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Trade: Exporting for growth




 Your export opportunity
 Our insight
Your guide to getting started in exporting




www.ukti.gov.uk
UK Trade & Investment
�
UK Trade & Investment (UKTI) is the      UKTI has helped many thousands
Government Department that helps         of businesses achieve international
UK-based companies succeed in            success by providing tailored
global markets and assists overseas      services with specialist support
firms in bringing their high-quality     covering a wide range of industries.
investment to the UK.                    Its clients consistently cite the
                                         importance of UKTI support in
UKTI has a global network of
                                         helping them to overcome barriers
2,400 staff. Its International Trade
                                         to new overseas business and
Advisers (ITAs) around the UK have
                                         improve their business performance.
years of business experience to draw
on when advising companies. In 96
markets based in British Embassies
and other Diplomatic offices around
the world, UKTI staff can offer local,
in-market knowledge and expertise.
Exporting for growth – Your guide to getting started 01




Foreword



                                                                         Businesses which
                                                                         get involved in the
                                                                         international market
                                                                         become more
                                                                         dynamic, innovative
                                                                         and successful.
Lord Green of Hurstpierpoint
Minister of State for Trade
and Investment




Welcome to UK Trade &           Even through challenging economic        A great place to start is by talking
Investment’s (UKTI) guide to    times, there are unparalleled            to your local UKTI International
                                opportunities for British firms around   Trade Adviser, who has years of
getting started in exporting.
                                the world as the emerging high           business experience and can give
                                growth markets continue to grow.         you one-to-one advice. UKTI’s staff
                                In the UK, if we are to make progress    around the world can provide you
                                in reducing our trade deficit, we need   with specialist local, in-market
                                to encourage more SMEs to take the       intelligence and guidance.
                                plunge and export, and to encourage
                                                                         The guide also steers you to other
                                those already doing so to spread
                                                                         sources of help – from logistics to
                                their wings. We know that companies
                                                                         intellectual property, from cultural
                                which begin to export experience
                                                                         issues to getting paid.
                                significant gains in productivity
                                and competitiveness. In essence,         Britain’s future prosperity will be
                                businesses which get involved in the     built on its success in international
                                international market become more         markets. Exporting provides a major
                                dynamic, innovative and successful.      opportunity for growth in the UK
                                                                         economy – and it could be a major
                                This guide outlines the points you
                                                                         opportunity for your company too.
                                need to consider before venturing
                                                                         Increasing British exports is a
                                into international business. And
                                                                         national challenge that we must
                                it tells you where to go for help
                                                                         rise to collectively.
                                and guidance.
02 Exporting for growth – Your guide to getting started




                                              It’s time to 

                                              go global
�
                                              Have you ever thought about doing business in
                                              overseas markets? If not, or you thought it too
                                              difficult, then you might want to think again.
Exporting for growth – Your guide to getting started 03




Exporting can help you survive and      As hosts of the 2012 Olympic and         If you become an
grow. There are real opportunities to   Paralympic Games in London, the
trade internationally; UK products,     eyes of the world are firmly on the
                                                                                 exporter, the evidence
services and expertise continue         UK. This provides a perfect platform     shows that you are
to be in demand across the world.       for UK companies to showcase             likely to improve your
There are opportunities – both in       their expertise and do business
traditional, established markets        in overseas markets.                     productivity by a third
such as Europe and the US, and
                                        This guide aims to help you grow
                                                                                 in your first year alone.
the high-growth economies of
         -
                                        your business internationally. If you    Mark Prisk, Minister of State
countries such as China, India,                                                  for Business and Enterprise
                                        haven’t exported before, you will
Brazil and Russia.
                                        probably have lots of questions.
                                        As this guide sets out, there is a
                                        lot of expert assistance available.
04 Exporting for growth – Your guide to getting started




 Why should I export?




Why should you take the                       Exporting can also be a catalyst for     A growing trend
export plunge?                                innovation. In many cases you will       More and more UK companies are
                                              see new ideas and opportunities          recognising the benefits of exporting.
UK companies which export are                 overseas which will spur you to
responsible for 60 per cent of national       develop new and modified products        Research shows that a growing
productivity growth and more than             to meet the needs of international       number of UK firms have increased
70 per cent of UK business research           customers. This can help you to gain     their export levels. A recent study2
and development. This helps to                and retain a competitive advantage       found that the percentage of UK
give them a technical competitive             in the UK as well.                       firms doing business overseas rose
advantage, leading to more sales                                                       from 26 per cent to 31 per cent over
and opening new markets.                      Academic research1 confirms that         a two-year period.
                                              exporting companies:
Doing business overseas is a                                                           Exporting is not just for bigger
different experience for every                – are more productive and                businesses. A recent survey of
company and its benefits will vary              innovative than non exporters;         around 200 smaller exporters
greatly depending on the personal             – are more resilient to an economic      showed that three in every four
profile of each firm.                           downturn;                              planned to export more in 2011.3
                                                                                       A separate study found that the
As well as opening access to                  – achieve stronger financial             proportion of small UK firms
new sources of revenue, trading                 performance;                           exporting increased by 10 per cent
internationally will allow you to                                                      in both manufacturing and services
spread risk across a wider range of           – have a higher profile and more
                                                credibility; and                       over a six-year period.4
customers, extend the market for
specific products and ensure that             – are more likely to stay in business.
you are aware of international
competition.
In some cases companies are able
to offer much more interesting roles
for their staff, and to recruit better
people as a result.
Exporting for growth – Your guide to getting started 05




 Business benefits
                                                                                         Exporting is a must to
 Exporting can allow companies to:                                                       survive in these difficult
 1    Achieve levels of growth
      not possible domestically.                  6  Increase the returns
                                                     on investment in R&D.
                                                                                         times. Despite the
                                                                                         challenges, the
 2    Increase the resilience
      of revenues and profits.                    7  Improve financial
                                                     performance.
                                                                                         opportunities are simply
                                                                                         staggering. A British-made
 3    Spread business risk.
                                                  8  Improve
                                                                                         product is a mark of quality,
 4
                                                     productivity.
      Achieve economies of scale                                                         and has a higher value
      not possible domestically.
                                                  9  Boost their profile and
                                                                                         overseas. Exporting can be
 5
                                                     recognition internationally.
      Increase the commercial
      lifespan of products                                                               challenging but also exciting.
      and services.                                                                      Mary Barnett, Director, Chokolit



An increasing number of young
UK companies are grabbing                         Case study —
international opportunities from an               New York Delhi
early stage. Almost one in five new               Exports have helped west London        Managing Director Nina Uppal
firms are currently active abroad –               snack business New York Delhi          says: “We are truly going global.
and so have been doing business                   more than quadruple its turnover       Because of the excellent advice,
overseas since they started trading.              since its launch in 2009.              support and contacts provided
                                                                                         by UKTI, New York Delhi has been
You too can join this growing club                With support from UK Trade &
                                                                                         catapulted into the global market,
and gain the export advantage.                    Investment (UKTI), its premium
                                                                                         giving it the sort of exposure I had
                                                  peanut brand, ViPnuts, is now
                                                                                         only dreamt of. We have already
                                                  being supplied to Canada, Eastern
                                                                                         caught the eye of a couple of giant
                                                  Europe, France, Germany, Spain
                                                                                         food multinationals.
                                                  and the US. UKTI has helped New
                                                  York Delhi go on market visits to     “I always knew we had an excellent
                                                  meet potential distributors and        product and brand, but it was
                                                  exhibit at overseas trade shows.       really about how we shouted about
                                                                                         it, and UKTI helped us do this.”
                                                                                         www.newyorkdelhi.com

1 Harris, R. and Q. Cher Li (2007), Firm Level
  Empirical Study of the Contribution of
  Exporting to UK Productivity Growth and
  Hart et al Impact of Trade Services on R&D –
  Aston University August 2009
2 Study of the Relationship Between Innovation,
  Exporting and the Use of E-Commerce, Harris
  and Li, 2010.
3 UKTI/IOD Doing Business Overseas survey,
  July/August 2010.
4 Study of the Relationship Between Innovation,
  Exporting and the Use of E-Commerce, Harris
  and Li, 2010.
06 Exporting for growth – Your guide to getting started




Where should I export to?
Exporting for growth – Your guide to getting started 07




                                                                                                       UKTI not only helped
                                                                                                       shape my export strategy,
                                                                                                       but really opened doors,
                                                                                                       putting me in contact
                                                                                                       with the right people
                                                                                                       in the right countries.
                                                                                                       Parminder Kalsi, Managing Director
                                                                                                       BBC Pharmaceutical Services




There is an abundance                              High-growth markets                                 middle classes in China and India, for
of opportunities for UK                            UK exporters are also increasingly                  example, are set to increase household
                                                                                                       expenditure fourfold over the next
exporters – and plenty                             embracing the myriad opportunities
                                                                                                       20 years.5 The Chinese middle class is
of support to help you                             offered by the world’s emerging
                                                   economies – many of which are                       forecast to grow from 172 million to
take advantage of them.                            experiencing rapid rates of growth.                 314 million in the next five years – more
The UK is a major trading nation,                  Such high-growth markets include                    than the entire population of the US.6
able to capitalise on the single                   the ‘BRICs’ (Brazil, Russia, India and              These rapid growth rates, combined
market through the European Union                  China), whose dynamic economies                     with progress in infrastructure,
(EU), as well as being ‘socially close’            will provide a wealth of prospects                  communication networks and global
in terms of culture and language                   for UK firms in the coming decades.                 co-operation, are making doing
to a number of major international                                                                     business in high-growth markets
                                                   In addition to the BRICs, there are
markets – including the US.                                                                            increasingly commonplace for UK
                                                   other fast-growing markets with great
Many UK firms begin exporting by                   potential, such as the so-called CIVETS             exporters. For example, since 2002,
entering established markets such                  (Colombia, Indonesia, Vietnam, Egypt,               the number of UK companies
as these. The EU, with its open                    Turkey and South Africa). These often               exporting to China and India in the
borders and shared import/export                   smaller markets have much to offer,                 construction and IT sectors has
procedures, provides UK companies                  and UKTI International Trade Advisers               increased by over 100 per cent.
with unrestricted access to more                   (ITAs) are well placed to guide                     You don’t have to be an experienced
than 500 million consumers,                        exporters on how to select the best                 exporter to enter a high-growth
while the US continues to be our                   territory to target.                                market. Two in five of the smallest
number-one export market, offering                                                                     exporters (with fewer than 10
                                                   Growth in such markets is driven by
opportunities across a wide range                                                                      employees) already do business in
                                                   rapidly rising populations and GDP
of sectors.                                                                                            at least one high-growth market.7
                                                   levels. Research has shown that the

5 BIS Economics Paper No.8, UK Trade Performance: Patterns in UK and Global Trade Growth, November 2010
6 HSBC, October 2010
7 NIESR Analysis of the International Business Strategies, Barriers and Awareness Monitoring Survey, March 2010, and OMB Research, PIMS Qualitative
  Follow-up Study of Business Needs in Emerging Markets, June 2006
08 Exporting for growth – Your guide to getting started




Aid-funded business
As well as working with specific              Case study —                           Case study —
geographic markets, there are                 Kat Maconie                            Skyline-IFE Ltd
also huge opportunities for UK                Exports have been a key way for 
      International business has really
companies in aid-funded business              British footwear designer Kat 
        taken off for Suffolk-based in-flight
– that is, the contracts awarded by           Maconie to build her business. 
       entertainment company Skyline-IFE.
multilateral agencies such as the             Having received support from UK 

                                                                                     Since enrolling on UK Trade &
UN and World Bank to support                  Trade & Investment, her label can 

                                                                                     Investment’s Passport to Export
projects in the developing world.             now be found in leading fashion 

                                                                                     programme and attending major
Much of the implementation of                 stores across the world, including 

                                                                                     airline industry exhibitions
these aid-funded projects is                  Brazil, Europe, Japan and the US. 

