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Export for growthYour guide to getting started
Chamber International
Chamber International providesinternational trade support tocompanies on behalf of severalChambers of Commerce.We speak to hundreds ofbusinesses of all sizes, acrossall sectors, every day and weunderstand the issues. We arecommitted to helping clientsbuild their capabilities for thechallenge of internationalbusiness. Let our professionalteam open a world of possibilityfor you.
"Trade and investment arefundamental to rebuilding andrebalancing our economy. The UKhas a strong history as a tradingand investing nation and continuesto be one of the world’s mostattractive places to do business, butthe world is changing and wecannot be complacent. British SMEsare already doing incredible thingsand we urgently need more ofthem to follow that boldness.
Encouraging businesses to exportmore is at the very heart of thisGovernment's approach. I amdetermined that British businesses,especially our small businesses,have all the tools they need toflourish, and that we continue tostrengthen and improve ourrelationship with trade partnersaround the world.
The Chambers of Commerce have along and proud history ofsupporting UK businesses and playa vital role in helping them achievetheir full potential. I passionatelybelieve our best years lie ahead ofus, and together I want us to makethe years ahead the mostentrepreneurial and the mostdynamic in our country’s history."
Prime MinisterDavid Cameron
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Why made-to-measure suitsexporters
For new exporters and smaller firms weoffer an invoice-to-final delivery servicehandling everything in between. Wekeep a close eye on things every stepof the way. We help streamlineprocedures for larger businesses. Andyet our involvement is rarely the sametwice.
When 180-strong Yorkshire-basedBritish Thornton ESF Ltd received a halfmillion pound order to supplyequipment for a science lab at a schoolin Brunei we were top of their list ofpeople to talk to.
“We’re not very experienced atexporting and Chamber Internationalwas a breath of fresh air, advising uson how to deal with all the problemareas,” says British Thornton’smanaging director Stuart Little. “I’mvery, very pleased with the servicethey’ve given.
“Initially we were looking at shippingourselves but they got morecompetitive pricing than we could.They’ve got very good contacts withhauliers and freight forwarders that wedon’t have. They also helped withinsurance quotations. They’ve beenvery professional and I was surprisedat how economical and cost-effective itall was.”
We don’t believe that one size fits alland that’s why our services are tailor-made – in a size and shape to fit you.
Learning the ropes
What we do is help you learn theropes. We give you access to
information, ideas and inspiration tohelp you grow your internationalbusiness through our networkingevents. You can learn first-hand fromthose already experienced in particularsectors or markets by coming along toour round table peer-to-peer groups.Our programme of seminars isdesigned to showcase opportunitymarkets for exporters and includescase studies from local businessesprepared to pass on insights, adviceand top tips.
Feedback from these seminars isoverwhelmingly positive with almost 80per cent of attendees describing themas an “excellent” investment of theirtime.
Tap into our networks
We’re extremely well connected, too.When you contact us, you’re plugginginto much more than the Chambernetwork either in the UK or worldwide.We have close associations withinfluential organisations and businessesat home and abroad which can all helpyou up your export performance.
The message is quite simple: we wantyou to benefit from exporting and wehave the means to help. We can putyou in touch with all the expertise you’llneed.
For example we’ve built a strategicalliance with Intertek, the world’sleading product testing organisation. Itgives us unique access to their globalnetwork with more than 1,000branches in 100 countries.
One of the first to benefit was WestYorkshire theatrical-productmanufacturer J & C Joel. Officials in
Dubai demanded that flooring wasfumigated with a chemical banned inthe EU. Intertek’s local office foundthere was no such requirement and theshipment proceeded smoothly.And we’re rich in trade data. Weproduce definitive import and exportguides giving exhaustive and vitalinternational trade information on morethan 220 countries around the world.These are available either on-line or ashard copies.
And on top of that we’ve put togetheran unrivalled team of specialistassociates that can help you getstarted, adapt the way you go tomarket, refine existing sales processes,build your capacity and reduce yourexport spend.
Scale up your expectationsEvents happen quickly in the world ofexport which is why we’ve developedan effective online strategy to helpbring you important updates as andwhen they happen. More than 15,000businesses belong to our onlinecommunities and we handle more web-based transactions for trade documentsthan any of the other 82 UK Chambers.Our website contains 50 useful advicesheets and “How to…” guides onvarious subjects along with details ofinternational trade themed events.
Export success means raising yourgame and going that extra mile. Whenyou do, you can always expect the verybest from us.
Supporting your business
Have you ever thought about doing business inoverseas markets? If not, or you thought it toodifficult, then you might want to think again.
Exporting can help you survive andgrow. There are real opportunities totrade internationally; UK products,services and expertise continue to bein demand across the world. Thereare opportunities – both in traditional,established markets such as Europeand the US, and the high-growtheconomies of countries such asChina, India, Brazil and Russia.
As hosts of the 2012 Olympic andParalympic Games in London, theeyes of the world are firmly on theUK. This provides a perfect platformfor UK companies to showcasetheir expertise and do businessin overseas markets.
This guide aims to help you growyour business internationally. If youhaven’t exported before, you willprobably have lots of questions.As this guide sets out, there is alot of expert assistance available.
If you become anexporter, the evidenceshows that you arelikely to improve yourproductivity by a thirdin your first year alone.
Mark Prisk, Minister of Statefor Business and Enterprise
Why should you take theexport plunge?UK companies which export areresponsible for 60 per cent of nationalproductivity growth and more than 70per cent of UK business research anddevelopment. This helps to give thema technical competitive advantage,leading to more sales and openingnew markets.
