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Brexit: researching new non-EU export markets

One of the most cited Brexit business opportunities is that there’ll be more freedom to export products and services globally – free from EU trade restrictions. So, can your business capitalise on global trade opportunities?

Where are we at with Brexit?

The UK left the European Union (EU) on 31 January 2020, ushering in the start of a Brexit transition period that will last until 1 January 2021. During this time, the UK and EU will seek to negotiate a new trade agreement.

Until 1 January 2021, free movement of people and goods between EU countries and the UK will continue. The UK will also stay within the EU VAT regime and EU legislation will continue to apply in the UK until the end of the Brexit transition period.

In March 2020, senior UK government figures claimed that the UK will walk away from trade talks with the EU as soon as June 2020, if a broad outline of a free trade agreement between the UK and EU hasn’t been agreed. EU representatives have said it is “virtually impossible” to create such a deal in just 11 months, if the UK diverges away completely from EU laws, rules and regulations, which is the UK government’s stated aim.

How could trade rules change post-Brexit?

The UK government wants a “Canada-style” trading relationship with the EU, meaning few tariffs (ie taxes on imports) and higher quotas, so goods could be exported in greater volume without extra charges levied.

Although the EU would have no legislative power in the UK, the UK would retain much EU legislation, absorb it into UK law and amend it where the government deemed it necessary. Some EU legislation may be replaced or abolished altogether.     

If a new free trade agreement cannot be reached, the UK and EU will trade on WTO rules, with tariffs and lower quotas introduced. VAT rules will change and additional admin and customs charges would push up prices or reduce margins for UK businesses selling to EU countries.

As the UK will no longer be part of the EU Customs Union, some predict serious border delays post Brexit transition. Because it could become more problematic and less profitable to sell to EU countries, some UK businesses selling overseas may already be targeting non-EU markets. Thorough research is essential before trying to sell to any new export market. So, how do you go about it?

Key statistics: How much does the UK export outside the EU?

  • Spinning globe
    Total non-EU exports

    About 55% of all UK exports are sold to non-EU countries. According to Office for National Statistics (ONS) figures, UK exports to countries outside the EU are now worth about £376.7bn a year.

  • Overhead shot of freight ship
    Growth in non-EU exports

    In the 12 months to September 2019, UK exports to countries outside the EU grew by 6.3% – nearly five times as fast as exports to countries within the EU (source: ONS).

  • Side view of young businesswoman walking with suitcase
    UK service exports

    According to the government: “Non-EU markets remain the top destination for the UK’s renowned service sector. 60.2% of UK services exports, including financial, travel and transport, go to non-EU markets and they are now worth £190.8bn.”

  • New York skyline from above
    Main UK export market

    By some way, the USA remains the number one export destination for British goods and services, with “increased demand driving exports up 11.4% to £133.7bn [in the 12 months to September 2019] – compared to £120bn in the previous 12 months.”

  • Mount Fiji
    Japan is a key UK trading partner

    Already the UK’s fourth largest non-EU trading partner, in the 12 months to September 2019, UK exports to Japan grew by 7.6%, from £13.8bn to £14.8bn (source: ONS).

  • Australia on map
    Other important non-EU export markets

    In addition to the USA, the UK’s most important non-EU export markets include China, Hong Kong, Turkey, India, Canada, Australia, Singapore and South Korea.

Checklist: Identifying possible non-EU export markets

Here are some good ways to establish the opportunities and risks of exporting to certain overseas markets. 

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What information do I need to find out before exporting?

Before entering any new sales territory, thorough market research is essential if you want to avoid expensive and potentially disastrous mistakes. There are many questions you need to answer if you are to better understand whether targeting a new market is viable (it may not be).

  • You must assess demand and find out how big the market opportunity is for what you’re offering.
  • It’s essential to discover what potential customers buy in that new market, how they buy it and – crucially – how much they pay.
  • You also need to know what quality and service they expect.
  • It’s vital to find out what competition you’ll face, too. Who would your competitors be? What do they sell, how do they sell it, how much do they charge and what services do they provide?

These are all key questions to which you must find answers.

You should also identify any potential issues or barriers you’ll encounter in new markets, which could include local market rules and regulations, duties, taxes, standards, etc. And there are logistical considerations, such as how you will deliver products or services to the new market and how much this will cost. Packaging and labeling could be another issue, for example, you may need to produce new packaging in a new language with new product details.

How to research possible new export markets

You can find out a wealth of information online from your UK base (which is called ‘desk research’). It’s a great place to start and costs nothing other than your time. To save time, you can pay others to carry out research for you or to access data based on research others have already carried out. You need to be sure of the reliability of this research.

Once you have done this and the initial signs are promising, it’s wise to travel to new potential sales territories to carry out ‘in-market’ research. This can reveal the most valuable information and provide the opportunity for you to make good local contacts. You might be able to combine your visit with a trade show or conference. 

Each year the DIT provides Tradeshow Access Programme (TAP) grants (£500-£2,500) to enable UK businesses to attend select trade shows around the world. Visit gov.uk for more information about the TAP.

Comprehensive market research can help you to decide what you need to sell, how and to whom, and – crucially – how much you can charge. You must be sure that your sales will cover all associated costs and generate sufficient profit for your business. However, if you target the right market(s), in the right way, it can bring a welcome boost to your turnover and really help you to take your business on to new heights.

hand browsing through stack of magazines

Where can I get advice and information on exporting?

The DIT’s Exporting Is Great website contains a wealth of information for UK businesses that want to sell their products and services overseas.

Visit GOV.UK to check duties and customs procedures for exporting goods and read step-by-step advice on exporting goods to countries outside the EU.

The international trade pages of the British Chambers of Commerce website also features much useful information for UK exporters. The BCC has a network of offices in various countries that want to help UK businesses grow and trade successfully across the world.

Open to Export is an online community that is “backed by government and business to help UK businesses get started selling overseas”. Created by the Institute of Export and International Trade, it provides advice on how to select the right overseas markets for your business. The Institute’s website also features guides to doing business in some 50 countries.     

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