International trade aspirations
UK businesses have long looked beyond our shores for growth. We are, at heart, a trading nation with entrepreneurial business leaders with international horizons.
Yet those international trading aspirations have been sorely challenged over the past decade. Political leaders around the world have looked more to domestic agendas, the UK left the European Union, the COVID pandemic all but shut international boarders for two years resulting in constrained supply chains and rising costs. And then the conflict in Ukraine has seen costs increase further, driving high inflation and, for many, a cost of living crisis. A period of low growth threatens.
It might be reasonable to expect the international aspirations of UK businesses to be dimmed.
But, as the findings from our Global Britain? research to be published in September 2022 will suggest, British businesses are more international in their outlook – the number of businesses that told our survey they are trading internationally has increased by 10% since 2020.
Despite these challenges, the large majority of businesses hold international trade in great importance, as the chart below illustrates. Over half say their view of trading internationally is more important as a result of recent events.
As a result of the following, has your view on the importance of exporting / trading internationally increased or decreased?
|Increased a lot||27%||25%|
|Increased a little||30%||27%|
|Remained about the same||30%||32%|
|Decreased a little||9%||13%|
|Decreased a lot||3%||4%|
Yet actions speak louder than aspirations, and 81% of business leaders participating in our survey told us they trade internationally, compared to 71% in 2020. Of the 19% that don’t already trade internationally, 38% are currently planning to, with 43% likely to consider expanding overseas in the next three years.
Whilst Europe remains the largest trading partner and will continue to be our most important international market, UK businesses have much wider aspirations, and those aspirations have changed markedly over the last three years.
Government policy has looked to reshape the trading relationships UK businesses have around the world and politicians can take some comfort from our survey results. However, it should be noted that trade with the EU significantly outweighs trade elsewhere and the government should take every step possible to make UK-EU trade as seamless as possible.
Which international markets do you see as your priority for growth in the next 12 months?
|Europe (outside UK)||71%||58%|
For those businesses looking to take that first step, Kreston Reeves offers the following advice.
Understand your market
It may sound obvious but take an objective step back and ascertain whether there is a market for your product or service. Look to competitors and the products or services they offer, and ask whether your own product or service will be well received.
How will you access that market
Business owners are often obsessive about their business, they care, they want to know what’s going on and overseas expansion will add further pressures. International expansion is typically achieved through a distributor or agent, or an international footprint. Building trust will be vitally important when you might be many thousands of miles and different time zones away.
In addition to asking whether your product or service meets the legal or regulatory requirements, a business should also ask whether the taxes and tariffs will make it a profitable venture.
If your business is considering trading internationally or expanding overseas, our Global team at Kreston Reeves can help. We’re also a member of Kreston Global which is an international accountancy network, with access to advice and colleagues in over 120 countries. If you would like to discuss your options or would like further information, please get in touch.
To receive your copy of the Global Britain? report, subscribe to ‘International business issues’ here.
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