                                                                                     overseas, the small firm has won
contracted out to the private sector,        “I knew I’d have to produce large       clients in Norway and Sweden
representing significant business             quantities of shoes early on           and is bidding for work in the
opportunities for consultants,                to get a decent price point,”          Middle East.
works contractors and suppliers               says Maconie. “I had to grow
of goods and services.                                                               Managing Director Richard Barsby
                                              the business quickly and my
                                                                                     says: “It is relatively new for us to
Every year, multilateral agencies             best chance of doing this was
                                                                                     be selling in this way and Passport
spend some US$60 billion on                   to look beyond the UK.
                                                                                     to Export was one of the things that
everything from tents to               “UKTI’s support has been crucial.             gave us the confidence to go ahead.
telecommunications. The UK              The international trade adviser              The service is tailor made for small
currently gains between 4 and 17        really understood what I was                 businesses like ours because it
per cent of this aid-funded business, trying to achieve and had a very               made us take a considered look at
with the most sought after expertise good insight into the nature of                 our strategies and plans.”
being in the healthcare, construction, my business.
consultancy, ICT, environmental and                                                  He adds: “We know that trading
transport sectors.                     “The UKTI-organised seminars                  conditions are going to get very
                                        were really helpful, while the               challenging in the coming year but,
                                        support I had in meeting the costs           with the backing of UKTI, we believe
                                        of travelling to new markets was             we are well placed to come through.
                                        invaluable – I would not have been           We’re now very busy presenting new
                                        able to fund such visits on my own.”         proposals to prospective clients.”
                                              www.katmaconie.com                     www.skyline-ife.com
Exporting for growth – Your guide to getting started 09
10 Exporting for growth – Your guide to getting started




A world awaits
�
There are opportunities                           Brazil                                Ireland
                                                The value of UK goods exported         Widely considered the ‘easiest’
for UK exporters in all                         to Brazil grew by 24 per cent to       overseas market for UK exporters,
corners of the world.                           £2.2 billion in 2010.                  who sold goods worth £17 billion
They include:                                     China
                                                                                       there in 2010.
                                                China has become the UK’s ninth-        Mexico
                                                largest goods export market and        UK goods exports to Mexico
                                                British export activity there rose     increased by £207 million in 2010.
                                                by 418 per cent from 2000-2010.        24 per cent of internationalised UK
                                                                                       firms said that they are already doing
                                                  France                               business here or are ‘very’ or ‘quite’
                                                The UK’s fourth-biggest export
                                                                                       likely to do so in the next two years.
                                                market.
                                                                                        Russia
Source: All figures taken from 2010 UKTI          India                                Around £3.6 billion of UK goods
International Business Strategies Barriers
                                                UK exports to India grew 45 per cent
and Awareness Survey and ONS Monthly Review                                            were exported here in 2010.
of External Trade Statistics, March 2011.       between 2005 and 2010.
Exporting for growth – Your guide to getting started 11




                                        International trade is more important than ever and
                                        exploiting the opportunities of fast-growing markets
                                        in Asia and Latin America is vital to the UK’s economic
                                        future. The difficulties and risks of operating in these
                                        fast-changing markets are less than the risk of not
                                        participating in their growth.
                                        Miles Templeman, Director General, Institute of Directors




                                        Top 20 goods export markets
                                        for UK companies (2010)

                                        US
                                        Germany
                                        Netherlands
                                        France
                                        Ireland
                                        Belgium/Luxembourg
                                        Spain
                                        Italy
                                        China
                                        Sweden
                                        Switzerland
                                        Hong Kong
 Saudi Arabia and UAE
Popular emerging markets                Japan
with nearly a quarter of
                                        Canada
internationalised UK firms
already doing business here.            India
 South Africa                           UAE
A popular emerging market, with         Poland
45 per cent of firms involved in or
considering export activity either      Russia
there already or with some likelihood   Singapore
of entering in the next two years.
                                        Australia
 US
The UK’s number-one export
market, with around £38 billion of                                   0            10           20           30           40
UK goods exported here in 2010.                                                   Value of goods (£ billion)
                                        Source: ONS 2011
12 Exporting for growth – Your guide to getting started




 Getting ready to export

                                                                                        We saw our website as a
                                                                                        critical tool to reach our
                                                                                        customer base. Getting it
                                                                                        right was crucial. The ECR
                                                                                        consultant was inspirational:
                                                                                        hugely experienced with
                                                                                        a wealth of knowledge.
                                                                                        Working with him provided
                                                                                        us with invaluable insights
                                                                                        and ideas.
                                                                                        Andy Cox, Director Cox & Plant Ltd,
                                                                                        West Midlands


If you are serious about                      ITAs can draw on years of business        Make an export plan
trading internationally,                      experience and give you – at no cost      After completing your market
                                              – a more detailed assessment and
you will want to think about                  practical advice on a one-to-one basis.
                                                                                        research, you can draw up an export
how to research, target                                                                 plan defining how you will enter
                                              Carry out market research                 the new market. That should include:
and grow a presence in
overseas markets.                             It is essential to carry out detailed     – a marketing strategy which
                                              market research to identify and             incorporates international
But how should you begin? How do              evaluate the target market. Areas           trade development;
you even know whether exporting               to examine include:
is right for you? Before you commit                                                     – an understanding of the route
to exporting you need to honestly             – the industry structure;                   to market, e.g. the preferred
assess your export potential – both           – the predicted demand for your             distribution channel for your
in terms of the readiness of your               product or service;                       products or services;
business and of your product or               – the competition and how you plan        – the chosen business model e.g.
service. The following steps should             to fit into that marketplace; and         agent, distributor, B2B, sales office,
help you to do this.
                                              – any modifications required to make        joint venture or subsidiary company;
Assess your export capabilities                 your product or service saleable.       – the necessary financial resources;
Business Link’s online tool ‘Are you          Desk research is a good starting
ready to export?’ provides a quick,           point – an increasing amount of           – the right people to develop the new
basic assessment of your export               information is available online –           export markets;
capabilities and the issues and               but you may also wish to consider         – adequate knowledge of the
practicalities you need to know               commissioning some bespoke                  requirements of your chosen market
about before beginning to export.             research from an export specialist.         – e.g. modifying packaging to meet
The tool provides a useful starting                                                       local regulations and standards; and
point for discussions with a UKTI             UKTI’s Overseas Market Introduction
International Trade Adviser (see              Service (OMIS) draws on the local         – an understanding of export payment
‘Who can help me export?’ and                 knowledge and expertise of its staff        mechanisms and export finance.
‘UKTI contacts’ later in this guide).         around the world. The cost of this is
                                              very competitive.
Exporting for growth – Your guide to getting started 13




 Key questions to ask before you export

 1   What are the unique selling
     points to your business
     proposition? Will there be
                                           4  Do you have sufficient resources
                                              (management time, project
                                              finance and expenses) to fund
                                                                                   7   Have you evaluated business
                                                                                       risks (such as protecting your
                                                                                       intellectual property) and
     a market for your products               your overseas projects?                  conducted research and due
     and services?                                                                     diligence?


 2   Are there any legal barriers
     to your business model?
                                           5  Who will be leading the project
                                              within your company?
                                                                                   8   Do you know how to secure
                                                                                       payment and get the right


 3   Where in the market would
     you start?
                                           6  Do you need to work with an
                                              overseas partner to succeed?
                                              Can you communicate with
                                                                                       quality products?


                                              them effectively?




Assess your product/service
To assess whether your product/            Case study —
service is suitable for export to your     WOW Toys
target market, consider:                   Quality toy manufacturer WOW            He continues: “If you’re serious
                                           Toys decided to adopt an export         about exporting, you need to
– consumer preferences, competitive
                                           strategy shortly after opening          recognise it as your number-one
  offers (local production and
                                           for business in 1997. Today, the        priority, focus on it and make it
  imported) and their market share;
                                           London-based company trades             happen. Be open-minded and even
– product standards and regulations        with 40 countries around the world.     opportunistic about which markets
  in the overseas market – the British                                             to pursue. Sometimes smaller
                                           Managing Director Nadim Ednan-
  Standards Institution offers help                                                markets such as those emerging
                                           Laperouse says: “These days, our
  for exporters; and                                                               in Eastern Europe are easier and
                                           international sales far outweigh
                                                                                   quicker to access. And make the
– the costs of adapting your product       sales within the UK. The revenue
                                                                                   most of support available from
  or service.                              we generate from our overseas
                                                                                   UK Trade & Investment. They can
                                           customers allows us to be a
Understand the law                                                                 help you get on the right path to
                                           completely independent business.
There are various legal responsibilities                                           international success.”
                                           We also spread the risk, rather than
associated with doing business             relying on just one company.”           www.wowtoys.com
overseas – all of which you should
understand before starting to export.
For example, you’ll need to familiarise
yourself with the VAT rules
administered by HM Revenue &
Customs (HMRC), and be aware of any
export controls which relate to your
particular product. See ‘Who can help
me export?’ later in this guide.
14 Exporting for growth – Your guide to getting started




I was quite taken aback
by the thoroughness
of the [UKTI Export
Communications] Review,
the insights it delivered
and the sheer depth of
resources it gave us access
to. The review changed the
way we think about our
export communications.
Britten Sinfonia, Cambridge



Selling and distribution                      – You can use a sales agent who sells    When arranging a sales contract
Once the initial homework has been              products on your behalf, or puts       with an agent or distributor, you
done, and you have decided on the               you into contact with potential        need to ensure that responsibility
export market/s to approach, you                customers on a commission basis.       for delivery and payment is clearly
then need to organise your sales                Note that an agent never takes title   defined. You will also need to secure
presence there.                                 of the goods but merely stocks         intellectual property protection in
                                                and sells them on, making a            each country you sell into.
Depending on your product/service,              commission in the process but
you may be able to sell directly. For           never accepting responsibility for
                                                                                       Marketing
example, you might be able to sell              profit or loss.                        Marketing is a key element of
over the internet or by exhibiting at                                                  successfully selling overseas.
local trade shows.                            – You can enter into a joint venture     To be effective, your marketing
                                                with a local business. This gives      strategy should be tailored to
Many businesses look for a partner              you a share of the management          each target market.
who already understands the local               and profits of the joint venture,
market. For example:                            but it can be a more complicated       You’ll need to appreciate the
                                                and expensive option.                  traditions, culture and legislation
– You can sell to a distributor who                                                    of the countries you are trading with
  then sells your products locally.           – If you want complete control over      to exploit your exporting efforts.
  Note that a distributor takes                 sales, you can set up your own         Customisation of your marketing
  title of the goods once the sales             local office. This is the most         activities is essential if there are
  transaction is complete; and is               expensive option.                      cultural differences affecting the
  responsible thereafter for any                                                       consumption of your product.
  profit or loss in stocking and                                                       UKTI’s Export Communications
  selling them on.                                                                     Review can help.
Exporting for growth – Your guide to getting started 15




Visit the market
Visiting the market is an invaluable
part of trading internationally. You
will experience the marketplace
first-hand, and make the contacts
necessary to do business.
Attending overseas events, such as
trade fairs, or participating in a
trade mission can be great ways
to test markets, attract customers,
                                                               314m
                                                  The Chinese middle class is forecast
appoint agents or distributors and                to grow from 172 million to 314
make sales.                                       million in the next five years – more
                                                  than the entire population of the US.
16 Exporting for growth – Your guide to getting started




Rising to the Challenge



                                                                                    Often a two minute chat
                                                                                    to the right person saves
                                                                                    about 30 minutes trawling
                                                                                    through a website.
                                                                                    Nigel Darby, Associate Director,
                                                                                    Angle Ring Co Ltd