Doing business overseas is a differentexperience for every company and itsbenefits will vary greatly dependingon the personal profile of each firm.
As well as opening access tonew sources of revenue, tradinginternationally will allow you tospread risk across a wider range ofcustomers, extend the market forspecific products and ensure that youare aware of internationalcompetition.
In some cases companies are ableto offer much more interesting roles
for their staff, and to recruit betterpeople as a result.
Exporting can also be a catalyst forinnovation. In many cases you willsee new ideas and opportunitiesoverseas which will spur you todevelop new and modified productsto meet the needs of internationalcustomers. This can help you to gainand retain a competitive advantage inthe UK as well.
Academic research confirmsthat exporting companies:
− are more productive and innovativethan non exporters;
− are more resilient to an economicdownturn;
− achieve stronger financialperformance;
− have a higher profile and morecredibility; and
− are more likely to stay in business.
A growing trendMore and more UK companies arerecognising the benefits of exporting.Research shows that a growingnumber of UK firms have increasedtheir export levels. A recent studyfound that the percentage of UK firmsdoing business overseas rose from26 per cent to 31 per cent over atwo-year period.
Exporting is not just for biggerbusinesses. A recent survey ofaround 200 smaller exporters showedthat three in every four planned toexport more in 2011. A separatestudy found that the proportion ofsmall UK firms exporting increased by10 per cent in both manufacturingand services over a six-year period.
Business benefits
Exporting can allow companies to:
Achieve levels of growthnot possible domestically.
Increase the resilienceof revenues and profits.
Spread business risk.
Achieve economies of scalenot possible domestically.
Increase the commerciallifespan of productsand services.
Increase the returnson investment in R&D.
Improve financialperformance.
Improveproductivity.
Boost their profile andrecognition internationally.
Exporting is a must tosurvive in these difficulttimes. Despite thechallenges, theopportunities are simplystaggering. A British-madeproduct is a mark of quality,and has a higher valueoverseas. Exporting can bechallenging but also exciting.
Mary Barnett, Director, Chokolit
Case study —New York DelhiExports have helped west Londonsnack business New York Delhi morethan quadruple its turnover since itslaunch in 2009.
Its premium peanut brand, ViPnuts, isnow being supplied to Canada, EasternEurope, France, Germany, Spainand the US. Market visits to New Yorkand Delhi have enabled them to meetpotential distributors and exhibit atoverseas trade shows.
Managing Director Nina Uppal says:“We are truly going global. Becauseof the excellent advice, support andcontacts we have received, NewYork Delhi has been catapulted intothe global market, giving it the sortof exposure I had only dreamt of. Wehave already caught the eye of acouple of giant food multinationals.
“I always knew we had an excellentproduct and brand, but it was reallyabout how we shouted about it.”
www.newyorkdelhi.com
The advice we receivednot only helped shapemy export strategy, butreally opened doors,putting me in contactwith the right people inthe right countries.Parminder Kalsi, Managing DirectorBBC Pharmaceutical Services
There is an abundanceof opportunities for UKexporters – and plentyof support to help youtake advantage of them.
The UK is a major trading nation, ableto capitalise on the single marketthrough the European Union (EU), aswell as being ‘socially close’ in termsof culture and language to a numberof major international markets –including the US.
Many UK firms begin exporting byentering established markets suchas these. The EU, with its openborders and shared import/exportprocedures, provides UK companieswith unrestricted access to more than500 million consumers, while the UScontinues to be our number-oneexport market, offering opportunitiesacross a wide range of sectors.
High-growth marketsUK exporters are also increasinglyembracing the myriad opportunitiesoffered by the world’s emergingeconomies – many of which areexperiencing rapid rates of growth.Such high-growth markets includethe ‘BRICs’ (Brazil, Russia, India andChina), whose dynamic economieswill provide a wealth of prospectsfor UK firms in the coming decades.
In addition to the BRICs, there areother fast-growing markets with greatpotential, such as the so-called CIVETS(Colombia, Indonesia, Vietnam, Egypt,Turkey and South Africa). These oftensmaller markets have much to offer,and UKTI International Trade Advisers(ITAs) are well placed to guideexporters on how to select the bestterritory to target.
Growth in such markets is driven byrapidly rising populations and GDPlevels. Research has shown that the
middle classes in China and India, forexample, are set to increase householdexpenditure fourfold over the next 20years. The Chinese middle class isforecast to grow from 172 millionto 314 million in the next five years– more than the entire populationof the US.
These rapid growth rates, combinedwith progress in infrastructure,communication networks and globalco-operation, are making doingbusiness in high-growth marketsincreasingly commonplace for UKexporters. For example, since 2002,the number of UK companiesexporting to China and India in theconstruction and IT sectors hasincreased by over 100 per cent.
You don’t have to be an experiencedexporter to enter a high-growthmarket. Two in five of the smallestexporters (with fewer than 10employees) already do business inat least one high-growth market.
Aid-funded businessAs well as working with specificgeographic markets, there arealso huge opportunities for UKcompanies in aid-funded business –that is, the contracts awarded bymultilateral agencies such as theUN and World Bank to supportprojects in the developing world.Much of the implementation of theseaid-funded projects is contracted outto the private sector, representingsignificant business opportunities forconsultants, works contractors andsuppliers of goods and services.
Every year, multilateral agenciesspend some US$60 billion oneverything from tents totelecommunications. The UKcurrently gains between 4 and 17 percent of this aid-funded business, withthe most sought after expertise beingin the healthcare, construction,consultancy, ICT, environmental andtransport sectors.
