Exporting For Growth Your Guide To Getting Started (1)
Trade: Exporting for growth Your export opportunity Our insightYour guide to getting started in exportingwww.ukti.gov.uk
UK Trade & Investment�UK Trade & Investment (UKTI) is the UKTI has helped many thousandsGovernment Department that helps of businesses achieve internationalUK-based companies succeed in success by providing tailoredglobal markets and assists overseas services with specialist supportfirms in bringing their high-quality covering a wide range of industries.investment to the UK. Its clients consistently cite the importance of UKTI support inUKTI has a global network of helping them to overcome barriers2,400 staff. Its International Trade to new overseas business andAdvisers (ITAs) around the UK have improve their business performance.years of business experience to drawon when advising companies. In 96markets based in British Embassiesand other Diplomatic offices aroundthe world, UKTI staff can offer local,in-market knowledge and expertise.
Exporting for growth – Your guide to getting started 01Foreword Businesses which get involved in the international market become more dynamic, innovative and successful.Lord Green of HurstpierpointMinister of State for Tradeand InvestmentWelcome to UK Trade & Even through challenging economic A great place to start is by talkingInvestment’s (UKTI) guide to times, there are unparalleled to your local UKTI International opportunities for British firms around Trade Adviser, who has years ofgetting started in exporting. the world as the emerging high business experience and can give growth markets continue to grow. you one-to-one advice. UKTI’s staff In the UK, if we are to make progress around the world can provide you in reducing our trade deficit, we need with specialist local, in-market to encourage more SMEs to take the intelligence and guidance. plunge and export, and to encourage The guide also steers you to other those already doing so to spread sources of help – from logistics to their wings. We know that companies intellectual property, from cultural which begin to export experience issues to getting paid. significant gains in productivity and competitiveness. In essence, Britain’s future prosperity will be businesses which get involved in the built on its success in international international market become more markets. Exporting provides a major dynamic, innovative and successful. opportunity for growth in the UK economy – and it could be a major This guide outlines the points you opportunity for your company too. need to consider before venturing Increasing British exports is a into international business. And national challenge that we must it tells you where to go for help rise to collectively. and guidance.
02 Exporting for growth – Your guide to getting started It’s time to go global� Have you ever thought about doing business in overseas markets? If not, or you thought it too difficult, then you might want to think again.
Exporting for growth – Your guide to getting started 03Exporting can help you survive and As hosts of the 2012 Olympic and If you become angrow. There are real opportunities to Paralympic Games in London, thetrade internationally; UK products, eyes of the world are firmly on the exporter, the evidenceservices and expertise continue UK. This provides a perfect platform shows that you areto be in demand across the world. for UK companies to showcase likely to improve yourThere are opportunities – both in their expertise and do businesstraditional, established markets in overseas markets. productivity by a thirdsuch as Europe and the US, and This guide aims to help you grow in your first year alone.the high-growth economies of - your business internationally. If you Mark Prisk, Minister of Statecountries such as China, India, for Business and Enterprise haven’t exported before, you willBrazil and Russia. probably have lots of questions. As this guide sets out, there is a lot of expert assistance available.
04 Exporting for growth – Your guide to getting started Why should I export?Why should you take the Exporting can also be a catalyst for A growing trendexport plunge? innovation. In many cases you will More and more UK companies are see new ideas and opportunities recognising the benefits of exporting.UK companies which export are overseas which will spur you toresponsible for 60 per cent of national develop new and modified products Research shows that a growingproductivity growth and more than to meet the needs of international number of UK firms have increased70 per cent of UK business research customers. This can help you to gain their export levels. A recent study2and development. This helps to and retain a competitive advantage found that the percentage of UKgive them a technical competitive in the UK as well. firms doing business overseas roseadvantage, leading to more sales from 26 per cent to 31 per cent overand opening new markets. Academic research1 confirms that a two-year period. exporting companies:Doing business overseas is a Exporting is not just for biggerdifferent experience for every – are more productive and businesses. A recent survey ofcompany and its benefits will vary innovative than non exporters; around 200 smaller exportersgreatly depending on the personal – are more resilient to an economic showed that three in every fourprofile of each firm. downturn; planned to export more in 2011.3 A separate study found that theAs well as opening access to – achieve stronger financial proportion of small UK firmsnew sources of revenue, trading performance; exporting increased by 10 per centinternationally will allow you to in both manufacturing and servicesspread risk across a wider range of – have a higher profile and more credibility; and over a six-year period.4customers, extend the market forspecific products and ensure that – are more likely to stay in business.you are aware of internationalcompetition.In some cases companies are ableto offer much more interesting rolesfor their staff, and to recruit betterpeople as a result.