Exporting may be a challenge, Resource costs                                        Legal, regulatory and
but the potential rewards are Entering an overseas market may                       intellectual property issues
huge. Following are some of   require both financial investment                     The barriers to success which
the most commonly cited       and an increase in manpower.                          exporters talk about most are legal
                              Timescales can also be an issue,                      and regulatory issues. Some firms
hurdles to doing business     with short-term ‘pay back’ not                        also say that intellectual property
internationally, and advice   necessarily guaranteed.                               (IP) protection can be an issue. The
on how to overcome them.                                                            Intellectual Property Office (IPO)
                                              It’s advisable to discuss your
                                                                                    can help in this area. See ‘Who can
                                              financial position with your
                                                                                    help me export?’ later in this guide.
                                              accountant and bank manager
                                              before committing to exporting.       Adopting the right mindset is
                                              It is also important to take the      vital to overcoming such hurdles.
                                              long-term view and build              Every country has its own trading,
                                              appropriate timescales into your      taxation and IP systems and you
                                              projections. Customers and partners   will need to be willing to get to grips
                                              in high-growth markets, for           with those systems and adapt to
                                              example, tend to put an essential     them. So doing your homework is
                                              value on relationships and it is      vital when planning market entry.
                                              unusual for a return on investment
                                              to emerge within the first year.
Exporting for growth – Your guide to getting started 17




                                      We have a long-term development strategy to achieve
                                      a strong presence in global markets. This is important
                                      as it allows us to be far more competitive, whilst
                                      giving us access to new technologies, manufacturers,
                                      skills and materials, all of which feed our creativity
                                      and influence new product development.
                                      Richard Liddle, Founder and Managing Director, COHDA Design




Managing overseas risk
Political and economic                Case study —
developments, cyber risks, bribery    Chokolit
and corruption – these are some of    Young British entrepreneur Louis           “UKTI has been a great support
the issues your business could face   Barnett has used UK Trade &                 to us as we develop our business
when you begin to trade overseas      Investment’s (UKTI) services to             internationally,” says Barnett. “It
or expand into fresh markets.         help sell his award-winning luxury          was instrumental in putting the
                                      chocolate brand, Chokolit, overseas.        Mexico deal together, advising and
UK Trade & Investment and the
                                                                                  helping us with back-end details
Foreign & Commonwealth Office         After participating in UKTI’s
                                                                                  and regulatory matters, including
bring together authoritative,         Passport to Export programme,
                                                                                  getting our products through
accessible and topical information    Chokolit appointed a distributor in
                                                                                  Customs. This kind of after-care
online on countries and the key       Mexico, who has since introduced
                                                                                  made all the difference.”
issues related to their political,    the company’s products into the
economic and business security        country’s biggest department                He adds: “We have also worked with
environments.                         store.                                      UKTI to get our products sold in
                                                                                  Spain, Hungary and 12 States in the
This can help you identify and
                                                                                  US, and are currently in discussions
understand possible risks – and
                                                                                  with China. By the end of 2011,
guard effectively against them.
                                                                                  we expect that 90 per cent of our
                                                                                  revenue will come from export.”
                                                                                  www.chokolit.com
18 Exporting for growth – Your guide to getting started




Language and cultural barriers                Being able to speak the language of
Every market is different, and                your potential customers can help to     Case study —
companies need to be sensitive to             establish mutual confidence. If you      Ellis Pharma
local ways of doing business, even            don’t speak the local language, you      The Middle East has become a key
in different regions of the same              could consider investing in foreign-     market for UK firm Ellis Pharma,
country. Lack of awareness and                language training for your staff.        a specialist in global supply chain
knowledge of local cultural norms             Alternatively, you could employ a        solutions for the pharmaceuticals
can impede the development of                 translator or interpreter. It can also   industry.
a business relationship.                      help to have your promotional
                                              material translated. It’s a good         Following advice from UK Trade
                                              idea to avoid colloquialisms and         & Investment (UKTI), the
                                              metaphors in promotional material        Staffordshire-based company
                                              – they could be embarrassing in the      decided to focus on the emerging
                                              local language.                          markets of Oman and Qatar.
Attending trade shows                         You should conduct research into         After receiving a Business
and exhibitions is a key                      your target market to establish local    Opportunity Alert from the UKTI
                                                                                       team in Qatar, Ellis Pharma won a
way of marketing the                          considerations. These may include
                                                                                       £18,000 contract with Doha Clinic
                                              product or packaging modifications
company and its products                      to enable your product to conform        Hospital. It further established
                                                                                       itself in the region by going on
to international audiences.                   to local cultural demands. Or it could
                                                                                       trade missions and having
                                              be that local sales and marketing
Claire Watt-Smith, MD, BoBelle                                                         numerous one-to-one meetings
                                              channels for your particular product
                                              are different from those in the UK.      with local decision makers in
                                                                                       governments and hospitals and
                                                                                       potential agents – contacts that
                                                                                       had been highlighted by UKTI.
                                                                                       This led to Ellis Pharma securing
                                                                                       orders worth £150,000.
                                                                                       Business Development Director
                                                                                       Gary Campbell says: “We are
                                                                                       confident that with our own efforts
                                                                                       and UKTI’s support, our exports
                                                                                       will increase substantially in the
                                                                                       coming months and years.”
                                                                                       www.ellispharma.com
Exporting for growth – Your guide to getting started 19




Logistics                              The best mode of transport for your      country – and use the correct
Getting international transport        goods will depend on the type of         Incoterms to describe this in the
right can be complicated and           goods and how quickly they need          quotation and written contract.
depends on the agreement you           to be delivered. You may need
                                                                                Most companies use a specialist
have with your customer or supplier.   more than one mode, for example,
                                                                                freight forwarder to handle
Your obligations should be clearly     sending goods by lorry to a port in
                                                                                transport. Confirm exactly what
set out in a written contract using    the UK and then by ship overseas.
                                                                                they will do and whether they can
Incoterms – standard trade terms       In all instances, the goods will need
                                                                                handle all documentation and other
which state who is responsible for     suitable packaging and labelling
                                                                                procedures. Look for a forwarder who
transporting goods, insuring the       for transportation. You should clarify
                                                                                exports regularly to that destination.
goods during transportation, paying    in advance who will be responsible
                                                                                They can ‘consolidate’ your goods
duties and customs clearance.          for UK customs procedures, for
                                                                                with other consignments in a single
                                       freight and insurance, and for
                                                                                container to reduce costs.
                                       customs clearance in the customer’s
20 Exporting for growth – Your guide to getting started
Exporting for growth – Your guide to getting started 21




Case study —
ABF Europe
Overseas sales have soared for
ABF Europe, the creator of the
revolutionary Kite table system.
The North Yorkshire firm first
introduced the conference and
business table, which can be
adapted to accommodate both
large and small groups of people,
into the international market four
years ago when sales took off in
the US. A regular user of UK Trade
& Investment services, ABF now
supplies 17 countries globally and
has offices in a number of overseas    Getting paid                            There are also currency issues you
markets, including Spain and Dubai.    The risk of late or even non-payment    need to consider. In some countries
                                       can sometimes be greater when           where there are restrictions on
Managing Director Darren Buttle                                                access to foreign currency, your
says: “Our international operation     doing business internationally.
                                       Ensuring you get paid for overseas      customers may face problems
is gathering pace. Our immediate                                               getting currency to pay you. In
focus is undoubtedly America, but      sales is a combination of assessing
                                       risk, settling on acceptable payment    this case, it’s worth insisting on
I’m keen to explore opportunities in                                           a (confirmed) irrevocable letter
Canada, Brazil and regions of South    terms and methods and considering
                                       insurance to protect yourself           of credit that secures payments
East Asia as well. These are all                                               according to the terms of the credit
markets that are experiencing rapid    against problems.
                                                                               and often at an agreed rate.
growth of their own and countries      Help is available from UK Export
where we can really play a part in     Finance (formerly known as ECGD)        Businesses which sell on credit to
helping companies compete in           – see page 25.                          foreign customers can use factoring
the international arena through                                                or invoice discounting to free up
effective use of office space and      To minimise the risks of non-           cash flow. Export factors specialise
cohesive work-life strategies.         payment, you should research the        in the collection of money from
                                       market conditions in your target        overseas. The factoring company
We’re doing that thanks in no small    country and the credit worthiness       pays you a percentage of the invoice
part to UKTI, and it promises to be    of potential customers before you       value up-front and the balance
an exciting journey ahead as we        start trading.                          (less their percentage) once they
harness the skills and expertise of                                            have collected payment.
[UKTI] trade advisers to support us
and show us the way.”
www.kitetables.com
22 Exporting for growth – Your guide to getting started




Getting it right
�

Ten key steps to successful exporting




1
Research your market
Does your prospective foreign
                                             2Implement an export strategy
                                                                                       3
                                                                                       Construct an export plan
                                                                                       Define how you will enter the foreign
                                              and review your capabilities
customer need what you are selling            Ask yourself: what would my 
            market. Finalise human resources
at the price that will yield you a            business gain from exporting?
�          and marketing strategy and allocate
profit? What is the competition                                                        an adequate budget to cover export
and how will they react?                                                               start-up costs.




6
Get the Customs side right
Contact HM Revenue & Customs and
                                             7Get paid on time
                                              Ensure your cashflow will remain
                                                                                       8
                                                                                       Choose your distribution
                                                                                       methods
the UK embassy of your destination            at a safe level. Guarantee sufficient    Consider the implications of selling
country to clarify requirements.              credit for your future sales. Take out   over long distances and across
Make sure your reporting practices            insurance cover if necessary.            national frontiers.
are watertight.
Exporting for growth – Your guide to getting started 23




4
Choose your sales presence
Establish whether you need a direct
                                      5
                                      Promote your product
                                      How are you going to market and
sales operation. Or is an agent       sell your product? Customise
or distributor more effective?        marketing to the target country.
How will you manage your overseas
sales presence?




9
Transport goods effectively
Assess and choose the most
                                      10
                                      After-sales policy
                                      Regularly liaise with customers,
effective transport method and        export agents and banks. Monitor
make sure the goods are insured       political unrest or other adverse
by you or the importer.               conditions in the country
                                      of destination. Manage regular
                                      servicing and warranty claims.

                                                                                           Source: UK Trade & Investment
24 Exporting for growth – Your guide to getting started




Who can help me export?
A wide range of support services exists to help UK
exporters and would-be exporters to tackle virtually
all of the issues and challenges which they are likely
to face, and help them become established in
international markets.
Following are just some of the many organisations which
can help you get started on your exporting journey.
Exporting for growth – Your guide to getting started 25




UK Trade & Investment                    UKTI services have helped its              UK Export Finance
UK Trade & Investment (UKTI) is the      customers to:                              UK Export Finance is the operating
Government Department that helps         – understand how to do business            name of the Export Credits
UK-based companies succeed in              overseas;                                Guarantee Department (ECGD),
global markets and assists overseas                                                 the UK’s export credit agency.
firms in bringing their high-quality     – identify opportunities and
                                           open doors;                              UK Export Finance does not lend
investment to the UK.
                                                                                    directly, but supports UK exports
UKTI has a global network of             – reach customers/business                 by issuing insurance contracts to
2,400 staff. Its International Trade       partners not otherwise accessible;       UK exporters and by issuing
Advisers (ITAs) around the UK have       – raise their profile and credibility      guarantees to banks which make
years of business experience to draw       overseas;                                loans to overseas borrowers, which
on when advising companies. In 96                                                   are used to purchase supplies from
markets based in British Embassies       – overcome barriers to entry               UK exporters. UK Export Finance’s
and other Diplomatic offices around        or expansion;                            services help facilitate export
the world, UKTI staff can offer local,                                              contracts by providing protection
                                         – improve overseas marketing
in-market knowledge and expertise.                                                  against the risks of the exports not
                                           strategy;
                                                                                    being paid for.
UKTI has helped many thousands
                                         – gain access to information
of businesses achieve international                                                 In 2010-11, UK Export Finance
                                           not otherwise available;
success by providing tailored                                                       (then known as ECGD) supported
services with specialist support         – understand the competition;              £2.9 billion of UK exports (up from
covering a wide range of industries.                                                £2.2 billion the previous year). In late
                                         – access powerful research to inform
Its clients consistently cite the                                                   2011 it announced an extension to
                                           management decisions; and
importance of UKTI support in                                                       its credit insurance policy to cover
helping them to overcome barriers        – have the confidence to explore           all sectors and sizes of company,
to new overseas business and               or expand in overseas markets.           as well as the launch of three new
improve their business performance.                                                 short-term products.
                                         www.ukti.gov.uk
                                                                                    See the following pages for details of
                                                                                    those services provided by UK Export
                                                                                    Finance which are most relevant to
                                                                                    small- and medium-sized businesses.
                                                                                    www.ecgd.gov.uk