Case study —Kat MaconieExports have been a key way forBritish footwear designer KatMaconie to build her business.Having received support from UKTrade & Investment, her label cannow be found in leading fashionstores across the world, includingBrazil, Europe, Japan and the US.
“I knew I’d have to produce largequantities of shoes early on to geta decent price point,” says Maconie.“I had to grow the business quicklyand my best chance of doing thiswas to look beyond the UK.
“UKTI’s support has been crucial.The international trade adviser reallyunderstood what I was trying toachieve and had a very good insightinto the nature of my business.
“The UKTI-organised seminars werereally helpful, while the support I hadin meeting the costs of travelling tonew markets was invaluable – I wouldnot have been able to fund such visitson my own.”
www.katmaconie.com
Case study —Skyline-IFE LtdInternational business has reallytaken off for Suffolk-based in-flightentertainment company Skyline-IFE.
Since getting professional advice andattending major airline industryexhibitions overseas, the small firmhas won clients in Norway andSweden and is bidding for workin the Middle East.
Managing Director Richard Barsbysays: “It is relatively new for us tobe selling in this way and the expertadvice we received was one of thethings that gave us the confidenceto go ahead. Advice which is tailor-made for a small business like oursmade us take a considered look atour strategies and plans.”
He adds: “We know that tradingconditions are going to get verychallenging in the coming year butwe believe we are well placed tocome through. We’re now verybusy presenting new proposals toprospective clients.”
www.skyline-ife.com
There are opportunitiesfor UK exporters in allcorners of the world.They include:
• BrazilThe value of UK goods exportedto Brazil grew by 24 per cent to£2.2 billion in 2010.
• ChinaChina has become the UK’s ninth-largest goods export market andBritish export activity there roseby 418 per cent from 2000-2010.
• FranceThe UK’s fourth-biggest exportmarket.
• IndiaUK exports to India grew 45 per centbetween 2005 and 2010.
• IrelandWidely considered the ‘easiest’overseas market for UK exporters,who sold goods worth £17 billionthere in 2010.
• MexicoUK goods exports to Mexico increasedby £207 million in 2010. 24 per cent ofinternationalised UK firms said thatthey are already doing business hereor are ‘very’ or ‘quite’ likely to do soin the next two years.
• RussiaAround £3.6 billion of UK goodswere exported here in 2010.
• Saudi Arabia and UAEPopular emerging markets withnearly a quarter of internationalisedUK firms already doing business here.
• South AfricaA popular emerging market, with45 per cent of firms involved in orconsidering export activity eitherthere already or with some likelihoodof entering in the next two years.
• USThe UK’s number-one exportmarket, with around £38 billion of UKgoods exported here in 2010.
Source: All figures taken from 2010 UKTIInternational Business Strategies Barriersand Awareness Survey and ONS MonthlyReview of External Trade Statistics, March2011.
International trade is more important than ever and exploitingthe opportunities of fast-growing markets in Asia and LatinAmerica is vital to the UK’s economic future. The difficultiesand risks of operating in these fast-changing markets are lessthan the risk of not participating in their growth.
Miles Templeman, Director General, Institute of Directors
Top 20 goods export marketsfor UK companies (2010, £ billion)
We saw our website as acritical tool to reach ourcustomer base. Getting itright was crucial. Theconsultant wasinspirational:hugely experienced witha wealth of knowledge.Working with him providedus with invaluable insightsand ideas.
Andy Cox, Director, Cox & Plant Ltd,West Midlands
If you are serious abouttrading internationally, youwill want to think abouthow to research, targetand grow a presence inoverseas markets.But how should you begin? How doyou even know whether exporting isright for you? Before you commit toexporting you need to honestly assessyour export potential – both in terms ofthe readiness of your business and ofyour product or service. The followingsteps should help you to do this.
Assess your exportcapabilitiesBusiness Link’s online tool ‘Are youready to export?’ provides a quick,basic assessment of your exportcapabilities and the issues andpracticalities you need to know aboutbefore beginning to export. The toolprovides a useful starting point fordiscussions with a UKTI InternationalTrade Adviser (see ‘Who can helpme export?’ and ‘UKTI contacts’later in this guide).
ITAs can draw on years of businessexperience and give you – at no cost– a more detailed assessment andpractical advice on a one-to-one basis.
Carry out market researchIt is essential to carry out detailedmarket research to identify andevaluate the target market. Areasto examine include:
− the industry structure;
− the predicted demand for yourproduct or service;
− the competition and how you planto fit into that marketplace; and
− any modifications required to makeyour product or service saleable.
Desk research is a good startingPoint - an increasing amount ofinformation is available online –but you may also wish to considercommissioning some bespokeresearch from an export specialist.
UKTI’s Overseas Market IntroductionService (OMIS) draws on the localknowledge and expertise of its staffaround the world. The cost of this isvery competitive.
Make an export planAfter completing your marketresearch, you can draw up an exportplan defining how you will enter thenew market. That should include:
− a marketing strategy whichincorporates international tradedevelopment;
− an understanding of the route tomarket, e.g. the preferreddistribution channel for yourproducts or services;
− the chosen business model e.g.agent, distributor, B2B, sales office,joint venture or subsidiary company;
− the necessary financial resources;
− the right people to develop the newexport markets;
− adequate knowledge of therequirements of your chosen market
− e.g. modifying packaging to meetlocal regulations and standards; and
− an understanding of export paymentmechanisms and export finance.
Assess your product/serviceTo assess whether your product/service is suitable for export to yourtarget market, consider:
− consumer preferences, competitiveoffers (local production andimported) and their market share;
− product standards and regulationsin the overseas market – the BritishStandards Institution offers help forexporters; and
− the costs of adapting your productor service.
