Today Go Exporting has launched a free Coronavirus advice and support Live Chat service.
The Live Chat is available to any exporting business to ask specialist questions and get expert advice on matters relating to international trade where Coronavirus has affected their business operations.
The service is designed to support exporters to navigate as best they can the choppy waters of the pandemic and emerge from lockdown in as best position as possible.
Access the Live Chat via the button below to ask a question.
Goods exports across all four UK nations rose once more in 2019 ending a strong year heading into the current period of pandemic uncertainty for businesses.
HMRC reported that, over the 12 months, international sales of goods from England rose 2% to £254bn. Scotland saw the largest growth at 4.4% to £33.6bn whilst Wales saw sales increase 3% to £17.7bn. Northern Ireland also saw strong sales totalling £9.1bn – a 2.2% rise.
The total number of exporting businesses increased by 2.6% to over 160,000. Click here to read the full report.
Positive for UK firms as the Brexit transition period began was that demand for UK goods is increasingly coming from countries outside of the EU with the USA remaining the largest export partner in terms of value. Scotland saw highest demand growth from China.
The performance of exporting businesses across the four nations has defied expectations over the last four years, riding out Brexit uncertainty to see record sales in both goods and services. However, the current coronavirus pandemic is a challenge that few firms would have seen coming and will provide the sternest test yet of organisations large and small – here in the UK and around the world.
Next up: how worried should exporting businesses be by Coronavirus?
Businesses are reporting that coronavirus is starting to impact their supply chains.
That’s according to a survey by the Institute for Supply Management of over 600 US companies which found that nearly 75% of firms are seeing capacity disruptions within their supply chains as a result of transport restrictions due to the pandemic.
More than six in 10 companies are also experiencing delays in receiving orders from China, whilst over half are struggling to get information out of the most affected country.
Thomas Derry, CEO of ISM commented on the results that: “The story the data tells us that companies are faced with a lengthy recovery to normal operations in the wake of the virus outbreak.
“For a majority of U.S. businesses, lead times have doubled, and that shortage is compounded by the shortage of air and ocean freight options to move product to the United States – even if they can get orders filled.
Read more: How worried should exporting businesses be by Coronavirus?
Companies with a more diversified supplier-base are reeling slightly less, especially compared to firms who rely on the Chinese markets for key components or, indeed, the vast majority of their imports.
As a result of the disruption, one in six companies have downgraded revenue targets.
Coronavirus has already had a huge effect on businesses worldwide and is starting to infect the working norms of UK firms too.
On the day that the Bank of England dropped the base rate back to a historic low and The Budget included measures including covering the cost of sick-pay for small businesses, many large businesses including Google and offices within The City have already told staff to work from home whilst Italy is on almost full lockdown.
For exporting businesses, self-isolation could affect more than productivity. Coronavirus threatens supply chains and international sales. And nowhere has that been more profound so far than in China.
The Financial Times reported that China exports have plummeted by 17% in the first two months of the year as Coronavirus takes its toll, disrupting global supply chains, blocking transport, movement and dampening business activity.
Elsewhere, food and pharma exporters are reporting anxiety regarding the global picture. In India, Coronavirus has contributed to a 15% decline in meat exports, whilst a falling global demand for rice and restrictions on the outbound shipments of medicine have confounded things. In fact, it’s thought that India’s trade with China has been hit to the tune of $12 billion so far.
The Institute of Export & International Trade published potential issues affecting supply chains last month, highlighting the importance of a clear overseas strategy without over-reliance on one market. The body noted the impact that SARS had on the global economy two decades ago, warning that China’s growth since then could see Coronavirus have a bigger impact.
In terms of transporting goods, airfreight and shipping are both being impacted with the International Chamber of Shipping advising new measures to its members.
Kitack Lim, secretary-general of The International Maritime Organisation said last week that: “With no vaccine currently available to tackle the Coronavirus, all industries and governments must take appropriate steps to contain the spread.
“Shipping is responsible for 90% of global trade and recognises its responsibility in helping tackle this global health issue whilst ensuring that the wheels of global trade continue to turn.”
Read their latest guidance document for the shipping industry here.
Government-backed agencies designed to help UK businesses trade overseas are reportedly struggling to meet targets as SMEs show reluctance to sell overseas.
That’s according to a report from the British Business Bank which found that exports from small and medium-sized businesses account for just 32% of UK exports, down from 50% 11 years ago.
The report had set out to explore whether access to export finance and monetary support, in general, was fuelling the decline but found that SMEs don’t believe they lack access to the finance they need – although lack of support from banks and advice on the risks that come with targeting new markets were stumbling blocks.
The report stated that: “The evidence shows that supporting SMEs to establish and grow is more important than providing them with better access to finance specifically to support their exports.