                                                                                    UK Trade & Investment and
                                                                                    UK Export Finance services and
                                                                                    products are detailed overleaf.
26 Exporting for growth – Your guide to getting started




UK Trade & Investment
– services




Passport to Export                            Events and seminars                      High-value opportunities
Provides new and inexperienced                Held across the UK and the world.        programme
exporters with the training, planning         They include specific sector and         Proactively identifies global supply
advice and ongoing support they               market based activities.                 chain opportunities, coupled with
need to succeed overseas.                                                              an online service giving access to
                                              Trade missions                           several hundred sales leads around
Overseas Market Introduction                  Organised to help UK companies           the world each month.
Service (OMIS)                                visit the marketplace they’re
A tailored service by our overseas            interested in and talk face to face
teams to access market and                    with prospective business partners.
industry information, identify                UKTI also organises missions into
potential contacts or assist in               the UK to allow overseas delegates
planning an event. This service               to meet with potential partners
attracts a charge.                            or investors.                            It’s such an advantage to
Export Marketing Research                     Business opportunities                   be able to tap into the UKTI
Scheme (EMRS)                                 News emailed directly into your          network, as we don’t have
Offers support, advice and some               in-box, highlighting hot leads in your   the time and resource to
grant funding to eligible companies           chosen overseas market. Companies
wishing to research a potential               can sign up for this free service        find overseas distributors
export market.                                by visiting www.ukti.gov.uk              on our own. Our export
Export Communications                         Gateway to Global Growth                 market couldn’t exist, and
Review (ECR)                                  A service for more experienced           we wouldn’t have moved
Assesses the way companies                    exporters. It offers focussed
communicate with overseas                     planning and advice, and support
                                                                                       at the speed we have
customers and makes practical                 to help companies to build on their      done, without UKTI.
recommendations for improvement.              previous success and develop new         Andrew Knights, Managing Director,
                                              overseas markets.                        Selectamark Security Systems
Exporting for growth – Your guide to getting started 27




UK Export Finance
– products and services
UK Export Finance has                    In the case of an advance payment         Foreign Exchange Credit
a range of products and                  bond, the exporter’s bank may             Support Scheme
                                         require the exporter to deposit the       When an exporter enters into an
services to support UK                   buyer’s advance payment with the          export contract under which it
exports; mentioned below                 bank as security for the exporter’s       will be paid in a foreign currency,
are those specifically                   undertaking to pay. This would            the exporter may be exposed to
targeted at small and                    deprive the exporter of the cashflow      unfavourable changes in exchange
                                         benefit of the advance payment.           rates over the course of that
medium-sized businesses.                 UK Export Finance can provide a           contract. In order to bring certainty
Export Insurance Policy                  guarantee to the bank of up to 80         to this aspect of the contract, the
Under an export contract, there is       per cent of the advance payment           exporter may ask the bank to enter
always a risk of not being paid by       bond’s value, which will reduce or        into a contract to purchase, with
the buyer – or of not being able to      remove the requirement to use the         sterling, the foreign currency which
recover costs incurred performing        advance payment as security –             the exporter will receive at a pre-
the contract due to it being             thus freeing up funds with which          agreed rate of exchange.
terminated in circumstances              to perform the export contract.
                                                                                   However, the bank will be taking
beyond the exporter’s control.           Export Working Capital Scheme a risk on the exporter’s ability to
UK Export Finance’s Export               To fulfil an export contract, the         deliver the required amount of
Insurance Policy may be able to          exporter may require funds in order       foreign currency on the agreed date:
provide an exporter with cover           to be in a position to provide goods      if the exporter fails to do so and
against those risks, such as specified   or services. Specifically, the exporter   exchange rates have moved against
political or buyer-related events,       may have won more or larger               the bank, the bank may suffer a loss.
which prevent it being paid, lead        contracts than usual and a bank           The bank may therefore wish to
to the contract being terminated,        may be cautious about lending any         receive some protection against this
or prevent its performance.              further funds to meet the exporter’s      risk of loss before entering into the
                                         needs for more working capital, thus      forward foreign exchange contract.
Bond Support Scheme                      constraining the company’s ability
Under an export contract, the buyer      to grow.                                  Where the exporter’s bank has been
may require the issue of an on-                                                    requested to provide a working
demand contract bond (for example,       UK Export Finance’s Export Working        capital facility guaranteed by UK
an advance payment, performance          Capital Scheme can offer a partial        Export Finance in respect of an
or retention bond) in order to assure    guarantee to the bank (of up to 80        export contract and is also requested
itself that the exporter will meet       per cent of the value of the working      to enter into a forward foreign
its obligations. Before issuing such     capital facility in some cases), so       exchange contract in relation to the
a bond, a bank will require an           that the exporter can gain access to      same contract, UK Export Finance
undertaking from the exporter to pay     the working capital with which to         will increase its guarantee of the
to the bank any amounts which the        perform a specific export contract.       working capital facility in order to
bank may pay out under that bond.                                                  enable the bank to enter into that
The bank is therefore taking a risk on                                             forward foreign exchange contract.
the exporter’s creditworthiness under                                              Further information
that undertaking. Where the bank
                                                                                   For additional information or
is unsure about taking that risk, a
                                                                                   details on the full range of UK Export
guarantee from UK Export Finance
                                                                                   Finance’s services, please contact
for part of it may persuade the bank
                                                                                   them on +44 (0)20 7512 7887 or visit
to issue the bond.
                                                                                   www.ecgd.gov.uk
28 Exporting for growth – Your guide to getting started
Exporting for growth – Your guide to getting started 29




Other sources of help

As well as the help                   RBS/NatWest                              Your lawyer
                                      David I.Houghton MBE,                    Your lawyer will also be able to
available from UKTI and               Director, Strategic Partnerships         help you. Similar to the ICAEW’s
UK Export Finance, there              M: +44 (0)7785 708611                    BAS, the Law Society has many
                                      E: david.i.houghton@rbs.co.uk
are many other sources                                                         members which offer a service for
                                                                               SMEs. ‘Lawyers For Your Business’
of help available to you.             Santander
                                                                               is a network of 1,000 solicitor firms
                                      Martin Hodges,
                                      Head of Trade Finance                    in England and Wales offering
Your bank                             M: +44 (0)7827 872312                    specialist advice and a free half-
Your bank can provide a range of      E: martin.hodges@santander.co.uk         hour initial consultation to small
help on topics such as managing                                                and medium-sized businesses.
foreign transactions, trading         Your accountant                          Advice can be sought on a range
overseas in sterling, owning assets   Your accountant can provide you          of legal issues – both domestic
abroad, exchange rates and            with a range of advice, from starting    and international.
managing foreign exchange risks.      a business, organising your financial
                                                                               In 2012 the Law Society will also
For more detailed financial advice    affairs, financial management and
                                                                               be working with its solicitor
and guidance on issues that           taxation. You should also be aware
                                                                               members to produce practical
affect you, you should talk to the    that the Institute for Accountants
                                                                               ‘Doing international business’
international section of your bank.   in England and Wales (ICAEW) has
                                                                               guides aimed at SME firms new
If you can’t find the right person    just launched a new scheme: small
                                                                               to exporting their products and
to talk to, you could contact the     businesses across the UK are being
                                                                               services internationally.
following people at the one of        offered free expert advice from
the five major banks:                 ICAEW Chartered Accountants              The guides will look at some of the
                                      as part of an initiative called the      fundamental legal issues which
Barclays                              Business Advice Service (BAS).           SMEs need to consider when working
John Bevan,                           It aims to help small companies          internationally. Topics being covered
Head of Trade and Working Capital     and start-ups with business and          will include:
T: +44 (0)1256 791401                 financial advice to help economic
E: john.bevan@mercantile.             growth. Small businesses can             – international employment issues;
   barclays.co.uk                     find details of ICAEW chartered          – international contracts;
HSBC                                  accountants in their local area at
                                      www.businessadviceservice.com            – business structures;
Felipe Hsieh, Senior Manager,
TSC Client Management                                                          – debt recovery;
M: +44 (0)7920 411997
                                                                               – tax; and
T: +44 (0)20 7991 1706
E: felipe.hsieh@hsbc.com                                                       – dispute resolution.
Lloyds TSB                                                                     These guides will be available as
Barry George, Senior Manager,                                                  publications, but also as webinars
Trade Products                                                                 and will be promoted widely to
M: +44 (0)7793 670292                                                          small businesses.
T: +44 (0)20 7463 1690
E: barry.george@lloydstsb.co.uk                                                For more information visit
                                                                               the Law Society’s website at
                                                                               www.lawsociety.org.uk
30 Exporting for growth – Your guide to getting started




British Chambers of Commerce                  Export Control Organisation              HM Revenue & Customs
(BCC)                                         (ECO)                                    HM Revenue & Customs (HMRC)
The BCC, and its network of affiliated        Any item exported from the UK            provides assistance on a number of
Chambers, support and advise                  which is subject to export control       matters relating to the importing
businesses in all areas of                    needs a licence. The ECO is              and exporting of goods. Information
international trade. With a                   responsible for assessing and issuing    and guides are available covering
worldwide network of bilateral                (or refusing) export licences for a      topics such as the classification
and international chambers of                 wide range of controlled, so-called      of goods, the European Union,
commerce, the BCC can provide                 “strategic” goods. This includes         Relief Procedures on Duty and
UK exporters with numerous                    military and dual-use items.             VAT, Tariffs and Duties, Intrastat
services including: export                                                             and the requirement to submit
                                              You can find out more on export
documentation, market research,                                                        Supplementary Declarations,
                                              controls, including applying for
training, translation services and                                                     together with basic guides on export
                                              a licence and rating enquiries,
letters of credit.                                                                     licences, export taxes, import
                                              licensing policy, key documents,
                                                                                       licences, rates of exchange, etc.
For more information visit                    key links, notices for exporters and
the BCC’s website at                          news related to export control, by       www.hmrc.gov.uk
www.britishchambers.org.uk                    visiting the businesslink.gov website
                                              at www.businesslink.gov.uk
                                                                                       Business Link
The Institute of Export (IoE)                                                          The Business Link website provides
The Institute’s mission is to enhance         Intellectual Property Office             the information, advice and support
the export performance of the UK              Intellectual property rights can         needed to start, maintain and grow
by setting and raising professional           allow you to own things you create,      a business. It provides information
standards in international trade              in a similar way to owning physical      and advice to help customers make
management and export practice.               property. You can control the use        the most of their opportunities.
They achieve this by the provision of         of your IP, and use it to gain reward.   Rather than providing all the
education and training programmes.            IP rights only give protection in the    advice and help itself, it fast-tracks
The IoE offers recognised formal              country where they are registered,       customers to the expert help they
qualifications in international trade.        so if you are thinking of trading        need. For SMEs thinking about
It also runs a series of short training       internationally, then you should         exporting there is a simple
courses covering every aspect of              consider registering your IP             diagnostic tool that helps you
international trade management,               rights abroad.                           consider whether now is the right
sales and marketing, logistics and                                                     time to export.
                                              The UK’s Intellectual Property Office
documentary requirements, and
                                              (UKIPO) can provide guidance:            For more information go to
international trade finance.
                                              www.intellectual-property.gov.uk         www.businesslink.gov.uk/bdotg/
For more information visit the IoE                                                     action/layer?r.l1=1079717544&r.
website at www.export.org.uk                                                           s=tl&topicId=1084654164
Exporting for growth – Your guide to getting started 31