Exporting for growth – Your guide to getting started 05 Business benefits Exporting is a must to Exporting can allow companies to: survive in these difficult 1 Achieve levels of growth not possible domestically. 6 Increase the returns on investment in R&D. times. Despite the challenges, the 2 Increase the resilience of revenues and profits. 7 Improve financial performance. opportunities are simply staggering. A British-made 3 Spread business risk. 8 Improve product is a mark of quality, 4 productivity. Achieve economies of scale and has a higher value not possible domestically. 9 Boost their profile and overseas. Exporting can be 5 recognition internationally. Increase the commercial lifespan of products challenging but also exciting. and services. Mary Barnett, Director, ChokolitAn increasing number of youngUK companies are grabbing Case study —international opportunities from an New York Delhiearly stage. Almost one in five new Exports have helped west London Managing Director Nina Uppalfirms are currently active abroad – snack business New York Delhi says: “We are truly going global.and so have been doing business more than quadruple its turnover Because of the excellent advice,overseas since they started trading. since its launch in 2009. support and contacts provided by UKTI, New York Delhi has beenYou too can join this growing club With support from UK Trade & catapulted into the global market,and gain the export advantage. Investment (UKTI), its premium giving it the sort of exposure I had peanut brand, ViPnuts, is now only dreamt of. We have already being supplied to Canada, Eastern caught the eye of a couple of giant Europe, France, Germany, Spain food multinationals. and the US. UKTI has helped New York Delhi go on market visits to “I always knew we had an excellent meet potential distributors and product and brand, but it was exhibit at overseas trade shows. really about how we shouted about it, and UKTI helped us do this.” www.newyorkdelhi.com1 Harris, R. and Q. Cher Li (2007), Firm Level Empirical Study of the Contribution of Exporting to UK Productivity Growth and Hart et al Impact of Trade Services on R&D – Aston University August 20092 Study of the Relationship Between Innovation, Exporting and the Use of E-Commerce, Harris and Li, 2010.3 UKTI/IOD Doing Business Overseas survey, July/August 2010.4 Study of the Relationship Between Innovation, Exporting and the Use of E-Commerce, Harris and Li, 2010.
06 Exporting for growth – Your guide to getting startedWhere should I export to?
Exporting for growth – Your guide to getting started 07 UKTI not only helped shape my export strategy, but really opened doors, putting me in contact with the right people in the right countries. Parminder Kalsi, Managing Director BBC Pharmaceutical ServicesThere is an abundance High-growth markets middle classes in China and India, forof opportunities for UK UK exporters are also increasingly example, are set to increase household expenditure fourfold over the nextexporters – and plenty embracing the myriad opportunities 20 years.5 The Chinese middle class isof support to help you offered by the world’s emerging economies – many of which are forecast to grow from 172 million totake advantage of them. experiencing rapid rates of growth. 314 million in the next five years – moreThe UK is a major trading nation, Such high-growth markets include than the entire population of the US.6able to capitalise on the single the ‘BRICs’ (Brazil, Russia, India and These rapid growth rates, combinedmarket through the European Union China), whose dynamic economies with progress in infrastructure,(EU), as well as being ‘socially close’ will provide a wealth of prospects communication networks and globalin terms of culture and language for UK firms in the coming decades. co-operation, are making doingto a number of major international business in high-growth markets In addition to the BRICs, there aremarkets – including the US. increasingly commonplace for UK other fast-growing markets with greatMany UK firms begin exporting by potential, such as the so-called CIVETS exporters. For example, since 2002,entering established markets such (Colombia, Indonesia, Vietnam, Egypt, the number of UK companiesas these. The EU, with its open Turkey and South Africa). These often exporting to China and India in theborders and shared import/export smaller markets have much to offer, construction and IT sectors hasprocedures, provides UK companies and UKTI International Trade Advisers increased by over 100 per cent.with unrestricted access to more (ITAs) are well placed to guide You don’t have to be an experiencedthan 500 million consumers, exporters on how to select the best exporter to enter a high-growthwhile the US continues to be our territory to target. market. Two in five of the smallestnumber-one export market, offering exporters (with fewer than 10 Growth in such markets is driven byopportunities across a wide range employees) already do business in rapidly rising populations and GDPof sectors. at least one high-growth market.7 levels. Research has shown that the5 BIS Economics Paper No.8, UK Trade Performance: Patterns in UK and Global Trade Growth, November 20106 HSBC, October 20107 NIESR Analysis of the International Business Strategies, Barriers and Awareness Monitoring Survey, March 2010, and OMB Research, PIMS Qualitative Follow-up Study of Business Needs in Emerging Markets, June 2006
08 Exporting for growth – Your guide to getting startedAid-funded businessAs well as working with specific Case study — Case study —geographic markets, there are Kat Maconie Skyline-IFE Ltdalso huge opportunities for UK Exports have been a key way for International business has reallycompanies in aid-funded business British footwear designer Kat taken off for Suffolk-based in-flight– that is, the contracts awarded by Maconie to build her business. entertainment company Skyline-IFE.multilateral agencies such as the Having received support from UK Since enrolling on UK Trade &UN and World Bank to support Trade & Investment, her label can Investment’s Passport to Exportprojects in the developing world. now be found in leading fashion programme and attending majorMuch of the implementation of stores across the world, including airline industry exhibitionsthese aid-funded projects is Brazil, Europe, Japan and the US. overseas, the small firm has woncontracted out to the private sector, “I knew I’d have to produce large clients in Norway and Swedenrepresenting significant business quantities of shoes early on and is bidding for work in theopportunities for consultants, to get a decent price point,” Middle East.works contractors and suppliers says Maconie. “I had to growof goods and services. Managing Director Richard Barsby the business quickly and my says: “It is relatively new for us toEvery year, multilateral agencies best chance of doing this was be selling in this way and Passportspend some US$60 billion on to look beyond the UK. to Export was one of the things thateverything from tents to “UKTI’s support has been crucial. gave us the confidence to go ahead.telecommunications. The UK The international trade adviser The service is tailor made for smallcurrently gains between 4 and 17 really understood what I was businesses like ours because itper cent of this aid-funded business, trying to achieve and had a very made us take a considered look atwith the most sought after expertise good insight into the nature of our strategies and plans.”being in the healthcare, construction, my business.consultancy, ICT, environmental and He adds: “We know that tradingtransport sectors. “The UKTI-organised seminars conditions are going to get very were really helpful, while the challenging in the coming year but, support I had in meeting the costs with the backing of UKTI, we believe of travelling to new markets was we are well placed to come through. invaluable – I would not have been We’re now very busy presenting new able to fund such visits on my own.” proposals to prospective clients.” www.katmaconie.com www.skyline-ife.com
Exporting for growth – Your guide to getting started 09
10 Exporting for growth – Your guide to getting startedA world awaits�There are opportunities Brazil Ireland The value of UK goods exported Widely considered the ‘easiest’for UK exporters in all to Brazil grew by 24 per cent to overseas market for UK exporters,corners of the world. £2.2 billion in 2010. who sold goods worth £17 billionThey include: China there in 2010. China has become the UK’s ninth- Mexico largest goods export market and UK goods exports to Mexico British export activity there rose increased by £207 million in 2010. by 418 per cent from 2000-2010. 24 per cent of internationalised UK firms said that they are already doing France business here or are ‘very’ or ‘quite’ The UK’s fourth-biggest export likely to do so in the next two years. market. RussiaSource: All figures taken from 2010 UKTI India Around £3.6 billion of UK goodsInternational Business Strategies Barriers UK exports to India grew 45 per centand Awareness Survey and ONS Monthly Review were exported here in 2010.of External Trade Statistics, March 2011. between 2005 and 2010.