Understand the lawThere are various legal responsibilitiesassociated with doing businessoverseas – 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.
Key questions to ask before you export
What are the unique sellingpoints to your businessproposition? Will there be amarket for your products andservices?
Are there any legal barriers toyour business model?
Where in the market wouldyou start?
Do you have sufficientresources (managementtime, project finance andexpenses) to fund youroverseas projects?
Who will be leading theproject within yourcompany?
Do you need to work with anoverseas partner to succeed?Can you communicate withthem effectively?
Have you evaluated businessrisks (such as protecting yourintellectual property) andconducted research and duediligence?
Do you know how to securepayment and get the rightquality products?
Case study —WOW Toys
Quality toy manufacturer WOW Toysdecided to adopt an export strategyshortly after opening for businessin 1997. Today, the London-basedcompany trades with 40 countriesaround the world.
Managing Director Nadim Ednan-Laperouse says: “These days, ourinternational sales far outweighsales within the UK. The revenue
we generate from our overseascustomers allows us to be acompletely independent business.We also spread the risk, ratherthan relying on just one company.”
He continues: “If you’re seriousabout exporting, you need torecognise it as your number-onepriority, focus on it and make ithappen. Be open-minded and even
opportunistic about which marketsto pursue. Sometimes smallermarkets such as those emergingin Eastern Europe are easier andquicker to access. And make themost of support available fromUK Trade & Investment. They canhelp you get on the right path tointernational success.”
www.wowtoys.com
I was quite taken abackby the thoroughnessof the CommunicationsReview, the insights itdelivered and the sheerdepth of resources it gaveus access to the reviewchanged the way we thinkabout our exportcommunications.
Britten Sinfonia, Cambridge
Selling and distributionOnce the initial homework has beendone, and you have decided on theexport market/s to approach, youthen need to organise your salespresence there.
Depending on your product/service,you may be able to sell direct. Forexample, you might be able to sellover the internet or by exhibiting atlocal trade shows.
Many businesses look for a partnerwho already understands the localmarket. For example:
− You can sell to a distributor whothen sells your products locally.Note that a distributor takestitle of the goods once the salestransaction is complete; and isresponsible thereafter for anyprofit or loss in stocking andselling them on.
− You can use a sales agent whosells products on your behalf, orputs you into contact with potentialcustomers on a commission basis.Note that an agent never takes titleof the goods but merely stocksand sells them on, making acommission in the process butnever accepting responsibility forprofit or loss.
− You can enter into a joint venturewith a local business. This givesyou a share of the managementand profits of the joint venture,but it can be a more complicatedand expensive option.
− If you want complete control oversales, you can set up your ownlocal office. This is the mostexpensive option.
When arranging a sales contractwith an agent or distributor, youneed to ensure that responsibilityfor delivery and payment is clearlydefined. You will also need to secureintellectual property protection ineach country you sell into.
MarketingMarketing is a key element ofsuccessfully selling overseas.To be effective, your marketingstrategy should be tailored toeach target market.
You’ll need to appreciate thetraditions, culture and legislationof the countries you are trading withto exploit your exporting efforts.Customisation of your marketingactivities is essential if there arecultural differences affecting theconsumption of your product.
Visit the marketVisiting the market is an invaluablepart of trading internationally.You will experience the marketplacefirsthand, 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,appoint agents or distributors andmake sales.
314mThe Chinese middle class is forecastto grow from 172 million to 314million in the next five years – morethan the entire population of the US.
Often a two minutechat to the right personsaves about 30 minutestrawling througha website.Nigel Darby, Associate Director,Angle Ring Co Ltd
Exporting may be achallenge, but the potentialrewards are huge. Thefollowing are some of themost commonly citedhurdles to doing businessinternationally, with adviceon how to overcome them.
Resource costsEntering an overseas market mayrequire both financial investment andan increase in manpower. Timescalescan also be an issue, with short-term‘pay back’ not necessarily guaranteed.
It’s advisable to discuss your financialposition with your accountant andbank manager before committing toexporting. It is also important to takethe long-term view and buildappropriate timescales into yourprojections. Customers and partnersin high-growth markets, for example,tend to put an essential value onrelationships and it is unusual for areturn on investment to emergewithin the first year.
Legal, regulatory andintellectual property issuesThe barriers to success whichexporters talk about most are legaland regulatory issues. Some firmsalso say that intellectual property(IP) protection can be an issue. TheIntellectual Property Office (IPO) canhelp in this area. See ‘Who canhelp me export?’ later in this guide.
Adopting the right mindset isvital to overcoming such hurdles.Every country has its own trading,taxation and IP systems and you willneed to be willing to get to grips withthose systems and adapt to them.So doing your homework is vital whenplanning market entry.
We have a long-term development strategy to achievea strong presence in global markets. This is importantas it allows us to be far more competitive, whilstgiving us access to new technologies, manufacturers,skills and materials, all of which feed our creativityand influence new product development.Richard Liddle, Founder and Managing Director, COHDA Design
Managing overseas riskPolitical and economic developments,cyber risks, bribery and corruption– these are some of the issues yourbusiness could face when you beginto trade overseas or expand intofresh markets.
UK Trade & Investment and theForeign & Commonwealth Officebring together authoritative,
accessible and topical informationonline on countries and the key issuesrelated to their political, economicand business security environments.
This can help you identify andunderstand possible risks – andguard effectively against them.