Freight forwarding
                                         Useful export links
One of the other things you’ll need
to think about is how to move your       Country Information                      Standards and Technical
goods overseas. Much will depend         BBC website                              Regulations
on the nature of your goods and          http://news.bbc.co.uk/1/hi/              British Standards Institution (BSI)
their destination and you will need      country_profiles/default.stm             www.bsigroup.com/en/
to evaluate the best combination of                                               sectorsandservices/Disciplines/
time and cost with the characteristics   Foreign & Commonwealth Office
                                                                                  ImportExport
of your product. There are various       country profiles
methods of shipping goods: by air,       www.fco.gov.uk/en/travel-and-            National Physical Laboratory
road, sea, or rail. Some companies       living-abroad/travel-advice-by-          www.npl.co.uk
offer multi-modal solutions; this        country/country-profile
                                                                                  Trade Statistics
means that they offer more than          Customs & Regulations                    National Statistics Information
one service.
                                         HM Revenue & Customs                     www.statistics.gov.uk/hub/index.
For more information about freight       www.hmrc.gov.uk                          html
forwarding please contact the
                                         Economic Information                     UK Trade Info
British International Freight
                                         The Economist                            www.uktradeinfo.com
Association at www.bifa.org
                                         www.economist.com/countries              Travel Advice
                                         Market Access                            Foreign & Commonwealth Office
                                         Market Access Database for               www.fco.gov.uk/en/travel-and-
                                         Tariffs (for non-EU markets only)        living-abroad
                                         http://mkaccdb.eu.int/mkaccdb2/          NHS
                                         indexPubli.htm                           www.nhs.uk/nhsengland/
                                         SOLVIT – Overcoming Trade                Healthcareabroad
                                         Barriers (EU markets only)               Travel Health
                                         www.bis.gov.uk/                          www.travelhealth.co.uk
                                         EUMarketAccessUnit
32 Exporting for growth – Your guide to getting started




 Contact us

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is the Government                             T: +44 (0)8456 419 955           T: +44 (0)28 9023 9090
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They are delivered through an
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UK and across the globe.                      UKTI North West                  www.business.wales.gov.uk

You can find contact details for              T: +44 (0)8456 037 053
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or telephone us: +44 (0)20 7215 8000.
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to 5.00pm Monday to Friday.                   T: +44 (0)8456 060 969
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                www.ukti.gov.uk
                +44(0)20 7215 8000



UK Trade & Investment is the                  UK Trade & Investment is responsible for
Government Department that helps              the delivery of the Solutions for Business
UK-based companies succeed in the             product “Helping Your Business Grow
global economy. We also help overseas         Internationally.” These “solutions”
companies bring their high-quality            are available to qualifying businesses,
investment to the UK’s dynamic                and cover everything from investment
economy acknowledged as Europe’s              and grants through to specialist advice,
best place from which to succeed in           collaborations and partnerships.
global business.
UK Trade & Investment offers expertise
and contacts through its extensive
network of specialists in the UK, and in
British embassies and other diplomatic
offices around the world. We provide
companies with the tools they require         2010 winner Best Trade Promotion
to be competitive on the world stage.         Organisation in the developed world.




                                              The paper in this document is made from
                                              50 per cent recycled waste pulp with 50
                                              per cent pulp from well-managed forests.
                                              This is a combination of Totally Chlorine
                                              Free and Elemental Chlorine Free. The
                                              inks are vegetable oil-based and contain
                                              resins from plants/trees and the laminate
                                              on the cover is sustainable, compostable
                                              and can be recycled.




Published November 2011
by UK Trade & Investment
© Crown Copyright
URN 11/1347

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Exporting For Growth Your Guide To Getting Started (1)

