Going global could help you beat recession

EXPORTING could be the shot in the arm businesses need to survive as the economy flatlines.

Companies are being encouraged to look beyond the local markets and develop new links abroad.

Instead of being bogged down in the economic crisis, they're being told it's time to sprout an overseas trading arm and help the country grow its way out of recession.

But is it really that easy? It is according to Rob Lawley, below, head of international trade at UK Trade & Investment (UKTI) West Midlands.

He said: "There's more legislation and paperwork involved but there's not much more difference. What exporting does though, is make people think more about their products and company.

"Businesses that trade internationally have a better survival rate. They can become more profitable and are more likely to grow.

"The workforce learns new skills and the business raises its game. Exporting makes a company more rounded and balanced and that rubs off on the UK market."

Research carried out by UKTI shows almost one in five new companies active abroad are 'born global', meaning they have been doing business overseas since the outset.

In its report 'New markets, new ideas: How exporting fosters innovation and growth', UKTI says: "Many internationalised firms experience a 'virtuous circle' where exporting led to innovation, and where those innovations then led to further exporting.

"More than half of all firms said that a new product or service evolved because of their business overseas."

But as with any new venture, preparation is the key. Sometimes a deal really is too good to be true as fraudsters are now targeting businesses with scam email offers.

Rob said: "The first step is to make sure you are going to get paid. Don't send anything out without knowing you are going to get paid.

"Make sure you get all the paperwork in order. Our team at the North Staffordshire Chamber of Commerce last year processed £190 million of export documents.

"The last thing you want is for a container to get stuck en route to a customers as it can costyou money.

"Make sure your product is fit for purpose. If it's electrical, make sure the voltage and currency is compatible.

"If businesses do their homework then it really is no different to trading with a company at home."

UKTI offers assistance to all businesses looking to export, from national names to sole traders, and in every possible market.

While any company can take advantage of the benefits exporting has to offer, they should be prepared for shelling out more than just a few extra pounds on postage.

Rob added: "You don't need a fantastic balance sheet but you do need some money.

"If you are going to trade in Manchester for example, it's an hour up the M6 and maybe £20 in fuel. If you're sending something there and it goes wrong, it can be sorted out.

"If you are trading with Singapore for example, it's 14 hours and several hundred pounds for the flight.

"You also need drive and a level of commitment. You're not going to conquer the U.S. market and be back in time for a drink before dinner.

"For some SMEs, time is equally as important. If owners or directors have to take a week or 10 days out overseas then there's nobody back home doing their job."

Data released by the Office for National Statistics last month revealed that British companies have more than doubled their exports to Brazil, Russia, India, China, and South Africa, known as the BRICS.

Exports jumped from £12.7 billion in 2007, the last full year before the recession struck, to £27.1 billion in 2012.

The BRICS now account for 5.56 per cent of total UK exports, compared with 3.34 per cent in 2007.

These emerging economies have more spending power and, with the Made in Britain brand still credible overseas, engineering and ceramics companies in North Staffordshire are benefiting from trading with these growth markets, although Europe remains the region's biggest export destination.

Last week JCB announced it has won an order for more than 1,000 backhoe loaders from Brazil's Ministry of Agrarian Development in a £40 million-plus deal.

While the machines will be manufactured at JCB's factory in Sao Paulo, 12,000 hydraulic cylinders will be supplied by JCB's World HQ at Rocester.

Dr Ian Jackson, enterprise reader at Staffordshire University, said returning, creating and safeguarding jobs as a result of exporting will mean that the UK is in a stronger position when the economic recovery eventually materialises.

He said: "The Government is now looking at ways to stimulate the economy without spending our way out of the recession. The best way is to export. Domestic demand is very sluggish.

"In North Staffordshire we are ideally situated to take advantage of the benefits of exporting because we have some really strong brands.

"JCB is an exemplar of how to return jobs in the British economy but have an export-led expansion.

"Another company with export growth is Steelite International. It hasn't got as strong a brand and so that's why it took over Royal Crown Derby. Steelite is exporting, but not that many people have heard of it outside of Britain.

"As for other companies, we have another strong brand that is exporting and that is Alton Towers. If we attract foreign visitors there it's as if it is exporting – it generates foreign currency."

He added that the local multiplier effect means exporting can generate wealth and jobs at smaller firms, encourage innovation and provide opportunities for graduates to stay in the area.

Dr Jackson added: "It's at the micro business level we need to focus now and that's where organisations like UKTI and the North Staffordshire Chamber of Commerce help.

"There are potentially lots of smaller businesses that have the ability to export but feel it is beyond their experience. SMEs and micro enterprises need to be encouraged."