As UK-US talks on a free trade deal officially get underway, there’s hope in the SME community that an opportunity arises which will help mitigate some of the damage caused by Covid-19.
Almost 200 negotiators will be locked in detailed discussions, via video call, every six weeks in a deal that could see UK-US trade, already valued at almost £221bn a year, expand massively. The big hope for UK exporters is that tariffs imposed by the US, especially on farming, textiles, food and manufactured goods products, are lifted.
International trade secretary, Liz Truss commented at the commencement of discussions that: “The US is our largest trading partner and increasing transatlantic trade can help our economies bounce back from the economic challenge posed by coronavirus.
“We don’t just want any trade agreement. We want an agreement that will work for small business, an agreement that works for consumers and workers, and an agreement that will benefit all regions and nations of the UK.”
Currently, there are 30,000 SMEs in the UK exporting to the US and Federation of Small Businesses surveys have found that it’s the most important export market for these businesses – 46% saying it’s their key target region over the next three years.
Mike Cherry, national chair of the FSB commented that: “For small businesses, the US is the number one single market of choice for importers and exporters for the next three years, which is why these negotiations are so critical. With our economy likely to be suppressed for some time, we are going to need small businesses that trade to lead the way.
“Small businesses are already the backbone of the UK’s domestic economy. And especially in these difficult times, we now need to see their share of global trade start to catch up. We can do this by putting SMEs front and centre of all new trade agreements.
Read more: Coronavirus Live Chat support leads to government emergency loan policy change
“Securing a pro-small business free trade agreement, which includes a comprehensive and dedicated small business chapter, will be essential to addressing the needs and distinct challenges that small firms face when engaged in transatlantic trade.”
Enterprise Ireland has launched its UK Local Authority Report following working with Go Exporting to produce and provide the research and overview.
The report outlines the 353 UK councils, their structure and the opportunities they present for Irish companies.
See below for a snapshot of the report.
Enterprise Ireland is the Irish Government’s trade and innovation agency, supporting innovative Irish companies through all stages of their growth and creating connections to international customers.
Read more: Coronavirus Live Chat support launches for exporters
Full access to the report can be garnered by contacting one of Enterprise Ireland’s UK market advisors.
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?
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.
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
Two years ago, the United Nations warned that the planet had just 12 years to limit climate change catastrophe. Now, as 2020 gets into full swing, the latest UN report suggests little progress has been made. In fact, it’s getting worse.
A study by the Climate Accountability Institute highlighted the effect that some businesses are having on the climate, with the top 20 worst emitters, including Saudi Aramco, Chevron, Gazprom and BP causing a third of all carbon emissions.
But what can businesses who want to make a positive contribution to changing the direction of travel for the environment do? Organisations still want to (and should want to) strive for profitable growth and globalisation has created so many opportunities for businesses all over the world – especially in the UK where goods exports are at a record high.
But what can environmentally-aware businesses do to support a decline in greenhouse emissions whilst still remaining successful on the international stage?
How can an exports business become a green exporter?
Understand most environmentally-costly modes of transport
How are your products currently shipped around the world? Cargo ships are the most popular mode of distribution with around nine in 10 items shipped across the globe onboard giant vessels. But shipping produces more carbon emissions than most countries and pollutes the ocean with toxic fuel and other waste too. In fact, ships are responsible for more than 18% of some air pollutants.
But air freight is just as costly, with global business operations emitting almost 171 million tonnes of CO2 in 2018 – although alternative fuels, operational efficiency and airline carbon offset initiatives are starting to pave a way to a greener airline industry. But this will take time.
Some shorter deliveries could instead be replaced by road haulage, especially once electric lorries become more commonplace. Train freight (electric) would also be a viable alternative, although the costs and added travel time would need to be factored in.
Some shipping companies are greener than others, and the US Environmental Protection Agency’s SmartWay Program can suggest transport companies with the best emission performance.
And the way that product is shipped can also be reviewed. Is the packaging recycled or can easily be re-used? Can your fulfilment and delivery suppliers implement an initiative where packaging is reclaimed once the items are delivered to the customer to be used once more?
Adopt a local fulfilment model
There are a number of distribution, shipping and fulfilment models enrolled by businesses. Some, like just-in-time, are fantastic for cost-saving and space-saving too, but require the frequent shipment of specific parts all over the world.
An alternative which could work for some companies is to create fulfilment hubs in parts of the world where they’re most active. So, for example, instead of shipping 10 products from the UK to Germany every week, ship 40 in one go and hold the stock.
Sure, this is an over-simplified view and the planes or cargo ships carrying your original 10 products will still sail without them with other goods on board, but a shift in thinking across an entire market segment can begin to pay dividends over time.
Change the way business is done
It has never been easier to conduct international business – without having to leave the office or even the kitchen table. Free business chat tools such as Skype and conference call systems can start to replace some of the meetings which really could have been an email, saving on travel emissions as well as time and costs.
Of course, some meetings have to happen face to face to form initial relationships, visit sites or inspect procedures. But with 60% of aviation emissions arising from international flights, there’s a good chance a video conference would work almost as well as an in-person one for a large chunk of business meetings and interactions.
Make carbon savings at home
Global organisations can have numerous bases and hubs, from head offices to satellite work stations and fulfilment centres – not to mention manufacturing plants. All of these areas can enact localised initiatives to make a positive contribution towards tackling climate damage.
