- Large businesses are more likely to export to high growth markets than their smaller counterparts
- Regulation and export tariffs top the list of barriers to exporting
The findings of a survey recently released by the British Chambers of Commerce shows that businesses, smaller firms in particular, need more support to trade with high-growth markets. The survey of more than 8,000 businesses suggests that UK exports are held back by a focus on traditional or mature markets at the expense of larger, faster-growing economies.
The EU remains the most popular destination for exports. When asked where they export to, 88% of respondents sell their products or services to the EU. This compares to 47% of businesses that export to BRIC countries (Brazil, Russia, India and China), and 55% to other Asian and Middle-Eastern markets such as Thailand and Saudi Arabia. However, while nearly three-quarters (73%) of large firms trade with BRIC countries, only a third (32%) of micro firms do business in these fast-growing markets.
The survey also asked exporters where they see the greatest opportunities for growth in the next twelve months. Two-thirds (67%) of large exporters see the BRIC economies as providing the most export growth, but this falls to around half (49%) among medium-sized firms, and a third (33%) of micros. More smaller businesses believed that the EU offers the greatest opportunities for export growth (56%).
The results showed businesses that belong to an international group or supply chain are 50% more likely to see growth opportunities in the fastest-growing, emerging economies, than those that don’t. The transport, manufacturing and education sectors are the most enthusiastic about opportunities for growth in developing economies.
Export sales among UK firms are hindered by several barriers, from languages and cultural differences to overseas public sector procurement rules. Overall, regulation and export tariffs top the list of barriers for exporters. Those trading in Africa quote political risk as the biggest concern.
Commenting, Phil Smith Managing Director of Business West, which runs the Chambers of Commerce in Bristol, Bath and Gloucestershire said: “More and more UK businesses are taking their goods and services overseas, but many still face obstacles when trading internationally. Smaller firms in particular can find it difficult to break into newer, emerging markets, such as Brazil, India and China. These countries are growing more than traditional export partners like those in the eurozone, and so present real opportunities for businesses. However, small firms often lack the resource of larger firms, which is why they need more support to break into new markets.”
Clive Wray of Business West, who is responsible for delivery of UK Trade & Investment services in the South West said: “UK Trade & Investment (UKTI) is working to address the reticence of some sectors and size groups – encouraging them to consider trading in new markets. By providing targeted support, such as sharing practice on foreign bureaucracy and introductions into new markets, we are helping companies access high-growth BRIC countries.
“Britain has the potential to be a great exporting nation. The government must work together with business to unlock the potential of Britain’s exporters, who will in turn help to drive the economic recovery.”