Exporting for growth – Your guide to getting started 11 International trade is more important than ever and exploiting the opportunities of fast-growing markets in Asia and Latin America is vital to the UK’s economic future. The difficulties and risks of operating in these fast-changing markets are less than the risk of not participating in their growth. Miles Templeman, Director General, Institute of Directors Top 20 goods export markets for UK companies (2010) US Germany Netherlands France Ireland Belgium/Luxembourg Spain Italy China Sweden Switzerland Hong Kong Saudi Arabia and UAEPopular emerging markets Japanwith nearly a quarter of Canadainternationalised UK firmsalready doing business here. India South Africa UAEA popular emerging market, with Poland45 per cent of firms involved in orconsidering export activity either Russiathere already or with some likelihood Singaporeof entering in the next two years. Australia USThe UK’s number-one exportmarket, with around £38 billion of 0 10 20 30 40UK goods exported here in 2010. Value of goods (£ billion) Source: ONS 2011
12 Exporting for growth – Your guide to getting started Getting ready to export We saw our website as a critical tool to reach our customer base. Getting it right was crucial. The ECR consultant was inspirational: hugely experienced with a wealth of knowledge. Working with him provided us with invaluable insights and ideas. Andy Cox, Director Cox & Plant Ltd, West MidlandsIf you are serious about ITAs can draw on years of business Make an export plantrading internationally, experience and give you – at no cost After completing your market – a more detailed assessment andyou will want to think about practical advice on a one-to-one basis. research, you can draw up an exporthow to research, target plan defining how you will enter Carry out market research the new market. That should include:and grow a presence inoverseas markets. It is essential to carry out detailed – a marketing strategy which market research to identify and incorporates internationalBut how should you begin? How do evaluate the target market. Areas trade development;you even know whether exporting to examine include:is right for you? Before you commit – an understanding of the routeto exporting you need to honestly – the industry structure; to market, e.g. the preferredassess your export potential – both – the predicted demand for your distribution channel for yourin terms of the readiness of your product or service; products or services;business and of your product or – the competition and how you plan – the chosen business model e.g.service. The following steps should to fit into that marketplace; and agent, distributor, B2B, sales office,help you to do this. – any modifications required to make joint venture or subsidiary company;Assess your export capabilities your product or service saleable. – the necessary financial resources;Business Link’s online tool ‘Are you Desk research is a good startingready to export?’ provides a quick, point – an increasing amount of – the right people to develop the newbasic assessment of your export information is available online – export markets;capabilities and the issues and but you may also wish to consider – adequate knowledge of thepracticalities you need to know commissioning some bespoke requirements of your chosen marketabout before beginning to export. research from an export specialist. – e.g. modifying packaging to meetThe tool provides a useful starting local regulations and standards; andpoint for discussions with a UKTI UKTI’s Overseas Market IntroductionInternational Trade Adviser (see Service (OMIS) draws on the local – an understanding of export payment‘Who can help me export?’ and knowledge and expertise of its staff mechanisms and export finance.‘UKTI contacts’ later in this guide). around the world. The cost of this is very competitive.
Exporting for growth – Your guide to getting started 13 Key questions to ask before you export 1 What are the unique selling points to your business proposition? Will there be 4 Do you have sufficient resources (management time, project finance and expenses) to fund 7 Have you evaluated business risks (such as protecting your intellectual property) and a market for your products your overseas projects? conducted research and due and services? diligence? 2 Are there any legal barriers to your business model? 5 Who will be leading the project within your company? 8 Do you know how to secure payment and get the right 3 Where in the market would you start? 6 Do you need to work with an overseas partner to succeed? Can you communicate with quality products? them effectively?Assess your product/serviceTo assess whether your product/ Case study —service is suitable for export to your WOW Toystarget market, consider: Quality toy manufacturer WOW He continues: “If you’re serious Toys decided to adopt an export about exporting, you need to– consumer preferences, competitive strategy shortly after opening recognise it as your number-one offers (local production and for business in 1997. Today, the priority, focus on it and make it imported) and their market share; London-based company trades happen. Be open-minded and even– product standards and regulations with 40 countries around the world. opportunistic about which markets in the overseas market – the British to pursue. Sometimes smaller Managing Director Nadim Ednan- Standards Institution offers help markets such as those emerging Laperouse says: “These days, our for exporters; and in Eastern Europe are easier and international sales far outweigh quicker to access. And make the– the costs of adapting your product sales within the UK. The revenue most of support available from or service. we generate from our overseas UK Trade & Investment. They can customers allows us to be aUnderstand the law help you get on the right path to completely independent business.There are various legal responsibilities international success.” We also spread the risk, rather thanassociated with doing business relying on just one company.” www.wowtoys.comoverseas – all of which you shouldunderstand before starting to export.For example, you’ll need to familiariseyourself with the VAT rulesadministered by HM Revenue &Customs (HMRC), and be aware of anyexport controls which relate to yourparticular product. See ‘Who can helpme export?’ later in this guide.