  • 1. Trade: Exporting for growth Your export opportunity Our insight Your guide to getting started in exporting www.ukti.gov.uk
  • 2. UK Trade & Investment � UK Trade & Investment (UKTI) is the UKTI has helped many thousands Government Department that helps of businesses achieve international UK-based companies succeed in success by providing tailored global markets and assists overseas services with specialist support firms in bringing their high-quality covering a wide range of industries. investment to the UK. Its clients consistently cite the importance of UKTI support in UKTI has a global network of helping them to overcome barriers 2,400 staff. Its International Trade to new overseas business and Advisers (ITAs) around the UK have improve their business performance. years of business experience to draw on when advising companies. In 96 markets based in British Embassies and other Diplomatic offices around the world, UKTI staff can offer local, in-market knowledge and expertise.
  • 3. Exporting for growth – Your guide to getting started 01 Foreword Businesses which get involved in the international market become more dynamic, innovative and successful. Lord Green of Hurstpierpoint Minister of State for Trade and Investment Welcome to UK Trade & Even through challenging economic A great place to start is by talking Investment’s (UKTI) guide to times, there are unparalleled to your local UKTI International opportunities for British firms around Trade Adviser, who has years of getting started in exporting. the world as the emerging high business experience and can give growth markets continue to grow. you one-to-one advice. UKTI’s staff In the UK, if we are to make progress around the world can provide you in reducing our trade deficit, we need with specialist local, in-market to encourage more SMEs to take the intelligence and guidance. plunge and export, and to encourage The guide also steers you to other those already doing so to spread sources of help – from logistics to their wings. We know that companies intellectual property, from cultural which begin to export experience issues to getting paid. significant gains in productivity and competitiveness. In essence, Britain’s future prosperity will be businesses which get involved in the built on its success in international international market become more markets. Exporting provides a major dynamic, innovative and successful. opportunity for growth in the UK economy – and it could be a major This guide outlines the points you opportunity for your company too. need to consider before venturing Increasing British exports is a into international business. And national challenge that we must it tells you where to go for help rise to collectively. and guidance.
  • 4. 02 Exporting for growth – Your guide to getting started It’s time to go global � Have you ever thought about doing business in overseas markets? If not, or you thought it too difficult, then you might want to think again.
  • 5. Exporting for growth – Your guide to getting started 03 Exporting can help you survive and As hosts of the 2012 Olympic and If you become an grow. There are real opportunities to Paralympic Games in London, the trade internationally; UK products, eyes of the world are firmly on the exporter, the evidence services and expertise continue UK. This provides a perfect platform shows that you are to be in demand across the world. for UK companies to showcase likely to improve your There are opportunities – both in their expertise and do business traditional, established markets in overseas markets. productivity by a third such as Europe and the US, and This guide aims to help you grow in your first year alone. the high-growth economies of - your business internationally. If you Mark Prisk, Minister of State countries such as China, India, for Business and Enterprise haven’t exported before, you will Brazil and Russia. probably have lots of questions. As this guide sets out, there is a lot of expert assistance available.
  • 6. 04 Exporting for growth – Your guide to getting started Why should I export? Why should you take the Exporting can also be a catalyst for A growing trend export plunge? innovation. In many cases you will More and more UK companies are see new ideas and opportunities recognising the benefits of exporting. UK companies which export are overseas which will spur you to responsible for 60 per cent of national develop new and modified products Research shows that a growing productivity growth and more than to meet the needs of international number of UK firms have increased 70 per cent of UK business research customers. This can help you to gain their export levels. A recent study2 and development. This helps to and retain a competitive advantage found that the percentage of UK give them a technical competitive in the UK as well. firms doing business overseas rose advantage, leading to more sales from 26 per cent to 31 per cent over and opening new markets. Academic research1 confirms that a two-year period. exporting companies: Doing business overseas is a Exporting is not just for bigger different experience for every – are more productive and businesses. A recent survey of company and its benefits will vary innovative than non exporters; around 200 smaller exporters greatly depending on the personal – are more resilient to an economic showed that three in every four profile of each firm. downturn; planned to export more in 2011.3 A separate study found that the As well as opening access to – achieve stronger financial proportion of small UK firms new sources of revenue, trading performance; exporting increased by 10 per cent internationally will allow you to in both manufacturing and services spread risk across a wider range of – have a higher profile and more credibility; and over a six-year period.4 customers, extend the market for specific products and ensure that – are more likely to stay in business. you are aware of international competition. In some cases companies are able to offer much more interesting roles for their staff, and to recruit better people as a result.
  • 7. Exporting for growth – Your guide to getting started 05 Business benefits Exporting is a must to Exporting can allow companies to: survive in these difficult 1 Achieve levels of growth not possible domestically. 6 Increase the returns on investment in R&D. times. Despite the challenges, the 2 Increase the resilience of revenues and profits. 7 Improve financial performance. opportunities are simply staggering. A British-made 3 Spread business risk. 8 Improve product is a mark of quality, 4 productivity. Achieve economies of scale and has a higher value not possible domestically. 9 Boost their profile and overseas. Exporting can be 5 recognition internationally. Increase the commercial lifespan of products challenging but also exciting. and services. Mary Barnett, Director, Chokolit An increasing number of young UK companies are grabbing Case study — international opportunities from an New York Delhi early stage. Almost one in five new Exports have helped west London Managing Director Nina Uppal firms are currently active abroad – snack business New York Delhi says: “We are truly going global. and so have been doing business more than quadruple its turnover Because of the excellent advice, overseas since they started trading. since its launch in 2009. support and contacts provided by UKTI, New York Delhi has been You too can join this growing club With support from UK Trade & catapulted into the global market, and gain the export advantage. Investment (UKTI), its premium giving it the sort of exposure I had peanut brand, ViPnuts, is now only dreamt of. We have already being supplied to Canada, Eastern caught the eye of a couple of giant Europe, France, Germany, Spain food multinationals. and the US. UKTI has helped New York Delhi go on market visits to “I always knew we had an excellent meet potential distributors and product and brand, but it was exhibit at overseas trade shows. really about how we shouted about it, and UKTI helped us do this.” www.newyorkdelhi.com 1 Harris, R. and Q. Cher Li (2007), Firm Level Empirical Study of the Contribution of Exporting to UK Productivity Growth and Hart et al Impact of Trade Services on R&D – Aston University August 2009 2 Study of the Relationship Between Innovation, Exporting and the Use of E-Commerce, Harris and Li, 2010. 3 UKTI/IOD Doing Business Overseas survey, July/August 2010. 4 Study of the Relationship Between Innovation, Exporting and the Use of E-Commerce, Harris and Li, 2010.
  • 8. 06 Exporting for growth – Your guide to getting started Where should I export to?
  • 9. Exporting for growth – Your guide to getting started 07 UKTI not only helped shape my export strategy, but really opened doors, putting me in contact with the right people in the right countries. Parminder Kalsi, Managing Director BBC Pharmaceutical Services There is an abundance High-growth markets middle classes in China and India, for of opportunities for UK UK exporters are also increasingly example, are set to increase household expenditure fourfold over the next exporters – and plenty embracing the myriad opportunities 20 years.5 The Chinese middle class is of support to help you offered by the world’s emerging economies – many of which are forecast to grow from 172 million to take advantage of them. experiencing rapid rates of growth. 314 million in the next five years – more The UK is a major trading nation, Such high-growth markets include than the entire population of the US.6 able to capitalise on the single the ‘BRICs’ (Brazil, Russia, India and These rapid growth rates, combined market through the European Union China), whose dynamic economies with progress in infrastructure, (EU), as well as being ‘socially close’ will provide a wealth of prospects communication networks and global in terms of culture and language for UK firms in the coming decades. co-operation, are making doing to a number of major international business in high-growth markets In addition to the BRICs, there are markets – including the US. increasingly commonplace for UK other fast-growing markets with great Many UK firms begin exporting by potential, such as the so-called CIVETS exporters. For example, since 2002, entering established markets such (Colombia, Indonesia, Vietnam, Egypt, the number of UK companies as these. The EU, with its open Turkey and South Africa). These often exporting to China and India in the borders and shared import/export smaller markets have much to offer, construction and IT sectors has procedures, provides UK companies and UKTI International Trade Advisers increased by over 100 per cent. with unrestricted access to more (ITAs) are well placed to guide You don’t have to be an experienced than 500 million consumers, exporters on how to select the best exporter to enter a high-growth while the US continues to be our territory to target. market. Two in five of the smallest number-one export market, offering exporters (with fewer than 10 Growth in such markets is driven by opportunities across a wide range employees) already do business in rapidly rising populations and GDP of sectors. at least one high-growth market.7 levels. Research has shown that the 5 BIS Economics Paper No.8, UK Trade Performance: Patterns in UK and Global Trade Growth, November 2010 6 HSBC, October 2010 7 NIESR Analysis of the International Business Strategies, Barriers and Awareness Monitoring Survey, March 2010, and OMB Research, PIMS Qualitative Follow-up Study of Business Needs in Emerging Markets, June 2006
  • 10. 08 Exporting for growth – Your guide to getting started Aid-funded business As well as working with specific Case study — Case study — geographic markets, there are Kat Maconie Skyline-IFE Ltd also huge opportunities for UK Exports have been a key way for International business has really companies in aid-funded business British footwear designer Kat taken off for Suffolk-based in-flight – that is, the contracts awarded by Maconie to build her business. entertainment company Skyline-IFE. multilateral agencies such as the Having received support from UK Since enrolling on UK Trade & UN and World Bank to support Trade & Investment, her label can Investment’s Passport to Export projects in the developing world. now be found in leading fashion programme and attending major Much of the implementation of stores across the world, including airline industry exhibitions these aid-funded projects is Brazil, Europe, Japan and the US. overseas, the small firm has won contracted out to the private sector, “I knew I’d have to produce large clients in Norway and Sweden representing significant business quantities of shoes early on and is bidding for work in the opportunities for consultants, to get a decent price point,” Middle East. works contractors and suppliers says Maconie. “I had to grow of goods and services. Managing Director Richard Barsby the business quickly and my says: “It is relatively new for us to Every year, multilateral agencies best chance of doing this was be selling in this way and Passport spend some US$60 billion on to look beyond the UK. to Export was one of the things that everything from tents to “UKTI’s support has been crucial. gave us the confidence to go ahead. telecommunications. The UK The international trade adviser The service is tailor made for small currently gains between 4 and 17 really understood what I was businesses like ours because it per cent of this aid-funded business, trying to achieve and had a very made us take a considered look at with the most sought after expertise good insight into the nature of our strategies and plans.” being in the healthcare, construction, my business. consultancy, ICT, environmental and He adds: “We know that trading transport sectors. “The UKTI-organised seminars conditions are going to get very were really helpful, while the challenging in the coming year but, support I had in meeting the costs with the backing of UKTI, we believe of travelling to new markets was we are well placed to come through. invaluable – I would not have been We’re now very busy presenting new able to fund such visits on my own.” proposals to prospective clients.” www.katmaconie.com www.skyline-ife.com
  • 11. Exporting for growth – Your guide to getting started 09
  • 12. 10 Exporting for growth – Your guide to getting started A world awaits � There are opportunities Brazil Ireland The value of UK goods exported Widely considered the ‘easiest’ for UK exporters in all to Brazil grew by 24 per cent to overseas market for UK exporters, corners of the world. £2.2 billion in 2010. who sold goods worth £17 billion They include: China there in 2010. China has become the UK’s ninth- Mexico largest goods export market and UK goods exports to Mexico British export activity there rose increased by £207 million in 2010. by 418 per cent from 2000-2010. 24 per cent of internationalised UK firms said that they are already doing France business here or are ‘very’ or ‘quite’ The UK’s fourth-biggest export likely to do so in the next two years. market. Russia Source: All figures taken from 2010 UKTI India Around £3.6 billion of UK goods International Business Strategies Barriers UK exports to India grew 45 per cent and Awareness Survey and ONS Monthly Review were exported here in 2010. of External Trade Statistics, March 2011. between 2005 and 2010.
  • 13. Exporting for growth – Your guide to getting started 11 International trade is more important than ever and exploiting the opportunities of fast-growing markets in Asia and Latin America is vital to the UK’s economic future. The difficulties and risks of operating in these fast-changing markets are less than the risk of not participating in their growth. Miles Templeman, Director General, Institute of Directors Top 20 goods export markets for UK companies (2010) US Germany Netherlands France Ireland Belgium/Luxembourg Spain Italy China Sweden Switzerland Hong Kong Saudi Arabia and UAE Popular emerging markets Japan with nearly a quarter of Canada internationalised UK firms already doing business here. India South Africa UAE A popular emerging market, with Poland 45 per cent of firms involved in or considering export activity either Russia there already or with some likelihood Singapore of entering in the next two years. Australia US The UK’s number-one export market, with around £38 billion of 0 10 20 30 40 UK goods exported here in 2010. Value of goods (£ billion) Source: ONS 2011
  • 14. 12 Exporting for growth – Your guide to getting started Getting ready to export We saw our website as a critical tool to reach our customer base. Getting it right was crucial. The ECR consultant was inspirational: hugely experienced with a wealth of knowledge. Working with him provided us with invaluable insights and ideas. Andy Cox, Director Cox & Plant Ltd, West Midlands If you are serious about ITAs can draw on years of business Make an export plan trading internationally, experience and give you – at no cost After completing your market – a more detailed assessment and you will want to think about practical advice on a one-to-one basis. research, you can draw up an export how to research, target plan defining how you will enter Carry out market research the new market. That should include: and grow a presence in overseas markets. It is essential to carry out detailed – a marketing strategy which market research to identify and incorporates international But how should you begin? How do evaluate the target market. Areas trade development; you even know whether exporting to examine include: is right for you? Before you commit – an understanding of the route to exporting you need to honestly – the industry structure; to market, e.g. the preferred assess your export potential – both – the predicted demand for your distribution channel for your in terms of the readiness of your product or service; products or services; business and of your product or – the competition and how you plan – the chosen business model e.g. service. The following steps should to fit into that marketplace; and agent, distributor, B2B, sales office, help you to do this. – any modifications required to make joint venture or subsidiary company; Assess your export capabilities your product or service saleable. – the necessary financial resources; Business Link’s online tool ‘Are you Desk research is a good starting ready to export?’ provides a quick, point – an increasing amount of – the right people to develop the new basic assessment of your export information is available online – export markets; capabilities and the issues and but you may also wish to consider – adequate knowledge of the practicalities you need to know commissioning some bespoke requirements of your chosen market about before beginning to export. research from an export specialist. – e.g. modifying packaging to meet The tool provides a useful starting local regulations and standards; and point for discussions with a UKTI UKTI’s Overseas Market Introduction International Trade Adviser (see Service (OMIS) draws on the local – an understanding of export payment ‘Who can help me export?’ and knowledge and expertise of its staff mechanisms and export finance. ‘UKTI contacts’ later in this guide). around the world. The cost of this is very competitive.