Case study —ChokolitYoung British entrepreneur LouisBarnett has used UK Trade &Investment’s (UKTI) services tohelp sell his award-winning luxurychocolate brand, Chokolit, overseas.
After participating in UKTI’s Passportto Export programme, Chokolitappointed a distributor in Mexico,who has since introduced thecompany’s products into thecountry’s biggest department store.
“ UKTI has been a great supportto us as we develop our businessinternationally,” says Barnett. “It wasinstrumental in putting the Mexicodeal together, advising and helpingus with back-end details andregulatory matters, including gettingour products through Customs.This kind of after-care made allthe difference.”
He adds: “We have also worked withUKTI to get our products sold inSpain, Hungary and 12 States in theUS, and are currently in discussionswith China. By the end of 2011,we expect that 90 per cent of ourrevenue will come from export.”
www.chokolit.com
Language and culturalbarriersEvery market is different, andcompanies need to be sensitive tolocal ways of doing business, evenin different regions of the samecountry. Lack of awareness andknowledge of local cultural norms canimpede the development ofa business relationship.
Attending trade showsand exhibitions is a keyway of marketing thecompany and its productsto international audiences.
Claire Watt-Smith, MD, BoBelle
Being able to speak the language ofyour potential customers can help toestablish mutual confidence. If youdon’t speak the local language, youcould consider investing in foreignlanguage training for your staff.Alternatively, you could employ atranslator or interpreter. It can alsohelp to have your promotionalmaterial translated. It’s a good ideato avoid colloquialisms andmetaphors in promotional material –they could be embarrassing in thelocal language.
You should conduct research intoyour target market to establish localconsiderations. These may includeproduct or packaging modifications toenable your product to conformto local cultural demands. Or it couldbe that local sales and marketingchannels for your particular productare different from those in the UK.
Case study —Ellis PharmaThe Middle East has become a keymarket for UK firm Ellis Pharma, aspecialist in global supply chainsolutions for the pharmaceuticalsindustry.
Following expert advice, theStaffordshire-based companydecided to focus on the emergingmarkets of Oman and Qatar,winning an £18,000 contract with
Doha Clinic Hospital. It furtherestablished itself in the region bygoing on trade missions and havingnumerous one-to-one meetingswith local decision makers ingovernments and hospitals andpotential agents. This led to EllisPharma securing orders worth£150,000.
Business Development Director GaryCampbell says: “We are confidentthat with our own efforts andsupport, our exports will increasesubstantially in the coming monthsand years.”
www.ellispharma.com
LogisticsGetting international transportright can be complicated anddepends on the agreement youhave with your customer or supplier.Your obligations should be clearly setout in a written contract usingIncoterms – standard trade termswhich state who is responsible fortransporting goods, insuring thegoods during transportation, payingduties and securing customsclearance.
The best mode of transport for yourgoods will depend on the type ofgoods and how quickly they needto be delivered. You may needmore than one mode, for example,sending goods by lorry to a port inthe UK and then by ship overseas.In all instances, the goods will needsuitable packaging and labellingfor transportation. You should clarifyin advance who will be responsiblefor UK customs procedures, forfreight and insurance, and forcustoms clearance in the customer’s
country – and use the correctIncoterms to describe this in thequotation and written contract.
Most companies use a specialistfreight forwarder to handletransport. Confirm exactly what theywill do and whether they can handleall documentation and otherprocedures. Look for a forwarder whoexports regularly to that destination.They can ‘consolidate’ your goodswith other consignments in a singlecontainer to reduce costs.
Getting paidThe risk of late or even non-paymentcan sometimes be greater whendoing business internationally.Ensuring you get paid for overseassales is a combination of assessingrisk, settling on acceptable paymentterms and methods and consideringinsurance to protect yourself againstproblems.
Help is available from UK ExportFinance (formerly known as ECGD).
To minimise the risks of non-payment,you should research the marketconditions in your target country andthe creditworthiness of potentialcustomers before you start trading.
There are also currency issues youneed to consider. In some countrieswhere there are restrictions onaccess to foreign currency, yourcustomers may face problems gettingcurrency to pay you. In this case, it’sworth insisting on a (confirmed)irrevocable letter of credit thatsecures payments according to theterms of the credit and often at anagreed rate.
Businesses which sell on credit toforeign customers can use factoringor invoice discounting to free up cashflow. Export factors specialise in thecollection of money from overseas.The factoring company pays you apercentage of the invoice valueup-front and the balance (less theirpercentage) once they have collectedpayment.
Case 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 be adaptedto accommodate both large andsmall groups of people, into theinternational market four years agowhen sales took off in the US.
ABF now supplies 17 countriesglobally and has offices in a numberof overseas markets, including Spainand Dubai.
Managing Director Darren Buttlesays: “Our international operationis gathering pace. Our immediatefocus is undoubtedly America, butI’m keen to explore opportunities inCanada, Brazil and regions of SouthEast Asia as well. These are allmarkets that are experiencing rapid
growth of their own and countrieswhere we can really play a part inhelping companies compete inthe international arena througheffective use of office space andcohesive work-life strategies.
It promises to be an exciting journeyahead as we harness the skills andexpertise available from trade advisersto support us and show us the way.”
www.kitetables.com
Ten key steps to successful exporting
1Research your marketDoes your prospective foreigncustomer need what you areselling at the price that will yieldyou a profit? What is thecompetition and how willthey react?
2Implement an exportstrategy and review yourcapabilitiesAsk yourself: what would mybusiness gain from exporting?
3Construct an export planDefine how you will enter theforeign market. Finalise humanresources and marketingstrategy and allocate anadequate budget to coverexport start-up costs.