14 Exporting for growth – Your guide to getting startedI was quite taken abackby the thoroughnessof the [UKTI ExportCommunications] Review,the insights it deliveredand the sheer depth ofresources it gave us accessto. The review changed theway we think about ourexport communications.Britten Sinfonia, CambridgeSelling and distribution – You can use a sales agent who sells When arranging a sales contractOnce the initial homework has been products on your behalf, or puts with an agent or distributor, youdone, and you have decided on the you into contact with potential need to ensure that responsibilityexport market/s to approach, you customers on a commission basis. for delivery and payment is clearlythen need to organise your sales Note that an agent never takes title defined. You will also need to securepresence there. of the goods but merely stocks intellectual property protection in and sells them on, making a each country you sell into.Depending on your product/service, commission in the process butyou may be able to sell directly. For never accepting responsibility for Marketingexample, you might be able to sell profit or loss. Marketing is a key element ofover the internet or by exhibiting at successfully selling overseas.local trade shows. – You can enter into a joint venture To be effective, your marketing with a local business. This gives strategy should be tailored toMany businesses look for a partner you a share of the management each target market.who already understands the local and profits of the joint venture,market. For example: but it can be a more complicated You’ll need to appreciate the and expensive option. traditions, culture and legislation– You can sell to a distributor who of the countries you are trading with then sells your products locally. – If you want complete control over to exploit your exporting efforts. Note that a distributor takes sales, you can set up your own Customisation of your marketing title of the goods once the sales local office. This is the most activities is essential if there are transaction is complete; and is expensive option. cultural differences affecting the responsible thereafter for any consumption of your product. profit or loss in stocking and UKTI’s Export Communications selling them on. Review can help.
Exporting for growth – Your guide to getting started 15Visit the marketVisiting the market is an invaluablepart of trading internationally. Youwill experience the marketplacefirst-hand, and make the contactsnecessary to do business.Attending overseas events, such astrade fairs, or participating in atrade mission can be great waysto test markets, attract customers, 314m The Chinese middle class is forecastappoint agents or distributors and to grow from 172 million to 314make sales. million in the next five years – more than the entire population of the US.
16 Exporting for growth – Your guide to getting startedRising to the Challenge Often a two minute chat to the right person saves about 30 minutes trawling through a website. Nigel Darby, Associate Director, Angle Ring Co LtdExporting may be a challenge, Resource costs Legal, regulatory andbut the potential rewards are Entering an overseas market may intellectual property issueshuge. Following are some of require both financial investment The barriers to success whichthe most commonly cited and an increase in manpower. exporters talk about most are legal Timescales can also be an issue, and regulatory issues. Some firmshurdles to doing business with short-term ‘pay back’ not also say that intellectual propertyinternationally, and advice necessarily guaranteed. (IP) protection can be an issue. Theon how to overcome them. Intellectual Property Office (IPO) It’s advisable to discuss your can help in this area. See ‘Who can financial position with your help me export?’ later in this guide. accountant and bank manager before committing to exporting. Adopting the right mindset is It is also important to take the vital to overcoming such hurdles. long-term view and build Every country has its own trading, appropriate timescales into your taxation and IP systems and you projections. Customers and partners will need to be willing to get to grips in high-growth markets, for with those systems and adapt to example, tend to put an essential them. So doing your homework is value on relationships and it is vital when planning market entry. unusual for a return on investment to emerge within the first year.
