Many SMEs 'Reluctant' To Export

Data Released For Export Week Shows UK SMEs Often Reluctant To Trade Overseas

12.11.2014

Steven Beahan, Partner | +44 (0)114 294 7868

This week (Monday November 10th to Friday November 14th), the UK celebrates Export Week, highlighting the country's successful international trade links, while raising awareness of its potential benefits.

However, research released by KPMG in conjunction with YouGov to coincide with the event shows that many of Britain's small and medium-sized enterprises (SMEs) are reluctant to sell their products and services overseas, preferring instead to market solely to UK-based customers.

Senior partner at KPMG Kevin Smith explained that surviving the global economic recession has led many firms to want to focus primarily on their domestic market instead of branching out overseas in order to minimise potential risks.

YouGov and KPMG questioned 1,100 SMEs to discover their views on exports, finding that 36 per cent currently have no interest in international trade, due to factors including complex legal regulations, few overseas contacts and a lack of tax incentives. For medium-sized firms, just 20 per cent said they had no interest in exporting their goods.

Regional variations were seen within the data, with 47 per cent of north-east firms not wanting to export, but four in five of those based in London were willing to explore international markets.

Despite this somewhat widespread reluctance to explore foreign trade markets by UK SMEs, research from the Confederation of British Industry shows companies are 11 per cent more likely to survive if they actively export their products and services.

However, the UK is lagging behind other countries in the European Union (EU) with regard to how much revenue its businesses generate outside of the EU, with just 17 per cent of British firms contributing towards this, compared to 25 per cent in Germany and Italy's 30 per cent.

Mr Smith added: "Making the leap into overseas markets is not nearly as daunting as it seems on paper.
There are some great success stories of SMEs who have achieved massive growth by successfully moving to overseas markets.

"Linking in with organisations who run trade missions overseas or have good networks abroad is the first step."

Expert Opinion
It is interesting to note this perceived reticence in relation to exporting, although the approach of focusing on domestic markets is not entirely surprising considering the difficult few years that many businesses have faced.

"However, it is clear that ambitious SMEs could gain a significant advantage over their competitors by considering the opportunities and potential for them to branch out into other markets.

"We would urge any small businesses considering such a step to carefully plan the steps they are taking and also seek external advice to ensure they are fully prepared for the challenges ahead. Legal advice is particularly crucial in terms of regulatory compliance and also ensuring legislation across different jurisdictions is correctly considered."
Steven Beahan, Partner