6Get the Customs siderightContact HM Revenue & Customsand the UK embassy of yourdestination country to clarifyrequirements. Make sureyour reporting practicesare watertight.
7Get paid on timeEnsure your cashflow willremain at a safe level. Guaranteesufficient credit for your futuresales. Take out insurance coverif necessary.
8Choose your distributionmethodsConsider the implications ofselling over long distances andacross national frontiers.
4Choose your salespresenceEstablish whether you need adirect sales operation. Or is anagent or distributor moreeffective? How will you manageyour overseas sales presence?
5Promote your productHow are you going to market andsell your product? Customisemarketing to the target country.
9Transport goodseffectivelyAssess and choose the mosteffective transport method andmake sure the goods are insuredby you or the importer.
10After-sales policyRegularly liaise with customers,export agents and banks.Monitor political unrest orother adverse conditions inthe country of destination.Manage regular servicing andwarranty claims.
Source: UK Trade & Investment
Who 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.
The following are just some of the many organisations whichcan help you get started on your exporting journey.
UK Trade & InvestmentUK Trade & Investment (UKTI) is theGovernment Department that helpsUK-based companies succeed inglobal markets and assists overseasfirms in bringing their high-qualityinvestment to the UK.
UKTI has a global network of2,400 staff. Its International TradeAdvisers (ITAs) around the UK haveyears of business experience to drawon when advising companies. In 97markets based in British Embassiesand other Diplomatic offices aroundthe world, UKTI staff can offer local,in-market knowledge and expertise.
UKTI has helped many thousandsof businesses achieve internationalsuccess by providing tailored serviceswith specialist support covering awide range of industries. Its clientsconsistently cite the importance ofUKTI support in helping them toovercome barriers to new overseasbusiness and improve their businessperformance.
UKTI services have helped itscustomers to:
− understand how to do businessoverseas;
− identify opportunities and opendoors;
− reach customers/business partnersnot otherwise accessible
− raise their profile and credibilityoverseas;
− overcome barriers to entry orexpansion;
− improve overseas marketingstrategy;
− gain access to information nototherwise available;
− understand the competition;
− access powerful research to informmanagement decisions; and
− have the confidence to explore orexpand in overseas markets.
www.ukti.gov.uk
UK Export FinanceUK Export Finance is the operatingname of the Export Credits GuaranteeDepartment (ECGD), the UK’s exportcredit agency.
UK Export Finance does not lend direct,but supports UK exports by issuinginsurance contracts to UK exportersand by issuing guarantees to bankswhich make loans to overseasborrowers, which are used to purchasesupplies from UK exporters. UK ExportFinance’s services help facilitate exportcontracts by providing protectionagainst the risks of the exports notbeing paid for.
In 2010-2011, UK Export Finance (thenknown as ECGD) supported £2.9 billionof UK exports (up from £2.2 billion theprevious year). In late 2011 itannounced an extension to its creditinsurance policy to cover all sectors andsizes of company, as well as the launchof three new short-term products.
See the following pages for detailsof those services provided by UK ExportFinance which are most relevant tosmall- and medium-sized businesses.
www.ecgd.gov.uk
UK Trade & Investment andUK Export Finance services andproducts are detailed overleaf.
UK Trade & Investment– servicesPassport to ExportProvides new and inexperiencedexporters with the training, planningadvice and ongoing support they needto succeed overseas.
Overseas MarketIntroduction Service(OMIS)A tailored service by our overseasteams to access market and industryinformation, identify potential contactsor assist in planning an event. Thisservice attracts a charge.
Export Marketing ResearchScheme (EMRS)Offers support, advice and somegrant funding to eligible companieswishing to research a potentialexport market.
Export CommunicationsReview (ECR)Assesses the way companiescommunicate with overseascustomers and makes practicalrecommendations for improvement.
Events and seminarsHeld across the UK and the world.They include specific sector andmarket based activities.
Trade missionsOrganised to help UK companies visitthe marketplace they’re interested inand talk face to face with prospectivebusiness partners. UKTI alsoorganises missions into the UK toallow overseas delegates to meetwith potential partners or investors.
Business opportunitiesNews emailed directly into yourin-box, highlighting hot leads in yourchosen overseas market. Companiescan sign up for this free service byvisiting www.ukti.gov.uk
Gateway to Global GrowthA service for more experiencedexporters. It offers focussed planningand advice, and support to helpcompanies to build on their previoussuccess and develop new overseasmarkets.
High-value opportunitiesprogrammeProactively identifies global supplychain opportunities, coupled withan online service giving access toseveral hundred sales leads aroundthe world each month.
ContactsUK Trade & Investmentis the Governmentdepartment that helpsUK-based companiessucceed in an increasinglyglobal economy.
Our range of expert services canbe tailored to meet the needs ofyour company to maximise yourinternational success.
You can find contact details foryour local UKTI InternationalTrade Adviser on our website:
www.ukti.gov.uk
or telephone us:+44 (0)20 7215 8000.Our helpline is open from 9.00amto 5.00pm Monday to Friday.
