Export & international trade
BLM met with business leaders from across the region to find out what more can be done to encourage exports and narrow the trade gap.
The UK economy has the largest current account deficit since 1989, according to the Office of National Statistics; with the measure of what transactions Britain conducts with the rest of the world standing at £72.4bn.
Linked into this is the UK’s balance of trade, the difference in the value of our imports and exports, which despite being historically weak, is showing signs of improvement in the most recent quarters and is currently standing at -1.3 per cent of GDP.
In particular, it is the strength of Britain’s exports of services to the rest of the world that is managing to make up for its weak exports in other types of goods.
However, sluggish demand and a poor growth outlook in Europe, Britain’s biggest market for goods and services, is likely to hamper progress on reducing the balance of payments in the near future.
As reported in this magazine throughout 2014, there are many success stories from the region, of businesses selling their products and services across the world – such as Powervamp, Viper Subsea, Trunki, Kember Associates.
But what this report aims to do is find out what barriers, if any, stop more businesses exporting.
Reaching beyond the EU
Firstly, BLM asked why are more British businesses not exporting outside of the EU.
Darrell Mann, who works all over the world helping businesses to innovate, and has a business based outside of Bristol, said: “Mainly, I suspect, because it involves hard work.
“If we look at the attitudes of, say, Asian companies looking to export to the UK versus UK companies considering exporting to Asia, the Asian company will put in the hard-yards to understand and adapt to the cultural differences they perceive.
“Some UK companies, on the other hand, are more likely to take the attitude that the Asian customer should adapt to them.”
On what more can be done to encourage businesses to export, Darrell said: “Trade missions and study tours can, in theory, help to resolve the cultural mis-match that exist when trading overseas, but too often, I suspect, they are ill-conceived and set out looking for the wrong things.”
Ken Walker, who is a Managing Director at Powervamp – a company that exports its products across the world, is more direct on the subject and says it’s important just to get up and start selling your product, if there is a market.
So what is the secret to his company’s success? Ken comments: “Powervamp started in 1993. The emphasis then was on product quality and supporting our customers – that company philosophy has not changed.
Recognised worldwide for quality and the reliability of its products, Powervamp has always responded to the changing needs of the industry, with new designs and innovative solutions in ground power.
“A solid distribution network is key to the continued success of international business. Local product support offers customer confidence before, and after, a purchase.
“Distributor feedback is also essential to understanding a problem that may have been experienced, or a special application that needs developing.
“Distributors understand the product, the market and the politics of a region and can open up opportunities that otherwise could be missed from the UK offices.”
Some commentators have questioned whether being a member of the European Union makes it less likely for businesses to export abroad.
Dr Liam Fox MP, who has been vocal about the UK’s future in Europe, told Business Leader in 2013 that: “The EU is becoming less important, as countries like China, Brazil, Russia and Australia continue to prosper. In fact the EU is actually part of the problem as to why we are not trading more with these countries.
“Being hamstrung by the problems in Europe has narrowed our horizons and meant that we have ended up exporting more to Ireland than we do to Russia and China.
“Although the latest trade data suggests this could be changing.”
For this feature, Dr Fox said: “With the weakness in the Eurozone, the real growth is in exports and we have to look outside the boundaries and start trading with developing countries such as Turkey and South Africa.
“We should be getting sustainable growth and becoming less dependant on specific areas, whether we are in the European Union
On the impact of EU membership on firms exporting, Darrell Mann comments: “According to our analysis, there is likely to be a short-term dip in sales to the EU, but in the medium to long term it will have little if any real impact.
“Customers ultimately buy the solutions that best meet their tangible and emotional outcome needs. So long as UK companies continue to understand that, it will continue to be the primary driver of export success.”
Goods and services
Fundamentally, being able to sell products and services around the world is dependent on the ability to produce them.
Britain has a rich history of selling to the world and Darrell says that re-discovering the bull dog spirit is crucial to success going forward.
He comments: “In a globalised knowledge economy, a small country of 64 million people needs to focus its resources and play in markets where there is the strongest chance it can win.
“There’s no point in British companies offering ‘me too’ products and services. Our best bet is to play on our international reputation for fairness, creativity, design flair and pushing boundaries.
“None of the underlying problems that gave us the 2008 global financial crisis have been solved and the day of reckoning isn’t too far away.
“And when it comes, all of the things that make up our international reputation will be exactly what the rest of the world needs.
“There’s a great opportunity heading our way if we can re-discover our Bulldog-spirit hard-work gene.”