Less than 10% of small UK businesses export, while Germany boasts 44%. Given the many opportunities exporting offers, how do we help more UK SMEs step onto the world stage?
The UK has approximately 5.5 million small and medium-sized enterprises (SMEs), accounting for 99.9% of all businesses. They provide more than 60% of private sector jobs and contribute over half of the nation’s economy.
Yet, despite major opportunities in international markets, only 9% of UK SMEs engage in cross-border trade. Raising this number is essential for individual business growth and the broader economic health of the UK. Research shows that businesses with a global presence are more profitable, sustainable and competitive, employing more people than their non-exporting counterparts.
The UK government has set an ambitious target of achieving £1 trillion exports annually by 2030. Realising this goal hinges on encouraging the 375,000 UK SMEs that have exportable goods but aren’t currently doing so to adopt a more global outlook.
Getting just 10% of this group to embrace international trade could add almost £30bn a year to UK export revenues. Manufacturing, which already accounts for nearly half of total UK exports, is one of the sectors with the biggest opportunity to grow the number of exporting businesses
Why aren’t small businesses exporting?
Surveys of UK businesses consistently identify common barriers to exporting, including:
- Lack of experience
- Insufficient business support
- Regulatory and compliance requirements
- Customs procedures
- Transportation costs
- Geopolitical uncertainty
- Volatile exchange rates
While these hurdles may seem daunting, the majority are knowledge-based and can be overcome with the right guidance and support; an insight underscored by Steve Hardeman in his recent presentation to Made Members.
Drawing on two decades of exporting experience, the Managing Director of Clevedon Fasteners noted that there’s never been a better time to venture into new markets overseas.
Birmingham-based Clevedon Fasteners manufactures a wide range of specialised cold-formed components and fasteners for commercial and automotive markets. Established almost a century ago to supply the aircraft industry, the company took a leap of faith in the early 2000s that has proven immensely successful.
The decision to participate in Automechanika in Germany marked the start of Clevedon’s export journey. Two decades later, international sales represent almost one-third of total turnover with customers across 36 countries worldwide.
Steve’s advice for small businesses navigating the logistical challenges of exporting is straightforward, “Give the problem to someone else!”
He highlighted the invaluable support provided by the Department for International Trade (DIT), which regularly organises or supports pavilions at major international trade shows, offering a platform for UK companies to showcase their products and services to a global audience.
These pavilions often have a larger and higher quality stand than shell schemes offered by show organisers, with strong UK branding and a central position on the show floor. Depending on eligibility, DIT also provides financial support to help cover the costs associated with participating in trade missions, exhibitions and pavilions.
DIT’s team of experts is well-versed in export regulations and provides advice on compliance with international trade laws and guidance on shipping, customs procedures and transportation.
Despite English being the third most spoken language in the world, behind Mandarin and Spanish, Steve also stressed the importance of translating promotional materials, product literature and websites into the language(s) of the target market. Something else DIT can help with.
‘Made in Britain’ commands a premium
Steve was emphatic about the power of ‘Brand Britain’ and how highly the international community values British manufacturing and engineering. Research supports his claim, revealing a strong global appetite for British-made products.
A study of 10,000 people across 10 markets showed that UK-made products are highly regarded, with consumers willing to pay a premium for them.
Those in India lead the way, willing to pay 12% more for British-made products, followed by the UAE (11%), the US and South Africa (both 10%) and China (9%). Clevedon’s strong export growth in India, despite its goods costing up to six times more than locally made goods, confirms this.
Their willingness to part with extra cash is reflected in the esteem in which items ‘made in Britain’ are held. Two-thirds (66%) of consumers in China and India said they’d pay more for goods displaying the Union Jack because they believe them to be of a higher quality. This is way ahead of the survey’s impressive average of 39%.
The positive perception of British products is further enhanced when examining consumers who’ve already paid more for British products, with China leading the rankings at 63%, followed by India (60%) and the UAE (56%).
Additionally, when asked if they are buying more British goods than five years ago, more than two in three consumers in India, China and the UAE said they are increasingly buying British.
Essential advice for those new to exporting
Steve concluded by offering his top tips for small businesses considering taking the international plunge:
- Establish a clear understanding of export paperwork responsibilities and clarify with customers and/or carriers and agents
- Verify customer legitimacy by reaching out to the local British embassy before engaging in business transactions
- Adapt to regional dynamics and market nuances by tailoring customer interactions and understanding local preferences
- Differentiate quoting for various regions, considering the acceptance of stated prices in Europe versus negotiation-centric regions like the Middle East
- Shift from email communication to face-to-face meetings once a customer is qualified, building stronger relationships through personal interactions
- Recognize the variations in payment terms between countries and establish clear and agreed-upon terms with customers to avoid complications
- Conduct thorough credit checks on potential partners before finalising agreements to minimise potential risks
- Stay informed about regulatory changes, such as CBAM, and address them proactively to navigate potential issues and maintain compliance
- Streamline compliance by delegating the handling of certificates to carriers or export agents, ensuring adherence to regulations without burdening your internal team
Join our Next Monthly Industry Meetup!
The opportunity to openly discuss challenges, opportunities and solutions is what makes the Made in Group’s Monthly Industry Meetups so invaluable.
During these captivating virtual events, industry experts, thought leaders, and professionals gather to share knowledge, insights and best practices.
The goal is to foster collaboration, inspire innovation, and drive growth within the manufacturing community.
Each month, we feature three engaging talks from Made Members, focusing on best practices around key themes that shape the future of manufacturing, including Global Trade, People & Skills, Future Factories, and Sustainability.
The presentations are followed by interactive Discussion Groups. These virtual roundtables enable Members to exchange ideas and gain further insights on their chosen topic.
We look forward to seeing you at the next one:
*Figures taken from the UK Government, German Economic Ministry, CBI, AMRC, Make UK, Sage & Capital Economics, and Barclays Corporate Banking
**Header image from Freepik