Exporting for growth – Your guide to getting started 17 We have a long-term development strategy to achieve a strong presence in global markets. This is important as it allows us to be far more competitive, whilst giving us access to new technologies, manufacturers, skills and materials, all of which feed our creativity and influence new product development. Richard Liddle, Founder and Managing Director, COHDA DesignManaging overseas riskPolitical and economic Case study —developments, cyber risks, bribery Chokolitand corruption – these are some of Young British entrepreneur Louis “UKTI has been a great supportthe issues your business could face Barnett has used UK Trade & to us as we develop our businesswhen you begin to trade overseas Investment’s (UKTI) services to internationally,” says Barnett. “Itor expand into fresh markets. help sell his award-winning luxury was instrumental in putting the chocolate brand, Chokolit, overseas. Mexico deal together, advising andUK Trade & Investment and the helping us with back-end detailsForeign & Commonwealth Office After participating in UKTI’s and regulatory matters, includingbring together authoritative, Passport to Export programme, getting our products throughaccessible and topical information Chokolit appointed a distributor in Customs. This kind of after-careonline on countries and the key Mexico, who has since introduced made all the difference.”issues related to their political, the company’s products into theeconomic and business security country’s biggest department He adds: “We have also worked withenvironments. store. UKTI to get our products sold in Spain, Hungary and 12 States in theThis can help you identify and US, and are currently in discussionsunderstand possible risks – and with China. By the end of 2011,guard effectively against them. we expect that 90 per cent of our revenue will come from export.” www.chokolit.com
18 Exporting for growth – Your guide to getting startedLanguage and cultural barriers Being able to speak the language ofEvery market is different, and your potential customers can help to Case study —companies need to be sensitive to establish mutual confidence. If you Ellis Pharmalocal ways of doing business, even don’t speak the local language, you The Middle East has become a keyin different regions of the same could consider investing in foreign- market for UK firm Ellis Pharma,country. Lack of awareness and language training for your staff. a specialist in global supply chainknowledge of local cultural norms Alternatively, you could employ a solutions for the pharmaceuticalscan impede the development of translator or interpreter. It can also industry.a business relationship. help to have your promotional material translated. It’s a good Following advice from UK Trade idea to avoid colloquialisms and & Investment (UKTI), the metaphors in promotional material Staffordshire-based company – they could be embarrassing in the decided to focus on the emerging local language. markets of Oman and Qatar.Attending trade shows You should conduct research into After receiving a Businessand exhibitions is a key your target market to establish local Opportunity Alert from the UKTI team in Qatar, Ellis Pharma won away of marketing the considerations. These may include £18,000 contract with Doha Clinic product or packaging modificationscompany and its products to enable your product to conform Hospital. It further established itself in the region by going onto international audiences. to local cultural demands. Or it could trade missions and having be that local sales and marketingClaire Watt-Smith, MD, BoBelle numerous one-to-one meetings channels for your particular product are different from those in the UK. with local decision makers in governments and hospitals and potential agents – contacts that had been highlighted by UKTI. This led to Ellis Pharma securing orders worth £150,000. Business Development Director Gary Campbell says: “We are confident that with our own efforts and UKTI’s support, our exports will increase substantially in the coming months and years.” www.ellispharma.com
Exporting for growth – Your guide to getting started 19Logistics The best mode of transport for your country – and use the correctGetting international transport goods will depend on the type of Incoterms to describe this in theright can be complicated and goods and how quickly they need quotation and written contract.depends on the agreement you to be delivered. You may need Most companies use a specialisthave with your customer or supplier. more than one mode, for example, freight forwarder to handleYour obligations should be clearly sending goods by lorry to a port in transport. Confirm exactly whatset out in a written contract using the UK and then by ship overseas. they will do and whether they canIncoterms – standard trade terms In all instances, the goods will need handle all documentation and otherwhich state who is responsible for suitable packaging and labelling procedures. Look for a forwarder whotransporting goods, insuring the for transportation. You should clarify exports regularly to that destination.goods during transportation, paying in advance who will be responsible They can ‘consolidate’ your goodsduties and customs clearance. for UK customs procedures, for with other consignments in a single freight and insurance, and for container to reduce costs. customs clearance in the customer’s
20 Exporting for growth – Your guide to getting started
Exporting for growth – Your guide to getting started 21Case study —ABF EuropeOverseas sales have soared forABF Europe, the creator of therevolutionary Kite table system.The North Yorkshire firm firstintroduced the conference andbusiness table, which can beadapted to accommodate bothlarge and small groups of people,into the international market fouryears ago when sales took off inthe US. A regular user of UK Trade& Investment services, ABF nowsupplies 17 countries globally andhas offices in a number of overseas Getting paid There are also currency issues youmarkets, including Spain and Dubai. The risk of late or even non-payment need to consider. In some countries can sometimes be greater when where there are restrictions onManaging Director Darren Buttle access to foreign currency, yoursays: “Our international operation doing business internationally. Ensuring you get paid for overseas customers may face problemsis gathering pace. Our immediate getting currency to pay you. Infocus is undoubtedly America, but sales is a combination of assessing risk, settling on acceptable payment this case, it’s worth insisting onI’m keen to explore opportunities in a (confirmed) irrevocable letterCanada, Brazil and regions of South terms and methods and considering insurance to protect yourself of credit that secures paymentsEast Asia as well. These are all according to the terms of the creditmarkets that are experiencing rapid against problems. and often at an agreed rate.growth of their own and countries Help is available from UK Exportwhere we can really play a part in Finance (formerly known as ECGD) Businesses which sell on credit tohelping companies compete in – see page 25. foreign customers can use factoringthe international arena through or invoice discounting to free upeffective use of office space and To minimise the risks of non- cash flow. Export factors specialisecohesive work-life strategies. payment, you should research the in the collection of money from market conditions in your target overseas. The factoring companyWe’re doing that thanks in no small country and the credit worthiness pays you a percentage of the invoicepart to UKTI, and it promises to be of potential customers before you value up-front and the balancean exciting journey ahead as we start trading. (less their percentage) once theyharness the skills and expertise of have collected payment.[UKTI] trade advisers to support usand show us the way.”www.kitetables.com
22 Exporting for growth – Your guide to getting startedGetting it right�Ten key steps to successful exporting1Research your marketDoes your prospective foreign 2Implement an export strategy 3 Construct an export plan Define how you will enter the foreign and review your capabilitiescustomer need what you are selling Ask yourself: what would my market. Finalise human resourcesat the price that will yield you a business gain from exporting?� and marketing strategy and allocateprofit? What is the competition an adequate budget to cover exportand how will they react? start-up costs.6Get the Customs side rightContact HM Revenue & Customs and 7Get paid on time Ensure your cashflow will remain 8 Choose your distribution methodsthe UK embassy of your destination at a safe level. Guarantee sufficient Consider the implications of sellingcountry to clarify requirements. credit for your future sales. Take out over long distances and acrossMake sure your reporting practices insurance cover if necessary. national frontiers.are watertight.
