Growth or groan? Turning exports into a success story is about the right strategy and controlling risks
31 March 2015
As a UK-based manufacturer, how do you feel when ‘exports’ are mentioned? Do you see them as a rich source of business growth, or groan inwardly at the challenges they present? Either way, given the right approach and commitment, overseas markets across the world offer huge – and in many cases growing – sales potential for the UK’s manufactured goods.
Manufacturers’ attitudes towards exporting vary widely, often reflecting persecutions rather than reality. For some businesses, exports have long been a major source of sales, and have helped drive revenue growth over many years. In contrast, others have put exports in the “too difficult” category, and taken a deliberate decision to focus on domestic markets. A third group have a nagging feeling that they really should be doing something about exporting more of their production – but aren’t quite sure what. So, which category do you fall into?
Whatever your answer, it isn’t hard to see why some companies groan at the thought of exporting, given the web of interlinked complexities it involves. For a start, amid shifting global growth rates, there’s the challenge of choosing which markets to target: do you go for more familiar and closer-to-home markets like continental Europe, where growth is currently relatively flat; or further-flung and less familiar markets like Brazil, where growth is faster and the middle class expanding apace?
The choice may well come down to how closely the products you’re trying to sell align with the tastes and characteristics of each market. That said, emerging markets do offer the potential for faster growth – and a general challenge facing UK exporters at the moment is to expand the focus from their traditional developed markets in Europe and North America, to higher-growth regions like Asia Pacific and Latin America.
But deciding which export markets to go for is just the beginning. The next question is the entry method – with companies facing a choice between selling direct by “flying in”, appointing a local distributor, creating a joint-venture on the ground, or acquiring an existing business in-country. Each approach brings its own benefits and risks. And in many cases the structure employed will evolve over time, even progressing eventually to the establishment of a local manufacturing and/or R&D capability.
Alongside these complexities, there are a host of further issues that manufacturing exporters need to address. These include people issues, such as meeting local employment regulations and deciding whether to relocate talent from the UK; legal risk assurance around regulations such as the UK Bribery Act; and managing the tax implications of the overseas operation. Currency fluctuations can create further challenges: the media presented the pound’s recent rise to a seven-year high against the euro as good news for holidaymakers – but for our exporters to Europe, it was anything but.
While the challenges may sound daunting, the good news is that the export opportunity is out there – and all that’s needed to seize it is the right products, backed up by the right ambition, commitment and strategy. UK companies have inherent advantages in many markets, ranging from the English language to our strong reputation for high quality, innovation and fair-dealing. And UK manufacturers looking to grow their exports can also benefit from a wealth of relevant professional advice and support, supplemented by valuable insights and expertise from the UK’s proven export leaders.
This is the first in a series of blogs where we’ll examine the issues facing UK manufacturing exporters – drilling down specifically into entry structures, people, tax and legal compliance. These issues will also be discussed by exporters and PwC experts at our ‘Exports: growth or groan?’ workshop in Sheffield on 24th April, where you’ll be able to network, hear advice and learn from war stories. Click here to register for the event. In the meantime, the series of blogs will continue – so watch this space.