“SMEs are reluctant to take on additional external finance, even if it means accepting a slower growth rate. Yet growth is the key to exporting: exporting SMEs tend to have higher revenues and a longer history than non-exporters. Supporting SMEs to grow therefore appears to be the best way of growing SME exports.”
Whilst almost 40% of SMEs who took part in the study said they had taken on some form of additional finance, only 8% was allocated to exporting activities. Meanwhile, a quarter of firms who were already selling overseas said they were experiencing a lack of time and other resources to sell domestically – let alone internationally. For businesses that have yet to start trading on the global stage, over half say they lack the personnel resource to do so.
The government has been active in supporting exporters, especially since the EU referendum, including the launch of new digital tools and enhancing grants to support in areas such as customs declarations, IT and training.
Read more: Two new digital tools available for UK exporters
However, many businesses still lack the experience or in-house know-how to really make a go at selling their products and services overseas. That’s despite the fact that, on average, SME exporters generate an extra £287k in sales each year, with 1 in 10 boosting profits by over 20% in the process. Yet only 5% of SMEs are considering exporting for the first time in the next 5 years.
The opportunities open to UK businesses to explore expansion into foreign markets is something we at Go Exporting are passionate about, already supporting organisations to identify high-potential markets and forge new partnerships and distribution agreements.
If your firm is considering exporting, or has begun but would benefit from outsourcing key research and growth management tasks to a specialist exporting consultancy, learn more about our services here.
The government has announced plans for up to 10 freeports to be opened across the UK as part of a wider plan to ‘regenerate communities and turbocharge Britain’s post-Brexit growth’.
Currently in a 10-week consultation period, the aim is to announce the location of the new zones before the end of the year and to begin operating in 2021.
The hope is that the freeports will boost trade, jobs and investment whilst also creating innovate business clusters and hubs of business and enterprise.
New Chancellor of the Exchequer, Rishi Sunak, commented that: “Freeports will unleash the potential in our proud historic ports, boosting and regenerating communities across the UK as we level up. They will attract new businesses, spreading jobs, investment and opportunity to towns and cities up and down the country.
“This is all part of our mission as an open, outward-looking country, championing global free trade with vibrant Freeports that work for all of the UK.”
Read more: Government confirms import controls on EU goods
Businesses secretary Andrea Leadsom also noted that the free ports will help create more jobs whilst underscoring the UK’s commitment to global free trade, whilst Minister for the Northern Powerhouse Jake Berry said that freeports will boost the region in particular.
The model would mean that duty wouldn’t need to be paid if products are re-exported, raw materials can avoid duties until made into the final product and a full customs declaration wouldn’t be required.
The government says it’s also assessing new tax measures to support investment in infrastructure and machinery around freeports to stimulate productivity and reducing the cost of hiring required workers.
The government has confirmed plans to implement import controls on goods entering the UK from the European Union once the transition period comes to an end on 31st December.
After departing the EU’s customs union and single market, all UK exports and imports will be treated equally according to the Chancellor of the Duchy of Lancaster, Michael Gove, meaning that both EU and UK firms will need to submit customs declarations and be liable for goods checks.
The government has given four key reasons as to why new customs checks will be required following the transition period, including security, treating all partners equally as new trade arrangements are agreed with other countries, collecting the correct customs, VAT and excise duties, and also simply matching what the EU says it will implement on UK goods entering the Eurozone.
Read more: Two new digital tools available for UK exporters
Michael Gove said at a Border Delivery Group stakeholder event that: “The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow.
“As a result of that we will be in a stronger position, not just to make sure that our economy succeeds outside the European Union but that we are in a position to take advantage of new trading relationships with the rest of the world.”
Businesses are urged to ensure they’ve applied for an Economic Operator Registration and Identification number (EORI) as soon as possible.
HMRC has also announced further funding and extended the deadline for businesses to apply for grants to help prepare for additional customs checks and paperwork following the transition period. Learn more about the grants and how to apply available here.
Businesses are being urged to apply for large grants to help complete customs declarations.
Offered by HMRC, there are three grants available designed to help the recruitment, IT and technical requirements that companies will face when completing customs declarations and processes.
There is also funding available for customs intermediaries for the hiring of new staff and IT improvements too.
Here’s all the information on the gov.uk website.
What the grants are for
The three grants cover recruitment, training and IT improvements. Core businesses requirements are that you are established in or have a branch in the UK when the grant is paid, and that you’ve not previously failed to meet tax obligations (for which HMRC will check).
Businesses can only apply for one of the three grants available, too.
Recruitment grant
The recruitment grant is available to businesses that have been established in the UK for at least 12 months and currently complete customs declarations on behalf of importers and exporters.