Exporting for growth – Your guide to getting started 234Choose your sales presenceEstablish whether you need a direct 5 Promote your product How are you going to market andsales operation. Or is an agent sell your product? Customiseor distributor more effective? marketing to the target country.How will you manage your overseassales presence?9Transport goods effectivelyAssess and choose the most 10 After-sales policy Regularly liaise with customers,effective transport method and export agents and banks. Monitormake sure the goods are insured political unrest or other adverseby you or the importer. conditions in the country of destination. Manage regular servicing and warranty claims. Source: UK Trade & Investment
24 Exporting for growth – Your guide to getting startedWho can help me export?A wide range of support services exists to help UKexporters and would-be exporters to tackle virtuallyall of the issues and challenges which they are likelyto face, and help them become established ininternational markets.Following are just some of the many organisations whichcan help you get started on your exporting journey.
Exporting for growth – Your guide to getting started 25UK Trade & Investment UKTI services have helped its UK Export FinanceUK Trade & Investment (UKTI) is the customers to: UK Export Finance is the operatingGovernment Department that helps – understand how to do business name of the Export CreditsUK-based companies succeed in overseas; Guarantee Department (ECGD),global markets and assists overseas the UK’s export credit agency.firms in bringing their high-quality – identify opportunities and open doors; UK Export Finance does not lendinvestment to the UK. directly, but supports UK exportsUKTI has a global network of – reach customers/business by issuing insurance contracts to2,400 staff. Its International Trade partners not otherwise accessible; UK exporters and by issuingAdvisers (ITAs) around the UK have – raise their profile and credibility guarantees to banks which makeyears of business experience to draw overseas; loans to overseas borrowers, whichon when advising companies. In 96 are used to purchase supplies frommarkets based in British Embassies – overcome barriers to entry UK exporters. UK Export Finance’sand other Diplomatic offices around or expansion; services help facilitate exportthe world, UKTI staff can offer local, contracts by providing protection – improve overseas marketingin-market knowledge and expertise. against the risks of the exports not strategy; being paid for.UKTI has helped many thousands – gain access to informationof businesses achieve international In 2010-11, UK Export Finance not otherwise available;success by providing tailored (then known as ECGD) supportedservices with specialist support – understand the competition; £2.9 billion of UK exports (up fromcovering a wide range of industries. £2.2 billion the previous year). In late – access powerful research to informIts clients consistently cite the 2011 it announced an extension to management decisions; andimportance of UKTI support in its credit insurance policy to coverhelping them to overcome barriers – have the confidence to explore all sectors and sizes of company,to new overseas business and or expand in overseas markets. as well as the launch of three newimprove their business performance. short-term products. www.ukti.gov.uk See the following pages for details of those services provided by UK Export Finance which are most relevant to small- and medium-sized businesses. www.ecgd.gov.uk UK Trade & Investment and UK Export Finance services and products are detailed overleaf.
26 Exporting for growth – Your guide to getting startedUK Trade & Investment– servicesPassport to Export Events and seminars High-value opportunitiesProvides new and inexperienced Held across the UK and the world. programmeexporters with the training, planning They include specific sector and Proactively identifies global supplyadvice and ongoing support they market based activities. chain opportunities, coupled withneed to succeed overseas. an online service giving access to Trade missions several hundred sales leads aroundOverseas Market Introduction Organised to help UK companies the world each month.Service (OMIS) visit the marketplace they’reA tailored service by our overseas interested in and talk face to faceteams to access market and with prospective business partners.industry information, identify UKTI also organises missions intopotential contacts or assist in the UK to allow overseas delegatesplanning an event. This service to meet with potential partnersattracts a charge. or investors. It’s such an advantage toExport Marketing Research Business opportunities be able to tap into the UKTIScheme (EMRS) News emailed directly into your network, as we don’t haveOffers support, advice and some in-box, highlighting hot leads in your the time and resource togrant funding to eligible companies chosen overseas market. Companieswishing to research a potential can sign up for this free service find overseas distributorsexport market. by visiting www.ukti.gov.uk on our own. Our exportExport Communications Gateway to Global Growth market couldn’t exist, andReview (ECR) A service for more experienced we wouldn’t have movedAssesses the way companies exporters. It offers focussedcommunicate with overseas planning and advice, and support at the speed we havecustomers and makes practical to help companies to build on their done, without UKTI.recommendations for improvement. previous success and develop new Andrew Knights, Managing Director, overseas markets. Selectamark Security Systems
