To coincide with its international trade conference last week, the British Chambers of Commerce (BCC) issued an ‘alarm bell’ in its Q3 2014 Quarterly Economic Survey, which showed the weakest UK export growth in nearly two years.
Highlighting the challenges facing UK exporters, John Longworth, director-general of BCC, said that despite high confidence levels amongst UK exporters “our latest International trade survey highlighted that less than half of the businesses we surveyed [7,241] have ambitions to grow internationally. This proves that we need to do more as a nation to take the fear out of exporting”.
He added: “The results for domestic manufacturing and exports in this quarter may be the ‘first alarm bell’ to warn of slower economic growth.”
One of the key findings was that all export balances fell in Q3, for both exports and services; manufacturing export sales fell from +30% in Q2 to +16% in Q3, while service export sales dropped by 17 points to +14%.
“The disappointing decline in exports highlights that we must do something radically different,” Longworth added.
“If we in Britain are serious about promoting business investment we must remove some longstanding barriers. Access to growth finance for small, ambitious firms remains insufficient. The business rates firms pay are the highest in Europe and a major disincentive for investment. We are calling on the government to freeze business rates for all companies until 2017’s planned full revaluation of premises, and perform a review and reform of the broken business rates system by 2022.”
The International Trade Conference
At the conference in London, GTR joined delegates to discuss the current state of the UK exporting market and heard from a number of these ambitious firms.
An array of speakers, including Dragons Den’s Theo Paphitis, and managing director of Amazon.co.uk, Christopher North, joined SME UK exporters to share their exporting stories and tips.
As the owner of Ryman and Robert Dyas, Paphitis described how his firm was looking abroad for export opportunities, notably towards India. He said to GTR and delegates: ““We now export less than 50% to the EU, there is a massive world out there.”
Adding to BCC sentiments on exporting confidence, Paphitis added: “We must move the barriers to incentivise exporting. We have a limited market in the UK and you have to go international.”
“Don’t take risks, take calculated risks. There’ll be challenges, but work out the risk/reward ratio,” added Paphitis, but warned: “Do your homework get many reference points, not just from the BCC or UKEF. The first step in international business is choosing the right partners.”
“Overcoming the fear of exporting is a key challenge,” he stressed to attending aspiring business owners, adding: “You can never ever do too much prep for the market you’re about to go into. You will all screw up, I do regularly. When you do it’s about how quickly you recognise it when it happens, address it and move on.”
Many of the talks centred on the barriers to entry in new exporting markets, and the focus on cultural differences and language barriers was a recurring theme of the day.
National head of international, foreign exchange and trade at Barclays, Steve Childs, told GTR and delegates that only 20% of UK SMEs are currently exporting.
“UK firms typically reach a domestic ceiling after four years,” he said. It is then after this point that they look to export. However, Childs said that the climate is different now: “It’s all changed. The Made in Britain Brand has reclaimed its appeal around the world.”
“Businesses that do export grow 20% faster than those that don’t,” added Adam Marshall, director of policy at BCC.
Speaking to GTR about digital support in moving into new markets, Childs says: “The digital side of the business is something this market is embracing.”
In one of the day’s seminars, Fi Akinsole of Virgos Lounge said that her business has embraced social media and e-commerce to expand to UAE and Australia: “Social media makes the world so small.”
Highlighting the growing confidence in becoming more digital, Christopher North, managing director of Amazon.co.uk, said: “In a UK entrepreneur survey we recently conducted, 75% of respondents said technology gave businesses more control, while 60% said that the using platforms helps to access new markets.”
Technology is driving down the cost of entry, making trading links easier to establish, the Amazon MD said: “Technology platforms will become primary drivers for economic growth.”
Representatives from the government discussed trade links with a number of countries around the world. Gareth Thomas, shadow minister for Europe, said that India was a clear opportunity for UK exporters and touched on the numerous UK free trade agreements which are currently pending Highlighting the lack of education that still impacts the UK potential exporter market, eyebrows were raised by a number of delegates regarding the FTAs, one guest informed GTR: “The government hasn’t told us anything about these agreements, what does it mean for my business, will it cost me?”
Kit Malthouse, deputy mayor of London for business and enterprise, admitted: “One area we don’t have a strong trade link with is South America. There’s huge opportunities beyond Europe and we need to make that clear on the UK export agenda.”