  • 15. Exporting for growth – Your guide to getting started 13 Key questions to ask before you export 1 What are the unique selling points to your business proposition? Will there be 4 Do you have sufficient resources (management time, project finance and expenses) to fund 7 Have you evaluated business risks (such as protecting your intellectual property) and a market for your products your overseas projects? conducted research and due and services? diligence? 2 Are there any legal barriers to your business model? 5 Who will be leading the project within your company? 8 Do you know how to secure payment and get the right 3 Where in the market would you start? 6 Do you need to work with an overseas partner to succeed? Can you communicate with quality products? them effectively? Assess your product/service To assess whether your product/ Case study — service is suitable for export to your WOW Toys target market, consider: Quality toy manufacturer WOW He continues: “If you’re serious Toys decided to adopt an export about exporting, you need to – consumer preferences, competitive strategy shortly after opening recognise it as your number-one offers (local production and for business in 1997. Today, the priority, focus on it and make it imported) and their market share; London-based company trades happen. Be open-minded and even – product standards and regulations with 40 countries around the world. opportunistic about which markets in the overseas market – the British to pursue. Sometimes smaller Managing Director Nadim Ednan- Standards Institution offers help markets such as those emerging Laperouse says: “These days, our for exporters; and in Eastern Europe are easier and international sales far outweigh quicker to access. And make the – the costs of adapting your product sales within the UK. The revenue most of support available from or service. we generate from our overseas UK Trade & Investment. They can customers allows us to be a Understand the law help you get on the right path to completely independent business. There are various legal responsibilities international success.” We also spread the risk, rather than associated with doing business relying on just one company.” www.wowtoys.com overseas – all of which you should understand before starting to export. For example, you’ll need to familiarise yourself with the VAT rules administered by HM Revenue & Customs (HMRC), and be aware of any export controls which relate to your particular product. See ‘Who can help me export?’ later in this guide.
  • 16. 14 Exporting for growth – Your guide to getting started I was quite taken aback by the thoroughness of the [UKTI Export Communications] Review, the insights it delivered and the sheer depth of resources it gave us access to. The review changed the way we think about our export communications. Britten Sinfonia, Cambridge Selling and distribution – You can use a sales agent who sells When arranging a sales contract Once the initial homework has been products on your behalf, or puts with an agent or distributor, you done, and you have decided on the you into contact with potential need to ensure that responsibility export market/s to approach, you customers on a commission basis. for delivery and payment is clearly then need to organise your sales Note that an agent never takes title defined. You will also need to secure presence there. of the goods but merely stocks intellectual property protection in and sells them on, making a each country you sell into. Depending on your product/service, commission in the process but you may be able to sell directly. For never accepting responsibility for Marketing example, you might be able to sell profit or loss. Marketing is a key element of over the internet or by exhibiting at successfully selling overseas. local trade shows. – You can enter into a joint venture To be effective, your marketing with a local business. This gives strategy should be tailored to Many businesses look for a partner you a share of the management each target market. who already understands the local and profits of the joint venture, market. For example: but it can be a more complicated You’ll need to appreciate the and expensive option. traditions, culture and legislation – You can sell to a distributor who of the countries you are trading with then sells your products locally. – If you want complete control over to exploit your exporting efforts. Note that a distributor takes sales, you can set up your own Customisation of your marketing title of the goods once the sales local office. This is the most activities is essential if there are transaction is complete; and is expensive option. cultural differences affecting the responsible thereafter for any consumption of your product. profit or loss in stocking and UKTI’s Export Communications selling them on. Review can help.
  • 17. Exporting for growth – Your guide to getting started 15 Visit the market Visiting the market is an invaluable part of trading internationally. You will experience the marketplace first-hand, and make the contacts necessary to do business. Attending overseas events, such as trade fairs, or participating in a trade mission can be great ways to test markets, attract customers, 314m The Chinese middle class is forecast appoint agents or distributors and to grow from 172 million to 314 make sales. million in the next five years – more than the entire population of the US.
  • 18. 16 Exporting for growth – Your guide to getting started Rising to the Challenge Often a two minute chat to the right person saves about 30 minutes trawling through a website. Nigel Darby, Associate Director, Angle Ring Co Ltd Exporting may be a challenge, Resource costs Legal, regulatory and but the potential rewards are Entering an overseas market may intellectual property issues huge. Following are some of require both financial investment The barriers to success which the most commonly cited and an increase in manpower. exporters talk about most are legal Timescales can also be an issue, and regulatory issues. Some firms hurdles to doing business with short-term ‘pay back’ not also say that intellectual property internationally, and advice necessarily guaranteed. (IP) protection can be an issue. The on how to overcome them. Intellectual Property Office (IPO) It’s advisable to discuss your can help in this area. See ‘Who can financial position with your help me export?’ later in this guide. accountant and bank manager before committing to exporting. Adopting the right mindset is It is also important to take the vital to overcoming such hurdles. long-term view and build Every country has its own trading, appropriate timescales into your taxation and IP systems and you projections. Customers and partners will need to be willing to get to grips in high-growth markets, for with those systems and adapt to example, tend to put an essential them. So doing your homework is value on relationships and it is vital when planning market entry. unusual for a return on investment to emerge within the first year.
  • 19. Exporting for growth – Your guide to getting started 17 We have a long-term development strategy to achieve a strong presence in global markets. This is important as it allows us to be far more competitive, whilst giving us access to new technologies, manufacturers, skills and materials, all of which feed our creativity and influence new product development. Richard Liddle, Founder and Managing Director, COHDA Design Managing overseas risk Political and economic Case study — developments, cyber risks, bribery Chokolit and corruption – these are some of Young British entrepreneur Louis “UKTI has been a great support the issues your business could face Barnett has used UK Trade & to us as we develop our business when you begin to trade overseas Investment’s (UKTI) services to internationally,” says Barnett. “It or expand into fresh markets. help sell his award-winning luxury was instrumental in putting the chocolate brand, Chokolit, overseas. Mexico deal together, advising and UK Trade & Investment and the helping us with back-end details Foreign & Commonwealth Office After participating in UKTI’s and regulatory matters, including bring together authoritative, Passport to Export programme, getting our products through accessible and topical information Chokolit appointed a distributor in Customs. This kind of after-care online on countries and the key Mexico, who has since introduced made all the difference.” issues related to their political, the company’s products into the economic and business security country’s biggest department He adds: “We have also worked with environments. store. UKTI to get our products sold in Spain, Hungary and 12 States in the This can help you identify and US, and are currently in discussions understand possible risks – and with China. By the end of 2011, guard effectively against them. we expect that 90 per cent of our revenue will come from export.” www.chokolit.com
  • 20. 18 Exporting for growth – Your guide to getting started Language and cultural barriers Being able to speak the language of Every market is different, and your potential customers can help to Case study — companies need to be sensitive to establish mutual confidence. If you Ellis Pharma local ways of doing business, even don’t speak the local language, you The Middle East has become a key in different regions of the same could consider investing in foreign- market for UK firm Ellis Pharma, country. Lack of awareness and language training for your staff. a specialist in global supply chain knowledge of local cultural norms Alternatively, you could employ a solutions for the pharmaceuticals can impede the development of translator or interpreter. It can also industry. a business relationship. help to have your promotional material translated. It’s a good Following advice from UK Trade idea to avoid colloquialisms and & Investment (UKTI), the metaphors in promotional material Staffordshire-based company – they could be embarrassing in the decided to focus on the emerging local language. markets of Oman and Qatar. Attending trade shows You should conduct research into After receiving a Business and exhibitions is a key your target market to establish local Opportunity Alert from the UKTI team in Qatar, Ellis Pharma won a way of marketing the considerations. These may include £18,000 contract with Doha Clinic product or packaging modifications company and its products to enable your product to conform Hospital. It further established itself in the region by going on to international audiences. to local cultural demands. Or it could trade missions and having be that local sales and marketing Claire Watt-Smith, MD, BoBelle numerous one-to-one meetings channels for your particular product are different from those in the UK. with local decision makers in governments and hospitals and potential agents – contacts that had been highlighted by UKTI. This led to Ellis Pharma securing orders worth £150,000. Business Development Director Gary Campbell says: “We are confident that with our own efforts and UKTI’s support, our exports will increase substantially in the coming months and years.” www.ellispharma.com
  • 21. Exporting for growth – Your guide to getting started 19 Logistics The best mode of transport for your country – and use the correct Getting international transport goods will depend on the type of Incoterms to describe this in the right can be complicated and goods and how quickly they need quotation and written contract. depends on the agreement you to be delivered. You may need Most companies use a specialist have with your customer or supplier. more than one mode, for example, freight forwarder to handle Your obligations should be clearly sending goods by lorry to a port in transport. Confirm exactly what set out in a written contract using the UK and then by ship overseas. they will do and whether they can Incoterms – standard trade terms In all instances, the goods will need handle all documentation and other which state who is responsible for suitable packaging and labelling procedures. Look for a forwarder who transporting goods, insuring the for transportation. You should clarify exports regularly to that destination. goods during transportation, paying in advance who will be responsible They can ‘consolidate’ your goods duties and customs clearance. for UK customs procedures, for with other consignments in a single freight and insurance, and for container to reduce costs. customs clearance in the customer’s
  • 22. 20 Exporting for growth – Your guide to getting started
  • 23. Exporting for growth – Your guide to getting started 21 Case study — ABF Europe Overseas sales have soared for ABF Europe, the creator of the revolutionary Kite table system. The North Yorkshire firm first introduced the conference and business table, which can be adapted to accommodate both large and small groups of people, into the international market four years ago when sales took off in the US. A regular user of UK Trade & Investment services, ABF now supplies 17 countries globally and has offices in a number of overseas Getting paid There are also currency issues you markets, including Spain and Dubai. The risk of late or even non-payment need to consider. In some countries can sometimes be greater when where there are restrictions on Managing Director Darren Buttle access to foreign currency, your says: “Our international operation doing business internationally. Ensuring you get paid for overseas customers may face problems is gathering pace. Our immediate getting currency to pay you. In focus is undoubtedly America, but sales is a combination of assessing risk, settling on acceptable payment this case, it’s worth insisting on I’m keen to explore opportunities in a (confirmed) irrevocable letter Canada, Brazil and regions of South terms and methods and considering insurance to protect yourself of credit that secures payments East Asia as well. These are all according to the terms of the credit markets that are experiencing rapid against problems. and often at an agreed rate. growth of their own and countries Help is available from UK Export where we can really play a part in Finance (formerly known as ECGD) Businesses which sell on credit to helping companies compete in – see page 25. foreign customers can use factoring the international arena through or invoice discounting to free up effective use of office space and To minimise the risks of non- cash flow. Export factors specialise cohesive work-life strategies. payment, you should research the in the collection of money from market conditions in your target overseas. The factoring company We’re doing that thanks in no small country and the credit worthiness pays you a percentage of the invoice part to UKTI, and it promises to be of potential customers before you value up-front and the balance an exciting journey ahead as we start trading. (less their percentage) once they harness the skills and expertise of have collected payment. [UKTI] trade advisers to support us and show us the way.” www.kitetables.com
  • 24. 22 Exporting for growth – Your guide to getting started Getting it right � Ten key steps to successful exporting 1 Research your market Does your prospective foreign 2Implement an export strategy 3 Construct an export plan Define how you will enter the foreign and review your capabilities customer need what you are selling Ask yourself: what would my market. Finalise human resources at the price that will yield you a business gain from exporting? � and marketing strategy and allocate profit? What is the competition an adequate budget to cover export and how will they react? start-up costs. 6 Get the Customs side right Contact HM Revenue & Customs and 7Get paid on time Ensure your cashflow will remain 8 Choose your distribution methods the UK embassy of your destination at a safe level. Guarantee sufficient Consider the implications of selling country to clarify requirements. credit for your future sales. Take out over long distances and across Make sure your reporting practices insurance cover if necessary. national frontiers. are watertight.
  • 25. Exporting for growth – Your guide to getting started 23 4 Choose your sales presence Establish whether you need a direct 5 Promote your product How are you going to market and sales operation. Or is an agent sell your product? Customise or distributor more effective? marketing to the target country. How will you manage your overseas sales presence? 9 Transport goods effectively Assess and choose the most 10 After-sales policy Regularly liaise with customers, effective transport method and export agents and banks. Monitor make sure the goods are insured political unrest or other adverse by you or the importer. conditions in the country of destination. Manage regular servicing and warranty claims. Source: UK Trade & Investment
  • 26. 24 Exporting for growth – Your guide to getting started Who can help me export? A wide range of support services exists to help UK exporters and would-be exporters to tackle virtually all of the issues and challenges which they are likely to face, and help them become established in international markets. Following are just some of the many organisations which can help you get started on your exporting journey.