UKTI EastT: +44 (0)8456 419 955E: [email protected]
UKTI East MidlandsT: +44 (0)8450 524 001E: [email protected]
UKTI LondonT: +44 (0)20 7234 3050E: [email protected]
UKTI North EastT: +44 (0)8450 505 054E: [email protected]
UKTI North WestT: +44 (0)8456 037 053E: [email protected]
UKTI South EastT: +44 (0)8452 789 600E: [email protected]
UKTI South WestT: +44 (0)8456 060 969E: [email protected]
UKTI West MidlandsT: +44 (0)8450 743 515E: [email protected]
UKTI Yorkshireand the HumberT: +44 (0)300 365 1000E: [email protected]
Invest NIT: +44 (0)28 9023 9090E: [email protected]
Scottish DevelopmentInternationalT: 0800 917 9534 within ScotlandT: +44 (0)141 228 2828 from the UKwww.sdi.co.uk
Business WalesT: +44 (0)3000 603000E: businessinformationhelpline@wales.gsi.gov.ukwww.business.wales.gov.uk
UK Export Finance– Products and ServicesUK Export Finance hasa range of products andservices to support UKexports; mentioned beloware those specificallytargeted at small andmedium-sized businesses.
Export Insurance PolicyUnder an export contract, there isalways a risk of not being paid bythe buyer - or of not being able torecover costs incurred performingthe contract due to it beingterminated in circumstancesbeyond the exporter’s control.
UK Export Finance’s ExportInsurance Policy may be able toprovide an exporter with coveragainst those risks, such as specifiedpolitical or buyer-related events,which prevent it being paid, leadto the contract being terminated,or prevent its performance.
Bond Support SchemeUnder an export contract, the buyermay require the issue of an on-demand contract bond (for example,an advance payment, performanceor retention bond) in order to assureitself that the exporter will meetits obligations. Before issuing sucha bond, a bank will require anundertaking from the exporter to payto the bank any amounts which thebank may pay out under that bond.The bank is therefore taking a risk onthe exporter’s creditworthiness underthat undertaking. Where the bankis unsure about taking that risk, aguarantee from UK Export Financefor part of it may persuade the bankto issue the bond.
In the case of an advance paymentbond, the exporter’s bank mayrequire the exporter to deposit thebuyer’s advance payment with thebank as security for the exporter’sundertaking to pay. This woulddeprive the exporter of the cashflowbenefit of the advance payment.UK Export Finance can provide aguarantee to the bank of up to 80per cent of the advance paymentbond’s value, which will reduce orremove the requirement to use theadvance payment as security –thus freeing up funds with whichto perform the export contract.
Export Working CapitalSchemeTo fulfil an export contract, theexporter may require funds in orderto be in a position to provide goodsor services. Specifically, the exportermay have won more or largercontracts than usual and a bankmay be cautious about lending anyfurther funds to meet the exporter’sneeds for more working capital, thusconstraining the company’s abilityto grow.
UK Export Finance’s Export WorkingCapital Scheme can offer a partialguarantee to the bank (of up to 80per cent of the value of the workingcapital facility in some cases), sothat the exporter can gain access tothe working capital with which toperform a specific export contract.
Foreign Exchange CreditSupport SchemeWhen an exporter enters into anexport contract under which itwill be paid in a foreign currency,the exporter may be exposed tounfavourable changes in exchangerates over the course of thatcontract. In order to bring certaintyto this aspect of the contract, theexporter may ask the bank to enterinto a contract to purchase, withsterling, the foreign currency whichthe exporter will receive at a pre-agreed rate of exchange.
However, the bank will be takinga risk on the exporter’s ability todeliver the required amount offoreign currency on the agreed date:if the exporter fails to do so andexchange rates have moved againstthe bank, the bank may suffer a loss.The bank may therefore wish toreceive some protection against thisrisk of loss before entering into theforward foreign exchange contract.
Where the exporter’s bank has beenrequested to provide a workingcapital facility guaranteed by UKExport Finance in respect of anexport contract and is also requestedto enter into a forward foreignexchange contract in relation to thesame contract, UK Export Financewill increase its guarantee of theworking capital facility in order toenable the bank to enter into thatforward foreign exchange contract.
Further informationFor additional information ordetails on the full range of UK ExportFinance’s services, please contactthem on +44 (0) 207 512 7887 or visitwww.ecgd.gov.uk.
Other sources of help
As well as the helpavailable from UKTI andUK Export Finance, thereare many other sourcesof help available to you.
Your bankYour bank can provide a range of helpon topics such as managing foreigntransactions, trading overseas insterling, owning assets abroad,exchange rates and managing foreignexchange risks. For more detailedfinancial advice and guidance onissues that affect you, you should talkto the international section of yourbank. If you can’t find the rightperson to talk to, you could contactthe following people at the one ofthe five major banks who will point youin the right direction:
BarclaysJohn Bevan,Head of Trade and Working CapitalT: +44 (0)1256 791401E: john.bevan@mercantile. barclays.co.uk
HSBCFelipe Hsieh, Senior Manager,TSC Client ManagementM: +44 (0)7920 411997T: +44 (0)20 7991 1706E: [email protected]
Lloyds TSBBarry George, Senior Manager,Trade ProductsM: +44 (0)7793 670292T: +44 (0)20 7463 1690E: [email protected]
RBS/NatWestDavid I.Houghton MBE,Director, Strategic PartnershipsM: +44 (0)7785 708611E: [email protected]
SantanderMartin Hodges,Head of Trade FinanceM: +44 (0)7827 872312E: [email protected]
Your accountantYour accountant can provide you witha range of advice, from starting abusiness, organising your financialaffairs, financial management andtaxation. You should also be awarethat the Institute for Accountantsin England and Wales (ICAEW) hasjust launched a new scheme: smallbusinesses across the UK are beingoffered free expert advice fromICAEW Chartered Accountantsas part of an initiative called theBusiness Advice Service (BAS).It aims to help small companiesand start-ups with business andfinancial advice to help economicgrowth. Small businesses canfind details of ICAEW charteredaccountants in their local area atwww.businessadviceservice.com
Your lawyerYour lawyer will also be able tohelp you. Similar to the ICAEW’s BAS,the Law Society has many memberswhich offer a service for SMEs.‘Lawyers For Your Business’ is anetwork of 1,000 solicitor firms inEngland and Wales offering specialistadvice and a free half-hour initialconsultation to small and medium-sizedbusinesses. Advice can besought on a range of legal issues– both domestic and international.
