Thursday, February 10, 2011

U.K companies lack culture.

Hopes that the UK economy can be balanced with a surge in export growth have been called into question by a new survey. The study, carried out by the British Chambers of Commerce (BCC), found that a majority of UK SMEs have little or no intention of trading abroad. Of the 8,000 firms polled by the BCC, seven out of ten said that they are neither current nor likely exporters.

The BCC survey laid bare a depressing lack of exporting culture among smaller British firms. Many of those questioned doubted whether their products or services would hold appeal for overseas consumers, while a fifth expressed themselves quite happy with domestic sales. The research also highlighted the large number of firms that are unable or unwilling to tap overseas markets and, of those actually engaged in trade abroad, the number of current exporters that continue to face difficulties financing international deals.

Of those not expecting to export, nearly 10 per cent said they lacked 'the resources to make it happen', and a similar proportion said they would need help finding overseas customers. Meanwhile, trade finance and insurance still remain hard to come by for exporters, the survey showed. Of some 1,800 exporters, nearly a third (29 per cent) used some form of trade finance. However, half of all trade finance users had difficulty securing the financing they needed and said there had been little improvement during the last year.

Of over 2,500 current and likely exporters, a third (34 per cent) wanted Government help dealing with foreign exchange fluctuations, a quarter (28 per cent) needed support with working capital and short-term trade credit insurance, and a fifth (19 per cent) were looking for assistance with contract bonds. An absence of promotional activity identifying those government support schemes that do exist was another problem. Of all the businesses surveyed by the BCC, 65 per cent were unaware of the UK's official export credit agency, the Export Credit Guarantee Department. Worse still, nine out of ten companies that do export have never applied for or used its services, suggesting that ECGD's current products do not reach critical SME markets.

David Frost, surely not the David Frost, director general of the BCC, commented: "Our survey reveals some uncomfortable truths for British business and for the Government about our ability to export. Too many of our companies lack an exporting culture, even though they produce high quality goods and services. We cannot rebalance Britain's economy when so many companies say they're simply not ready or able to take their products overseas. Despite its rhetoric, the Government is not yet doing enough to encourage and incentivise exporting. The UK doesn't provide enough help to small- and medium-sized exporters, whereas governments in Canada, Germany, France and the USA take more steps to make sure their companies succeed overseas. Unless we see more help for small companies seeking trade finance, the UK will continue to see hundreds of millions of pounds of lost business."

The role of Government in trade can be as subtle or as obvious as you like, no doubt reflecting your own take on politics. All Governments want to be seen as the champions of growth and confidence even those who say they firmly believe in market forces will apply a little pressure to those markets. It's interesting that the U.S.A and France are two of those countries cited by David Frost as I have personal and professional experience of both countries bending international rules on trade and Government involvement in order for 'their' companies to succeed in export markets. I can't help thinking that us Brits get so bogged down with rules that we sometime lose sight of what the actual game is about.


Span Ows said...

I am genuinely surprised by these numbers Paul, especially those unaware of export credit etc: having worked abroad so much, mainly with companies that export, I have always just presumed businesses (all businesses) knew what, how, when and why to export; it's no great mystery or even difficult. I understand the currency worries and concern over collecting payment etc but that's about it.

Paul said...

I was shocked as well but then the day after I wrote that I had a visit from a client who knows nothing about importing goods which bore out what I had written.

Span Ows said...

Thanks for all your comments paul. Re this I presumed outfits like Business Link would be doing their job, bloody quangos (hahaha)

Maybe I should come back and start a business advising companies on export!

Paul said...

There's money in it I'm sure. No problem about the comments, I've been playing catch-up.