  • 27. Exporting for growth – Your guide to getting started 25 UK Trade & Investment UKTI services have helped its UK Export Finance UK Trade & Investment (UKTI) is the customers to: UK Export Finance is the operating Government Department that helps – understand how to do business name of the Export Credits UK-based companies succeed in overseas; Guarantee Department (ECGD), global markets and assists overseas the UK’s export credit agency. firms in bringing their high-quality – identify opportunities and open doors; UK Export Finance does not lend investment to the UK. directly, but supports UK exports UKTI has a global network of – reach customers/business by issuing insurance contracts to 2,400 staff. Its International Trade partners not otherwise accessible; UK exporters and by issuing Advisers (ITAs) around the UK have – raise their profile and credibility guarantees to banks which make years of business experience to draw overseas; loans to overseas borrowers, which on when advising companies. In 96 are used to purchase supplies from markets based in British Embassies – overcome barriers to entry UK exporters. UK Export Finance’s and other Diplomatic offices around or expansion; services help facilitate export the world, UKTI staff can offer local, contracts by providing protection – improve overseas marketing in-market knowledge and expertise. against the risks of the exports not strategy; being paid for. UKTI has helped many thousands – gain access to information of businesses achieve international In 2010-11, UK Export Finance not otherwise available; success by providing tailored (then known as ECGD) supported services with specialist support – understand the competition; £2.9 billion of UK exports (up from covering a wide range of industries. £2.2 billion the previous year). In late – access powerful research to inform Its clients consistently cite the 2011 it announced an extension to management decisions; and importance of UKTI support in its credit insurance policy to cover helping them to overcome barriers – have the confidence to explore all sectors and sizes of company, to new overseas business and or expand in overseas markets. as well as the launch of three new improve their business performance. short-term products. www.ukti.gov.uk See the following pages for details of those services provided by UK Export Finance which are most relevant to small- and medium-sized businesses. www.ecgd.gov.uk UK Trade & Investment and UK Export Finance services and products are detailed overleaf.
  • 28. 26 Exporting for growth – Your guide to getting started UK Trade & Investment – services Passport to Export Events and seminars High-value opportunities Provides new and inexperienced Held across the UK and the world. programme exporters with the training, planning They include specific sector and Proactively identifies global supply advice and ongoing support they market based activities. chain opportunities, coupled with need to succeed overseas. an online service giving access to Trade missions several hundred sales leads around Overseas Market Introduction Organised to help UK companies the world each month. Service (OMIS) visit the marketplace they’re A tailored service by our overseas interested in and talk face to face teams to access market and with prospective business partners. industry information, identify UKTI also organises missions into potential contacts or assist in the UK to allow overseas delegates planning an event. This service to meet with potential partners attracts a charge. or investors. It’s such an advantage to Export Marketing Research Business opportunities be able to tap into the UKTI Scheme (EMRS) News emailed directly into your network, as we don’t have Offers support, advice and some in-box, highlighting hot leads in your the time and resource to grant funding to eligible companies chosen overseas market. Companies wishing to research a potential can sign up for this free service find overseas distributors export market. by visiting www.ukti.gov.uk on our own. Our export Export Communications Gateway to Global Growth market couldn’t exist, and Review (ECR) A service for more experienced we wouldn’t have moved Assesses the way companies exporters. It offers focussed communicate with overseas planning and advice, and support at the speed we have customers and makes practical to help companies to build on their done, without UKTI. recommendations for improvement. previous success and develop new Andrew Knights, Managing Director, overseas markets. Selectamark Security Systems
  • 29. Exporting for growth – Your guide to getting started 27 UK Export Finance – products and services UK Export Finance has In the case of an advance payment Foreign Exchange Credit a range of products and bond, the exporter’s bank may Support Scheme require the exporter to deposit the When an exporter enters into an services to support UK buyer’s advance payment with the export contract under which it exports; mentioned below bank as security for the exporter’s will be paid in a foreign currency, are those specifically undertaking to pay. This would the exporter may be exposed to targeted at small and deprive the exporter of the cashflow unfavourable changes in exchange benefit of the advance payment. rates over the course of that medium-sized businesses. UK Export Finance can provide a contract. In order to bring certainty Export Insurance Policy guarantee to the bank of up to 80 to this aspect of the contract, the Under an export contract, there is per cent of the advance payment exporter may ask the bank to enter always a risk of not being paid by bond’s value, which will reduce or into a contract to purchase, with the buyer – or of not being able to remove the requirement to use the sterling, the foreign currency which recover costs incurred performing advance payment as security – the exporter will receive at a pre- the contract due to it being thus freeing up funds with which agreed rate of exchange. terminated in circumstances to perform the export contract. However, the bank will be taking beyond the exporter’s control. Export Working Capital Scheme a risk on the exporter’s ability to UK Export Finance’s Export To fulfil an export contract, the deliver the required amount of Insurance Policy may be able to exporter may require funds in order foreign currency on the agreed date: provide an exporter with cover to be in a position to provide goods if the exporter fails to do so and against those risks, such as specified or services. Specifically, the exporter exchange rates have moved against political or buyer-related events, may have won more or larger the bank, the bank may suffer a loss. which prevent it being paid, lead contracts than usual and a bank The bank may therefore wish to to the contract being terminated, may be cautious about lending any receive some protection against this or prevent its performance. further funds to meet the exporter’s risk of loss before entering into the needs for more working capital, thus forward foreign exchange contract. Bond Support Scheme constraining the company’s ability Under an export contract, the buyer to grow. Where the exporter’s bank has been may require the issue of an on- requested to provide a working demand contract bond (for example, UK Export Finance’s Export Working capital facility guaranteed by UK an advance payment, performance Capital Scheme can offer a partial Export Finance in respect of an or retention bond) in order to assure guarantee to the bank (of up to 80 export contract and is also requested itself that the exporter will meet per cent of the value of the working to enter into a forward foreign its obligations. Before issuing such capital facility in some cases), so exchange contract in relation to the a bond, a bank will require an that the exporter can gain access to same contract, UK Export Finance undertaking from the exporter to pay the working capital with which to will increase its guarantee of the to the bank any amounts which the perform a specific export contract. working capital facility in order to bank may pay out under that bond. enable the bank to enter into that The bank is therefore taking a risk on forward foreign exchange contract. the exporter’s creditworthiness under Further information that undertaking. Where the bank For additional information or is unsure about taking that risk, a details on the full range of UK Export guarantee from UK Export Finance Finance’s services, please contact for part of it may persuade the bank them on +44 (0)20 7512 7887 or visit to issue the bond. www.ecgd.gov.uk
  • 30. 28 Exporting for growth – Your guide to getting started
  • 31. Exporting for growth – Your guide to getting started 29 Other sources of help As well as the help RBS/NatWest Your lawyer David I.Houghton MBE, Your lawyer will also be able to available from UKTI and Director, Strategic Partnerships help you. Similar to the ICAEW’s UK Export Finance, there M: +44 (0)7785 708611 BAS, the Law Society has many E: david.i.houghton@rbs.co.uk are many other sources members which offer a service for SMEs. ‘Lawyers For Your Business’ of help available to you. Santander is a network of 1,000 solicitor firms Martin Hodges, Head of Trade Finance in England and Wales offering Your bank M: +44 (0)7827 872312 specialist advice and a free half- Your bank can provide a range of E: martin.hodges@santander.co.uk hour initial consultation to small help on topics such as managing and medium-sized businesses. foreign transactions, trading Your accountant Advice can be sought on a range overseas in sterling, owning assets Your accountant can provide you of legal issues – both domestic abroad, exchange rates and with a range of advice, from starting and international. managing foreign exchange risks. a business, organising your financial In 2012 the Law Society will also For more detailed financial advice affairs, financial management and be working with its solicitor and guidance on issues that taxation. You should also be aware members to produce practical affect you, you should talk to the that the Institute for Accountants ‘Doing international business’ international section of your bank. in England and Wales (ICAEW) has guides aimed at SME firms new If you can’t find the right person just launched a new scheme: small to exporting their products and to talk to, you could contact the businesses across the UK are being services internationally. following people at the one of offered free expert advice from the five major banks: ICAEW Chartered Accountants The guides will look at some of the as part of an initiative called the fundamental legal issues which Barclays Business Advice Service (BAS). SMEs need to consider when working John Bevan, It aims to help small companies internationally. Topics being covered Head of Trade and Working Capital and start-ups with business and will include: T: +44 (0)1256 791401 financial advice to help economic E: john.bevan@mercantile. growth. Small businesses can – international employment issues; barclays.co.uk find details of ICAEW chartered – international contracts; HSBC accountants in their local area at www.businessadviceservice.com – business structures; Felipe Hsieh, Senior Manager, TSC Client Management – debt recovery; M: +44 (0)7920 411997 – tax; and T: +44 (0)20 7991 1706 E: felipe.hsieh@hsbc.com – dispute resolution. Lloyds TSB These guides will be available as Barry George, Senior Manager, publications, but also as webinars Trade Products and will be promoted widely to M: +44 (0)7793 670292 small businesses. T: +44 (0)20 7463 1690 E: barry.george@lloydstsb.co.uk For more information visit the Law Society’s website at www.lawsociety.org.uk
  • 32. 30 Exporting for growth – Your guide to getting started British Chambers of Commerce Export Control Organisation HM Revenue & Customs (BCC) (ECO) HM Revenue & Customs (HMRC) The BCC, and its network of affiliated Any item exported from the UK provides assistance on a number of Chambers, support and advise which is subject to export control matters relating to the importing businesses in all areas of needs a licence. The ECO is and exporting of goods. Information international trade. With a responsible for assessing and issuing and guides are available covering worldwide network of bilateral (or refusing) export licences for a topics such as the classification and international chambers of wide range of controlled, so-called of goods, the European Union, commerce, the BCC can provide “strategic” goods. This includes Relief Procedures on Duty and UK exporters with numerous military and dual-use items. VAT, Tariffs and Duties, Intrastat services including: export and the requirement to submit You can find out more on export documentation, market research, Supplementary Declarations, controls, including applying for training, translation services and together with basic guides on export a licence and rating enquiries, letters of credit. licences, export taxes, import licensing policy, key documents, licences, rates of exchange, etc. For more information visit key links, notices for exporters and the BCC’s website at news related to export control, by www.hmrc.gov.uk www.britishchambers.org.uk visiting the businesslink.gov website at www.businesslink.gov.uk Business Link The Institute of Export (IoE) The Business Link website provides The Institute’s mission is to enhance Intellectual Property Office the information, advice and support the export performance of the UK Intellectual property rights can needed to start, maintain and grow by setting and raising professional allow you to own things you create, a business. It provides information standards in international trade in a similar way to owning physical and advice to help customers make management and export practice. property. You can control the use the most of their opportunities. They achieve this by the provision of of your IP, and use it to gain reward. Rather than providing all the education and training programmes. IP rights only give protection in the advice and help itself, it fast-tracks The IoE offers recognised formal country where they are registered, customers to the expert help they qualifications in international trade. so if you are thinking of trading need. For SMEs thinking about It also runs a series of short training internationally, then you should exporting there is a simple courses covering every aspect of consider registering your IP diagnostic tool that helps you international trade management, rights abroad. consider whether now is the right sales and marketing, logistics and time to export. The UK’s Intellectual Property Office documentary requirements, and (UKIPO) can provide guidance: For more information go to international trade finance. www.intellectual-property.gov.uk www.businesslink.gov.uk/bdotg/ For more information visit the IoE action/layer?r.l1=1079717544&r. website at www.export.org.uk s=tl&topicId=1084654164
  • 33. Exporting for growth – Your guide to getting started 31 Freight forwarding Useful export links One of the other things you’ll need to think about is how to move your Country Information Standards and Technical goods overseas. Much will depend BBC website Regulations on the nature of your goods and http://news.bbc.co.uk/1/hi/ British Standards Institution (BSI) their destination and you will need country_profiles/default.stm www.bsigroup.com/en/ to evaluate the best combination of sectorsandservices/Disciplines/ time and cost with the characteristics Foreign & Commonwealth Office ImportExport of your product. There are various country profiles methods of shipping goods: by air, www.fco.gov.uk/en/travel-and- National Physical Laboratory road, sea, or rail. Some companies living-abroad/travel-advice-by- www.npl.co.uk offer multi-modal solutions; this country/country-profile Trade Statistics means that they offer more than Customs & Regulations National Statistics Information one service. HM Revenue & Customs www.statistics.gov.uk/hub/index. For more information about freight www.hmrc.gov.uk html forwarding please contact the Economic Information UK Trade Info British International Freight The Economist www.uktradeinfo.com Association at www.bifa.org www.economist.com/countries Travel Advice Market Access Foreign & Commonwealth Office Market Access Database for www.fco.gov.uk/en/travel-and- Tariffs (for non-EU markets only) living-abroad http://mkaccdb.eu.int/mkaccdb2/ NHS indexPubli.htm www.nhs.uk/nhsengland/ SOLVIT – Overcoming Trade Healthcareabroad Barriers (EU markets only) Travel Health www.bis.gov.uk/ www.travelhealth.co.uk EUMarketAccessUnit
  • 34. 32 Exporting for growth – Your guide to getting started Contact us UK Trade & Investment UKTI East Invest NI is the Government T: +44 (0)8456 419 955 T: +44 (0)28 9023 9090 department that helps E: info@uktieast.org.uk E: customerservicemgr@investni.com UK-based companies www.investni.com UKTI East Midlands succeed in an increasingly T: +44 (0)8450 524 001 Scottish Development global economy. E: info@uktiem.co.uk International T: 0800 917 9534 within Scotland Our range of expert services can UKTI London T: +44 (0)141 228 2828 from the UK be tailored to meet the needs of T: +44 (0)20 7234 3050 www.sdi.co.uk your company to maximise your E: info@uktilondon.org.uk international success. Business Wales UKTI North East T: +44 (0)3000 603000 They are delivered through an T: +44 (0)8450 505 054 E: businessinformationhelpline extensive network of market E: enquiries@ukti.rito.co.uk @wales.gsi.gov.uk specialists, based in the UK and across the globe. UKTI North West www.business.wales.gov.uk You can find contact details for T: +44 (0)8456 037 053 your local UKTI International E: info@uktinorthwest.co.uk Trade Adviser on our website: UKTI South East www.ukti.gov.uk T: +44 (0)8452 789 600 E: info@uktisoutheast.com or telephone us: +44 (0)20 7215 8000. UKTI South West Our helpline is open from 9.00am to 5.00pm Monday to Friday. T: +44 (0)8456 060 969 E: enquiries@uktisouthwest.org UKTI West Midlands T: +44 (0)8450 743 515 E: info@wmchambers.co.uk UKTI Yorkshire and the Humber T: +44 (0)300 365 1000 E: info@uktiyorkshire.co.uk
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  • 36. To find out more, scan this code with your smart phone. www.ukti.gov.uk +44(0)20 7215 8000 UK Trade & Investment is the UK Trade & Investment is responsible for Government Department that helps the delivery of the Solutions for Business UK-based companies succeed in the product “Helping Your Business Grow global economy. We also help overseas Internationally.” These “solutions” companies bring their high-quality are available to qualifying businesses, investment to the UK’s dynamic and cover everything from investment economy acknowledged as Europe’s and grants through to specialist advice, best place from which to succeed in collaborations and partnerships. global business. UK Trade & Investment offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. We provide companies with the tools they require 2010 winner Best Trade Promotion to be competitive on the world stage. Organisation in the developed world. The paper in this document is made from 50 per cent recycled waste pulp with 50 per cent pulp from well-managed forests. This is a combination of Totally Chlorine Free and Elemental Chlorine Free. The inks are vegetable oil-based and contain resins from plants/trees and the laminate on the cover is sustainable, compostable and can be recycled. Published November 2011 by UK Trade & Investment © Crown Copyright URN 11/1347