In recent years the government has recognised the importance of rebalancing the UK economy. This means moving away from a reliance on debt and consumption for growth, and moving towards business investment and exporting. Exporting more improves the balance of payments and helps the nation achieve sustainable long-term growth.
But exporting isn’t just important on a national level. It also has proven benefits for individual companies that transcend increased turnover alone. Research by UK Trade & Investment (UKTI) shows that exporting businesses reap the rewards in terms of attracting and keeping staff, improved productivity and financial performance, and downturn resilience compared to those that trade only in domestic markets.
For example, firms who choose to export become 34% more productive in their first year, while those already exporting achieve 59% faster productivity growth than non-exporters. Not only that, 85% of businesses said that exporting helped them grow to a level not otherwise possible, and 66% said that trading overseas led them to fresh business ideas and innovation.
Yet, despite all these benefits, too few UK small to medium-sized enterprises (SMEs) export. In fact, only one in five UK SMEs currently export at all – below the European average. This translates to an estimate of anywhere between 25,000 and 150,000 currently non-exporting firms in the UK that could, and should, be doing so.
Given that SMEs are at the forefront of entrepreneurism, competition promotion and innovation in the UK economy, it’s therefore critical to address this gap and make sure SMEs and entrepreneurs get as much support as possible in making the leap into foreign markets.
However, when it comes to choosing new markets, particularly those outside the low-growth and potentially unstable markets of Europe, the range of options can seem overwhelming. This is odd because UK SMEs have a major advantage – a ready-made collective of 53 countries that think favourably of the “Made in Britain” label and share many of our business practices.
I’m talking of course about the Commonwealth. This is a network where the business community speaks English, shares English legal characteristics and has a common business culture. Furthermore, the Commonwealth’s growing number of middle-class consumers have a strong appetite for British goods and services.
With member countries spanning Africa, Asia, the Americas, Europe and the Pacific, the Commonwealth is vast and stunningly diverse. It has a combined population of 2.3bn, 60% of whom are under the age of 30. It also contains some of the world’s fastest growing economies – totalling £8tn in GDP.
Certainly, there is huge potential. By 2020, the Commonwealth will have one billion middle-class consumers, 40% of the global workforce and trade between member countries is expected to double to £700bn.
Aside from these impressive figures, it is simply easier to do business in the Commonwealth than in many other foreign markets – and less expensive. The shared language and complementary legal systems and business practices help to make it, on average, 19% cheaper to do business between member countries.
That said, UK SMEs can be forgiven in being hesitant. Worries persist regarding costs, regulations and risk – and especially in finding relevant business partners to trade with. Fortunately for them, help is at hand.
Supported by Royal Mail, CWEIC has created CommonwealthFirst – an initiative aimed at providing training and mentoring over three years to 100 high-potential, export-ready UK SMEs.
The chosen companies are drawn from a wide range of industries, and selected on their potential for innovation, their potential impact and their ambition. Whether early stage or long-established, they will have the desire and means to take advantage of the trading opportunities provided across the Commonwealth – aided by the first-class training and mentoring that comes with CommonwealthFirst.
Business mentoring will be a key part of the initiative – helping educate our chosen SMEs on legal and regulatory issues critical for exporting abroad (often perceived as the largest barrier to exporting by SMEs). And our specialist advice and in-field experience means we can help our chosen SMEs take advantage of the myriad opportunities awaiting them in Commonwealth markets.
Trade missions also play a vital part in winning export orders. In a recent study by the London Chamber of Commerce & Industry, the ease of finding potential customers and business partners was the most influential factor for 81% of companies considering exporting, and 39% found trade missions to be most beneficial of the various support methods for entering new markets. In this vein we will be offering our SMEs tailored trade missions to key Commonwealth targets.
Networking and access to key contacts is also important for would-be exporters, and our SMEs will attend high-level events where they can learn from experienced business people about opportunities abroad. We can also ensure assistance from trade associations, chambers of commerce and a network of suppliers, all to help our chosen SMEs navigate through the sometimes tricky regulations and bureaucracy of international trade.
The aim is to then expand the programme across the Commonwealth after the first three years. We’ll showcase the success of the initial 100 SMEs and by doing so hope to highlight the opportunities UK businesses have across Commonwealth – a network of markets that have strong commonalities, despite the distances between them.
CWEIC was established in July 2014 with the support of the Commonwealth Secretariat. It is a not for profit membership organisation with a mandate to facilitate increased trade and investment across the Commonwealth.