Trading places

4 min read

Exporting and international trade have been making headlines for the past 18 months, with the pandemic, Brexit and March’s blockage of the Suez Canal all throwing into focus the inter-connected nature of today’s supply chains.

Domestically, manufacturing plays a major role in the UK’s exports, with manufactured goods accounting for over half of UK total exports at the end of 2019, bringing in £637bn for UK plc. However, many companies – especially SMEs – are missing out on the benefits that exporting can bring.

Many will be put off by the perceived complexity of starting to export, especially with additional barriers now in place with EU/UK trade post-Brexit. To try and demystify some of this complexity, Make UK and HSBC have released an in-depth beginners’ guide to exporting, outlining the key steps manufacturers should take to become exporters.

“The challenge for a lot of companies either starting or refreshing their exporting journey is that there are so many different factors at play,” Fergus McReynolds, director of EU & International affairs at Make UK, tells MM. “The difference between supplying a customer down the road versus one overseas is immense. It’s important to take a step back and understand the scale of the challenge and where to start. This guide looks at the first step of the journey towards exporting: helping leaders understand how to make exporting an everyday part of the business.”

For those leaders who don’t know their Rules of Origin from their Customs Procedure Code, the guide contains an extensive glossary of export-related terms. “For those new to exporting, there is a whole new lexicon that they have to get their heads around, which is why we’ve included the glossary,” says McReynolds. “We want to demonstrate how international trade works and show people that, yes, there’s a lot of jargon, but that doesn’t mean it’s necessarily that complex.”

A successful export strategy is no different to any other site-wide change programme, says McReynolds. It starts with getting buy-in from the boardroom to the shopfloor. “Exporting will impact every facet of the business, from sales to the shopfloor to marketing and beyond,” he explains. “It may be that businesses have the capacity to create a new export team, but it’s just as important that every department becomes switched on to exporting so they can understand what exporting is about and how it will affect them.”

Three steps to success

Once the team is on-board, there are three steps to ensuring export success, says McReynolds.

  • Understand the basics: “Why is trading internationally different to selling to someone up the road? It’s about understanding how the whole mechanism of rules of origin, shipping rates and the like."
  • Look at your products: “All those technical aspects from the first step are product-specific. There’s legislation around getting into certain markets that is based on the product you are exporting."
  • Understand the market you’re targeting. “While there’s a lot of learning in the first stage that is universal, there are many issues that are specific to each individual market.”

This third point is vital – while countries may have similar paperwork and rules on exporting, culturally they will be very different, and require a number of approaches. Some of these may be as simple as a change in accounting, while others may see a need to put a network of agents in the location, or even set up a full office network. “Don’t just go to a trade show in a particular country, make a couple of contacts and assume you understand how you could export there,” warns McReynolds. “You must visit several times, and understand that each market will require a different type of relationship.”

Why now is a good time to export

With the disruption posed by Brexit and the pandemic showing no sign of abating, it may seem futile for companies to be looking at starting to export at this moment in time. However, says McReynolds, Brexit in particular provides a perfect opportunity for manufacturers to either start exporting altogether or broaden their horizons.

“The UK is at a moment of change: it is increasingly looking at global markets; there are lots of opportunities out there for manufacturers, and with a government that is particularly focused on international trade, it’s a good time to begin to understand that exporting is for everyone – it’s complicated, but once you understand it, it can be hugely beneficial,” he says. “In terms of our new relationship with the EU, for many years we associated exports not just with sending goods to places like America and China, but also to Europe. In reality, though, for the past 30-40 years we were selling things on an open market to Europe, and while we called it ‘exporting’, it wasn’t. The difference between sending goods to the USA and to Europe was large, despite calling them both exporting. Now, there’s been a levelling of that, and if you know how to trade with Europe, you’ll understand rules of origin and the like, and it could open up new markets for those who have traditionally only traded with Europe.

"Of course, there are still significant barriers to trade with the EU at the moment: we’ve just come off five years of negotiating with our biggest trade partner, which have led to a whole number of new complexities and requirements that in time will become part of everyday business.”

In addition to this, the pandemic has demonstrated that, while relying on exports can sometimes be volatile, spreading yourself across a number of overseas markets will actually help build resilience. When COVID first hit China, supply chains were disrupted for many European manufacturers; similarly, as the pandemic spread to Europe, those exporting to hard-hit places like Italy would have seen delays and a drop-off in export potential.

“2020 was a year of understanding just how crucial supply chains are, and companies had to learn to build resilience into them,” says McReynolds. “Looking at it from the reverse perspective, exporting your products can build resilience: selling to multiple markets will offset any losses and disruption caused by a downturn in any one market. Exports have the potential to reduce risk, as well as being an inherently risky process.”

Support available

The government is very focussed on building trade deals with countries across the world post-Brexit, which will undoubtedly bring benefits to manufacturers looking to get into these markets. In addition, the Department for International Trade can help businesses understand the specific legislation and restrictions around product design.

Make UK and banks such as HSBC are also well-placed to help support manufacturers and help them reduce risk from their exports, whatever stage of their export journey they are at.

“With the right skills, knowledge and determination, international trade is for everyone,” concludes McReynolds. “It will bring significant benefit to your business, and while not one size fits all, businesses will learn some important information from our guide.”