In 2012 the Law Society will alsobe working with its solicitor membersto produce practical ‘Doinginternational business’ guides aimedat SME firms new to exporting theirproducts and services internationally.
The guides will look at some of thefundamental legal issues which SMEsneed to consider when workinginternationally. Topics being coveredwill include:
− international employment issues;
− international contracts;
− business structures;
− debt recovery;
− tax; and
− dispute resolution.
These guides will be available aspublications, but also as webinarsand will be promoted widely tosmall businesses.
For more information visitthe Law Society’s website atwww.lawsociety.org.uk
British Chambers ofCommerce (BCC)The BCC, and its network of affiliatedChambers, support and advisebusinesses in all areas of internationaltrade. With a worldwide network ofbilateral and international chambersof commerce, the BCC can provideUK exporters with numerous servicesincluding: export documentation,market research, training, translationservices and letters of credit.For more information visitthe BCC’s website atwww.britishchambers.org.uk
The Institute of Export(IoE)The Institute’s mission is to enhancethe export performance of the UKby setting and raising professionalstandards in international trademanagement and export practice.They achieve this by the provision ofeducation and training programmes.The IoE offers recognised formalqualifications in international trade.It also runs a series of short trainingcourses covering every aspect ofinternational trade management,sales and marketing, logistics anddocumentary requirements, andinternational trade finance.
For more information visit the IoEwebsite at www.export.org.uk
Export ControlOrganisation (ECO)Any item exported from the UK whichis subject to export control needs alicence. The ECO is responsible forassessing and issuing (or refusing)export licences for a wide range ofcontrolled, so-called “strategic”goods. This includes military anddual-use items.
You can find out more on exportcontrols, including applying fora licence and rating enquiries,licensing policy, key documents, keylinks, notices for exporters and newsrelated to export control, by visitingthe businesslink.gov website atwww.businesslink.gov.uk
Intellectual Property OfficeIntellectual property rights can allowyou to own things you create, in asimilar way to owning physicalproperty. You can control the useof your IP, and use it to gain reward.IP rights only give protection in thecountry where they are registered, soif you are thinking of tradinginternationally, then you shouldconsider registering your IPrights abroad.
The UK’s Intellectual Property Office(UKIPO) can provide guidance:www.intellectual-property.gov.uk
HM Revenue & CustomsHM Revenue & Customs (HMRC)provides assistance on a number ofmatters relating to the importing andexporting of goods. Information andguides are available covering topicssuch as the classificationof goods, the European Union,Relief Procedures on Duty andVAT, Tariffs and Duties, Intrastatand the requirement to submitSupplementary Declarations,together with basic guides on exportlicences, export taxes, importlicences, rates of exchange, etc.www.hmrc.gov.uk
Business LinkThe Business Link website providesthe information, advice and supportneeded to start, maintain and grow abusiness. It provides information andadvice to help customers make themost of their opportunities. Ratherthan providing all the advice and helpitself, it fast-tracks customers to theexpert help they need. For SMEsthinking about exporting there is asimple diagnostic tool that helps youconsider whether now is the righttime to export.
For more information go towww.businesslink.gov.uk/bdotg/action/layer?r.l1=1079717544&r.s=tl&topicId=1084654164
Useful export linksFreight forwardingOne of the other things you’ll need tothink about is how to move yourgoods overseas. Much will depend onthe nature of your goods and theirdestination and you will need toevaluate the best combination of timeand cost with the characteristics ofyour product. There are variousmethods of shipping goods: by air,road, sea, or rail. Some companiesoffer multi-modal solutions; thismeans that they offer more thanone service.
For more information about freightforwarding please contact the BritishInternational Freight Association atwww.bifa.org
Country InformationBBC websitehttp://news.bbc.co.uk/1/hi/country_profiles/default.stm
Foreign & CommonwealthOffice country profileswww.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile
Customs & RegulationsHM Revenue & Customswww.hmrc.gov.uk
Economic InformationThe Economistwww.economist.com/countries
Market AccessMarket Access Databasefor Tariffs (for non-EUmarkets only)http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm
SOLVIT – Overcoming TradeBarriers (EU markets only)www.bis.gov.uk/EUMarketAccessUnit
Standards and TechnicalRegulationsBritish Standards Institution(BSI)www.bsigroup.com/en/sectorsandservices/Disciplines/ImportExportNational Physical Laboratorywww.npl.co.ukTrade Statistics
Trade StatisticsNational Statistics Informationwww.statistics.gov.uk/hub/index.html
UK Trade Infowww.uktradeinfo.com
Travel AdviceForeign & CommonwealthOfficewww.fco.gov.uk/en/travel-andliving-abroad
NHSwww.nhs.uk/nhsengland/Healthcareabroad
Travel Healthwww.travelhealth.co.uk
Devere HouseVicar LaneLittle GermanyBradford BD1 5AH
T: 0845 034 7200F: 01274 771587E: [email protected]: www.chamber-international.com
Joe Baker, International Account Executive,M: +44 (0)7827 318687T: +44 (0)1274 230092E: [email protected]
Nikki Cunningham, International Account Executive,M: +44 (0)7827 318683T: +44 (0)1274 230058E: [email protected]