Exporting for growth – Your guide to getting started 27UK Export Finance– products and servicesUK Export Finance has In the case of an advance payment Foreign Exchange Credita range of products and bond, the exporter’s bank may Support Scheme require the exporter to deposit the When an exporter enters into anservices to support UK buyer’s advance payment with the export contract under which itexports; mentioned below bank as security for the exporter’s will be paid in a foreign currency,are those specifically undertaking to pay. This would the exporter may be exposed totargeted at small and deprive the exporter of the cashflow unfavourable changes in exchange benefit of the advance payment. rates over the course of thatmedium-sized businesses. UK Export Finance can provide a contract. In order to bring certaintyExport Insurance Policy guarantee to the bank of up to 80 to this aspect of the contract, theUnder an export contract, there is per cent of the advance payment exporter may ask the bank to enteralways a risk of not being paid by bond’s value, which will reduce or into a contract to purchase, withthe buyer – or of not being able to remove the requirement to use the sterling, the foreign currency whichrecover costs incurred performing advance payment as security – the exporter will receive at a pre-the contract due to it being thus freeing up funds with which agreed rate of exchange.terminated in circumstances to perform the export contract. However, the bank will be takingbeyond the exporter’s control. Export Working Capital Scheme a risk on the exporter’s ability toUK Export Finance’s Export To fulfil an export contract, the deliver the required amount ofInsurance Policy may be able to exporter may require funds in order foreign currency on the agreed date:provide an exporter with cover to be in a position to provide goods if the exporter fails to do so andagainst those risks, such as specified or services. Specifically, the exporter exchange rates have moved againstpolitical or buyer-related events, may have won more or larger the bank, the bank may suffer a loss.which prevent it being paid, lead contracts than usual and a bank The bank may therefore wish toto the contract being terminated, may be cautious about lending any receive some protection against thisor prevent its performance. further funds to meet the exporter’s risk of loss before entering into the needs for more working capital, thus forward foreign exchange contract.Bond Support Scheme constraining the company’s abilityUnder an export contract, the buyer to grow. Where the exporter’s bank has beenmay require the issue of an on- requested to provide a workingdemand contract bond (for example, UK Export Finance’s Export Working capital facility guaranteed by UKan advance payment, performance Capital Scheme can offer a partial Export Finance in respect of anor retention bond) in order to assure guarantee to the bank (of up to 80 export contract and is also requesteditself that the exporter will meet per cent of the value of the working to enter into a forward foreignits obligations. Before issuing such capital facility in some cases), so exchange contract in relation to thea bond, a bank will require an that the exporter can gain access to same contract, UK Export Financeundertaking from the exporter to pay the working capital with which to will increase its guarantee of theto the bank any amounts which the perform a specific export contract. working capital facility in order tobank may pay out under that bond. enable the bank to enter into thatThe bank is therefore taking a risk on forward foreign exchange contract.the exporter’s creditworthiness under Further informationthat undertaking. Where the bank For additional information oris unsure about taking that risk, a details on the full range of UK Exportguarantee from UK Export Finance Finance’s services, please contactfor part of it may persuade the bank them on +44 (0)20 7512 7887 or visitto issue the bond. www.ecgd.gov.uk
28 Exporting for growth – Your guide to getting started
Exporting for growth – Your guide to getting started 29Other sources of helpAs well as the help RBS/NatWest Your lawyer David I.Houghton MBE, Your lawyer will also be able toavailable from UKTI and Director, Strategic Partnerships help you. Similar to the ICAEW’sUK Export Finance, there M: +44 (0)7785 708611 BAS, the Law Society has many E: email@example.com many other sources members which offer a service for SMEs. ‘Lawyers For Your Business’of help available to you. Santander is a network of 1,000 solicitor firms Martin Hodges, Head of Trade Finance in England and Wales offeringYour bank M: +44 (0)7827 872312 specialist advice and a free half-Your bank can provide a range of E: firstname.lastname@example.org hour initial consultation to smallhelp on topics such as managing and medium-sized businesses.foreign transactions, trading Your accountant Advice can be sought on a rangeoverseas in sterling, owning assets Your accountant can provide you of legal issues – both domesticabroad, exchange rates and with a range of advice, from starting and international.managing foreign exchange risks. a business, organising your financial In 2012 the Law Society will alsoFor more detailed financial advice affairs, financial management and be working with its solicitorand guidance on issues that taxation. You should also be aware members to produce practicalaffect you, you should talk to the that the Institute for Accountants ‘Doing international business’international section of your bank. in England and Wales (ICAEW) has guides aimed at SME firms newIf you can’t find the right person just launched a new scheme: small to exporting their products andto talk to, you could contact the businesses across the UK are being services internationally.following people at the one of offered free expert advice fromthe five major banks: ICAEW Chartered Accountants The guides will look at some of the as part of an initiative called the fundamental legal issues whichBarclays Business Advice Service (BAS). SMEs need to consider when workingJohn Bevan, It aims to help small companies internationally. Topics being coveredHead of Trade and Working Capital and start-ups with business and will include:T: +44 (0)1256 791401 financial advice to help economicE: john.bevan@mercantile. growth. Small businesses can – international employment issues; barclays.co.uk find details of ICAEW chartered – international contracts;HSBC accountants in their local area at www.businessadviceservice.com – business structures;Felipe Hsieh, Senior Manager,TSC Client Management – debt recovery;M: +44 (0)7920 411997 – tax; andT: +44 (0)20 7991 1706E: email@example.com – dispute resolution.Lloyds TSB These guides will be available asBarry George, Senior Manager, publications, but also as webinarsTrade Products and will be promoted widely toM: +44 (0)7793 670292 small businesses.T: +44 (0)20 7463 1690E: firstname.lastname@example.org For more information visit the Law Society’s website at www.lawsociety.org.uk