Read more: UK exports outside the EU growing five times faster
These could range from going paper-free in offices to switching energy suppliers to one which guarantees a certain percentage of supplied power is from a green source, such as solar, tidal or wind.
Offset carbon contributions
After installing a number of green initiatives, it’s still highly unlikely that an active and successful exports business is going to reach carbon neutral. So, instead, businesses can look to offset the remaining contribution to global warming but offsetting carbon contributions.
Some airlines have already started to do this, as well as smaller retailers, by making promises to plant trees for every sale or flight – trees which act as natural CO2 sponges. Other approaches could be to support charities which invest in saving natural habitats which have been damaged by an increase in global temperatures, such as coral reefs and forests.
Data from the Office for National Statistics have shown how UK firms have been capitalising on opportunities outside of the European Union over the last 18 months.
The figures show that in the year to September 2019, EU exports grew by 1.3% to just under £300 billion. Non-EU exports, however, grew 6.3% to £373.7 billion – including 60% of service-sector exports such as finance, travel and transport.
The ONS data also showed a further quarterly increase in exports, reaching a record high in Q3 last year. The trade deficit of goods also fell to £29.2 billion from £34.7 billion between Q2 and Q3 with increased exports helping shrink the gap.
Liz Truss, Internationa Trade Secretary, commented on the figures that: “These figures show how big the opportunities are for British businesses exporting across the world, and the strength of the trade relationship with the USA and Japan.
“This government will continue to back our business communities to ensure they have the tools to seize this opportunity and take full advantage of all its benefits.
“My priority is to strike new trade deals with key partners and to open up new markets to British products as we go forward and leave the European Union.”
Read more: UK business confidence on the rise
The increase in worldwide trade for UK firms, or that outside of the EU bloc, is a positive movement for businesses as Brexit looms in just over two weeks.
It indicates that companies have for the last 18 months been broadening their horizons, either as a strategic ploy to dampen any impact of whatever EU market access agreement is rolled-out – or indeed facilitating organic orders fuelled by increased global demand for British goods and services.
Is your business looking to increase demand and sales on the global stage? Find out how Go Exporting can help introduce your businesses to new worldwide markets through our international trade consultancy services.
A new study has found that globalism is strong and well in the world of international business, despite a turbulent period of trade conflict and political separation.
The Global Connectedness Index (GCI), published by DHL, found that international flows were smoother than feared, with the annual barometer of global goods, capital, information and people flow showing only a slight overall dip for 2018.
However, international investment has taken a hit, in part because of US tax policy changes aiming to repatriate earnings held overseas.
Chief executive of DHL Express, John Pearson, commented that: “While current geopolitical tensions could seriously disrupt global connectedness, this 2019 update finds that most international flows have remained surprisingly resilient so far.
“Ultimately, what we’re seeing today is the evolution of globalisation, not its decline. Decision-makers need to be careful to not overreact to strong rhetoric or headlines.”
And on claims that trade was shifting away from globalisation towards regionalism, Steven Altman of the NYU Stern School of Business said that: “Our analysis does not confirm a robust regionalisation trend. Instead, we see that the average distance across which countries trade has held steady since 2012.”
Read more: US imports from China drop 13% in 2019 as trade war continues
“While fraying relations between major economies could lead to a fracturing along regional lines, such a shift has not yet conclusively taken place.”
The GCI report suggests that the outlook for 2020 remains stable with just a slight decline in trade intensity forecast.
New research has uncovered small and medium-sized businesses trading internationally have grown at almost twice the rate as small firms selling within local markets.
The study, carried out by the government’s export credit agency, UK Export Finance, found that firms trading domestically experienced an 8.4% growth rate over the last five years, compared to 15.2% for those exporting internationally.
The survey, which quizzed 1,000 UK SME’s, also uncovered that almost half of those exporting businesses said trading internationally increased profits by up to 20%, whilst for 9% of firms, exporting increased profits by over the 20% mark.
Despite the opportunity to expand into new, less saturated markets, as well as improving bottom-line results, 19% of SMEs say they believe they’re ready to export but choose not to do so, citing challenges over managing export procedures, paperwork and also finance issues due to delayed payments.
Secretary of State for International Trade, Liz Truss, commented that: “Finance is a key barrier coming between SMEs and their export potential. If small businesses were to export more, Britain would see even more stronger economic growth.
“In its centenary year, UKEF continues to enable companies from across the UK to expand their global reach by helping them succeed abroad. That’s why it is at the heart of my plan to get businesses ready to trade as we leave the EU.”
Despite this, the opportunities for SME exporters are evident, with research finding that businesses with fewer than 50 employees have seen the fastest revenue growth through exports, and higher average growth annually (10.9%) compared to non-exporting firms (7.4%).
Opening a world of opportunities
Despite strong global trade headwinds, ongoing trade wars between the US and China and the little matter of Brexit, exporting has been a success story for British businesses over the last four years. In the 12 months to May 2019, overall exports grew by 4% to surpass £647 billion – the highest levels on record – whilst the number of exporting manufacturers also grew to their highest levels in over a decade.
Read more: Global pressures having little impact on UK export growth as trade reaches new record high
If your business is considering broadening its horizons and looking to expand into the international marketplace, conducting thorough market research and analysis, devising an entry strategy and understanding how to mitigate the challenges that international trade can arise are critical to ensure early-years success.
Find out how Go Exporting’s international trade services can help your company make a success of exporting and open a world of opportunities here.
