and fear. These tools include the Santander Trade Portal and Trade Club, which are free for Santander Corporate and Commercial Customers. The Trade Portal is an online database of export information, whilst the Trade Club is an online community of business clients of the Santander Group across 14 countries, where businesses can establish trade links.

As John Carroll observes, there is a genuine need for on-the-ground support to identify business opportunities. “It is clear that there are significant opportunities globally for UK businesses across a range of sectors. Santander is passionate about helping businesses make the most of the incredible benefits that exporting can bring. We are dedicated to connecting our customers with overseas opportunities and providing support across the whole export journey, both here in the UK and overseas.” he says.

From the ground up
Desk research into overseas markets, followed up by phone and/or emails, can take you a long way and even win orders. But as is the case in domestic selling, meeting prospective customers, agents and distributors face-to-face is hugely important.

Again, there are resource issues. Before any sales are confirmed, regularly flying to China, the US or Latin America to meet potential partners or buyers can seem like a drain on money and time with no guarantee of reward.

That’s where trade missions come into the picture. Trade missions introduce businesses to key contacts to help build connections and secure deals, as well as providing the opportunity to meet with lawyers, agents, distributors and consular officials who know the markets. Many are organised by UKTI.

Again Santander has an important role. For several years we’ve organised trade missions to markets such as the US, Poland, Germany, Spain, Brazil, the UAE and Mexico. Aimed at growing, ambitious and export-oriented firms, these missions offer subsidised places to those firms that are selected. To ensure businesses are fully prepared for when they make their first journey to a new market, we also run a program of Virtual Trade Missions. These missions, conducted via video conference, allow businesses to pitch their products to distributors overseas, as well as gain useful market insight, without incurring the time or cost associated with a physical mission.

With our international presence, and through our network of alliance bank partners, we’re in a strong position to provide the necessary support for both importers and exporters when creating, executing and managing international trade.

Buoyant export activity is essential for the UK’s economic health but more importantly, exporting boosts individual businesses. The imperative for policymakers, industry organisations and organisations like ours is to give the right support.

Find out more at www.santandercb.co.uk