With Brexit causing a drop in the value of the pound UK exports are becoming more competitive and firms wanting a new route to growth should consider exporting. The government has recognised this and is further pushing its previously announced First Time Exporters initiative that helps firms new to exporting.
The UK is a nation of exporters. A June 2016 House of Commons briefing paper noted that in 2015 the country exported £223bn to other EU member states, a figure that represents 43.7% of the overall global total of £510bn. Based on May 2016 government data, it is estimated that 9% of the UKs SMEs export and a further 15% are in the supply chains of other businesses that export. If you are looking to move into this area, there are a number of sources of advice available.
Before you start exporting you need to be certain that there’s a demand for what you’re selling. Just as importantly, consider if your products will work without any modifications – electricity is a key point to note. Also think how an unaltered UK product would appear in an overseas market. In China, for example, white means death and red is considered lucky. At the same time, take advice on your company name and that of your product. Be very aware that what might seem innocuous in the UK could appear, for example, to be a form of vulgar slang in your target market. International brands spend fortunes trying to find product names that mean nothing and which are inoffensive.
It’s important to give thought as to the method of distribution, noting that local infrastructure may not be to UK standards. Also how you are to communicate and promote your company overseas. Apart from language barriers there may well be issues that relate to packaging and health and safety.
Do also take time to investigate the state of play when it comes to protecting your intellectual property such as trademarks, copyright and designs. If you can’t protect yourself, you may need to find other markets to trade in.
Other questions exporters should be asking of information sources include:
Trading outside of the UK means dealing with currency risk. If you get your pricing right but fail to protect your currency rate, you could, on the one hand make more profit if the rate swings in your favour. However, a move the other way could wipe out your profit - and more.
For anything other than personal travel money your best bet is to use a foreign exchange broker (just search on Google). They can offer advice and services on options such as forward contracts (a currency contract at today’s price that is paid for in the future), a stop loss order (which guarantees a minimum exchange rate) and a limit order (selling currency for another when the rate reaches a given limit).
You need to get paid for your exports and just as there are risks to trading in the UK, there are risks in selling overseas. You will also have to cope with language and cultural barriers as well as different legislation and of course, distance. The following offers practical advice on how you can ensure the risks are minimised.
The first step is to understand the country risks for your customer including the political and economic risks as well as any foreign exchange and conditions.Find out more
It’s also worth considering credit insurance which, for a fee, will cover a loss should the customer not pay. You can insure against commercial risk (pure non-payment) or political risk (some form of intervening government action).Find out more
UK Trade and Investment (UKTI) helps businesses export and grow into global markets. They also help overseas companies locate and grow in the UK.Read more
If you are selling goods or services online to countries outside the European Union (EU) they are known as exports and there are certain guidelines you must follow.Read more
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