The funding must be used to cover recruitment and salary costs of new employees from October last year where those employees are in a role designed to assist with the completion of declaration forms.
The grant affords up to £3,000 per employee, up to £10,000 for any employee recruited before 31st January 2021 (to cover the first-quarter salary) and also 50% reimbursement on recruiter fees.
Training grant
The training grant is available to businesses which import from or export to the EU and either currently or intent to complete customs declarations.
The grant can be used to cover upskilling employees in areas such as completing customs declarations, carrying out customs processes including relevant training in safety and security, as well as other import and export processes.
The grant can be used to either support the costs of in-house or external training but cannot be used to fund the cost of existing training programs.
The grant available for training is up to 100% of the cost to the employer, limited at £2,250 per course or £250 per employee for in-house training.
IT improvements grant
The IT improvements grant is available to businesses with fewer than 250 employees and an annual turnover of less than £50 million – which are currently completing customs declarations for imports and/or exports.
It’s designed to help cover the cost of funding software purchases but that software must be an off-the-shelf solution and not be used to part-fund a self-built program.
Read more: Two new digital tools available for UK exporters
The grant can also be used to reimburse former expenses on relevant IT improvements since 31st July last year and covers areas such as additional hardware for the customs software to run on, installation and configuration costs, one-year’s license fee of the software and staff training.
Learn more and apply to the Customs Grant Scheme, which has been extended until 31st January next year, here.
The Department for International Trade has this month launched two new digital tools to support businesses exporting goods in and out of the UK.
The tools, available on the gov.uk website, explain product and country-specific details regarding tariffs and regulations. Pooling this information into one online location is designed to make it easier for businesses to trade, as well as saving them time in the process.
Trade with the UK
The first tool, Trade with the UK, provides information on tariffs, taxes and rules and is always up to date. It also details any duty relief schemes, if import licenses are needed and details UK commodity codes.
Use it now here – https://www.gov.uk/get-rules-tariffs-trade-with-uk
Check How to Export Goods
The second online tool, Check How to Export Goods, provides exporting firms in the UK into international markets with information around duties and customs procedures for more than 160 territories.
It also sets out what exporting documents you’ll need as well as pooling related information from other government departments including HMRC and the Department for Environment, Food and Rural Affairs where they relate to the exporting of products overseas.
See that here – https://www.gov.uk/check-duties-customs-exporting
The new tools will be welcomed by exporting businesses as the UK enters the transition period with the European Union, helping to pool required information surrounding exports in one handy online place.
Read more: SMEs have bigger worries than Brexit
Whilst for large and enterprise organisations, Brexit has dominated the list of top headaches for over three years, for small businesses, other challenges are deemed far more pressing.
That’s according to a new report from Clearwater International, titled Growth Europe, which surveyed some 2,100 small and medium-sized businesses across Western Europe.
Of those firms questioned, from the UK, Ireland, France, Germany, Italy, Spain, Portugal and Denmark, Brexit only ranked as the fifth biggest challenge that their company currently faced, behind maintaining market position and recruiting skilled staff.
The top 10 challenges included:
- Recruiting skilled staff (33.3%)
- Maintaining market position (31.7%)
- Finding new customers (28.3%)
- Access to foreign markets (24.4%)
- Brexit (23.9%)
- Political uncertainty (22.9%)
- Dealing with regulation (19.9%)
- Late payments (15.4%)
- Getting external investment (15.3%)
- Access to finance (14.5%)
Whilst the data in relation to concern over Brexit was somewhat skewed by the EU-wide SME survey, analysis of the 500 UK firms who took part in the study still only ranked the imminent departure from the EU as their third biggest challenge, with 45% saying they were still exploring markets within Europe and nearly 50% saying they are looking to expand further afield.
Meanwhile, in the Republic of Ireland, 62% of small firms report that they expect a positive impact as a result of Brexit.
Nearly all of the countries who’s businesses took part said that recruiting was their primary challenge, followed by maintaining market share and finding customers.
In essence, for small businesses anyway, the same challenges exist now as always have done – despite the huge upheaval that Brexit and recent political wranglings may have suggested.
Clearwater International’s David Weavers commented on the report’s findings that: “A lot has been said about the supposed sluggish performance of European companies in comparison to their rivals in the US and China. But the results of our study show that there is a lot to be optimistic about in both the UK and continental Europe.
Read more: UK SMEs confident of achieving 2020 aims despite Brexit uncertainty
“The biggest challenges facing SMEs at the moment, such as difficulties in meeting expansionary recruitment targets, relate to things which may constrain growth but aren’t necessarily suggestive of excessive downward pressures.
“As such, the data seems to indicate that companies are looking to the future from a position of relative strength and a desire to maintain or enhance their current market position, rather than from a position of weakness.”