30 Exporting for growth – Your guide to getting startedBritish Chambers of Commerce Export Control Organisation HM Revenue & Customs(BCC) (ECO) HM Revenue & Customs (HMRC)The BCC, and its network of affiliated Any item exported from the UK provides assistance on a number ofChambers, support and advise which is subject to export control matters relating to the importingbusinesses in all areas of needs a licence. The ECO is and exporting of goods. Informationinternational trade. With a responsible for assessing and issuing and guides are available coveringworldwide network of bilateral (or refusing) export licences for a topics such as the classificationand international chambers of wide range of controlled, so-called of goods, the European Union,commerce, the BCC can provide “strategic” goods. This includes Relief Procedures on Duty andUK exporters with numerous military and dual-use items. VAT, Tariffs and Duties, Intrastatservices including: export and the requirement to submit You can find out more on exportdocumentation, market research, Supplementary Declarations, controls, including applying fortraining, translation services and together with basic guides on export a licence and rating enquiries,letters of credit. licences, export taxes, import licensing policy, key documents, licences, rates of exchange, etc.For more information visit key links, notices for exporters andthe BCC’s website at news related to export control, by www.hmrc.gov.ukwww.britishchambers.org.uk visiting the businesslink.gov website at www.businesslink.gov.uk Business LinkThe Institute of Export (IoE) The Business Link website providesThe Institute’s mission is to enhance Intellectual Property Office the information, advice and supportthe export performance of the UK Intellectual property rights can needed to start, maintain and growby setting and raising professional allow you to own things you create, a business. It provides informationstandards in international trade in a similar way to owning physical and advice to help customers makemanagement and export practice. property. You can control the use the most of their opportunities.They achieve this by the provision of of your IP, and use it to gain reward. Rather than providing all theeducation and training programmes. IP rights only give protection in the advice and help itself, it fast-tracksThe IoE offers recognised formal country where they are registered, customers to the expert help theyqualifications in international trade. so if you are thinking of trading need. For SMEs thinking aboutIt also runs a series of short training internationally, then you should exporting there is a simplecourses covering every aspect of consider registering your IP diagnostic tool that helps youinternational trade management, rights abroad. consider whether now is the rightsales and marketing, logistics and time to export. The UK’s Intellectual Property Officedocumentary requirements, and (UKIPO) can provide guidance: For more information go tointernational trade finance. www.intellectual-property.gov.uk www.businesslink.gov.uk/bdotg/For more information visit the IoE action/layer?r.l1=1079717544&r.website at www.export.org.uk s=tl&topicId=1084654164
Exporting for growth – Your guide to getting started 31Freight forwarding Useful export linksOne of the other things you’ll needto think about is how to move your Country Information Standards and Technicalgoods overseas. Much will depend BBC website Regulationson the nature of your goods and http://news.bbc.co.uk/1/hi/ British Standards Institution (BSI)their destination and you will need country_profiles/default.stm www.bsigroup.com/en/to evaluate the best combination of sectorsandservices/Disciplines/time and cost with the characteristics Foreign & Commonwealth Office ImportExportof your product. There are various country profilesmethods of shipping goods: by air, www.fco.gov.uk/en/travel-and- National Physical Laboratoryroad, sea, or rail. Some companies living-abroad/travel-advice-by- www.npl.co.ukoffer multi-modal solutions; this country/country-profile Trade Statisticsmeans that they offer more than Customs & Regulations National Statistics Informationone service. HM Revenue & Customs www.statistics.gov.uk/hub/index.For more information about freight www.hmrc.gov.uk htmlforwarding please contact the Economic Information UK Trade InfoBritish International Freight The Economist www.uktradeinfo.comAssociation at www.bifa.org www.economist.com/countries Travel Advice Market Access Foreign & Commonwealth Office Market Access Database for www.fco.gov.uk/en/travel-and- Tariffs (for non-EU markets only) living-abroad http://mkaccdb.eu.int/mkaccdb2/ NHS indexPubli.htm www.nhs.uk/nhsengland/ SOLVIT – Overcoming Trade Healthcareabroad Barriers (EU markets only) Travel Health www.bis.gov.uk/ www.travelhealth.co.uk EUMarketAccessUnit
32 Exporting for growth – Your guide to getting started Contact usUK Trade & Investment UKTI East Invest NIis the Government T: +44 (0)8456 419 955 T: +44 (0)28 9023 9090department that helps E: email@example.com E: firstname.lastname@example.orgUK-based companies www.investni.com UKTI East Midlandssucceed in an increasingly T: +44 (0)8450 524 001 Scottish Developmentglobal economy. E: email@example.com International T: 0800 917 9534 within ScotlandOur range of expert services can UKTI London T: +44 (0)141 228 2828 from the UKbe tailored to meet the needs of T: +44 (0)20 7234 3050 www.sdi.co.ukyour company to maximise your E: firstname.lastname@example.org success. Business Wales UKTI North East T: +44 (0)3000 603000They are delivered through an T: +44 (0)8450 505 054 E: businessinformationhelplineextensive network of market E: email@example.com @wales.gsi.gov.ukspecialists, based in theUK and across the globe. UKTI North West www.business.wales.gov.ukYou can find contact details for T: +44 (0)8456 037 053your local UKTI International E: firstname.lastname@example.orgTrade Adviser on our website: UKTI South Eastwww.ukti.gov.uk T: +44 (0)8452 789 600 E: email@example.com telephone us: +44 (0)20 7215 8000. UKTI South WestOur helpline is open from 9.00amto 5.00pm Monday to Friday. T: +44 (0)8456 060 969 E: firstname.lastname@example.org UKTI West Midlands T: +44 (0)8450 743 515 E: email@example.com UKTI Yorkshire and the Humber T: +44 (0)300 365 1000 E: firstname.lastname@example.org