Beyond Borders

Guide To Exporting

Beyond Borders: Realigning the Leeds City Region economy towards export-driven growth
The notion of an exportled recovery is regularly put forward as a remedy to the UKs economic challenges. The Chambers Quarterly Economic Survey (QES) shows that international markets continue to present opportunities for growth and increasing the volume of exports could help drive economic recovery by acting as an alternative to the weak domestic market. However, exporting is far from the norm and whilst it is easy to point out the potential of selling to international markets, entering new geographic territories is not always so simple. The challenge is how you turn the rhetoric into a realistic opportunity for UK businesses. In particular, more SMEs and service providers need to realise their export potential and understand how they can benet from expanding into international markets. In this document you will nd a prole of Leeds City Region exporters and non-exporters, as well as useful advice from UKTI and Natwest to help your business expand into new international markets to achieve growth.

Opportunities in global markets Exporters

Say turnover is at the same level or higher than at the start of the recession

Experiencing an increase in overseas sales

41%
Non-exporters o on-exporters

67%
Say turnover is at the same level or higher than at the start of the recession

Exp Experiencing an ncrease increase in UK sales

33%

53%

Prole of Leeds City Region exporters

Leeds City Region exporters Proportion of sales that come from export
What proportion of your total sales are from overseas?

24%

66%
Manufacturers involved in exporting Service providers involved in exporting

Sizes of businesses involved in overseas markets

20%

34%
Small

41%
Medium

52%
Large

0-10%

11-25% 26-50% 51-75% 76-99%

100%

Micro

The markets Leeds City Region exporters currently sell to

US

48.1%
Other North/ Central America

26.0%
South America

22.4%

The markets Leeds City Region exporters would like to expand into Not
Considered Expansion

Ge Germany

17 17.4%
France

20.1%
Italy

15.3%
Spain

17.0%

Russia

Other EU

Other European Countries (Non EU)

20.1%

24.7%

18.1%

Africa

14.2%

Australasia

14.6%

Barriers to exporting
What help exporters would need to target new markets

49%
...of Leeds City Region businesses believe they have no export potential ...of non-exporters are about to start selling internationally

Support with making contacts

Market research and intelligence

Greater condence in global markets

Access to nance

Reasons why businesses that have considered exporting did not pursue it:

Lack of contacts

Lack of nance

Lack of marketing intelligence

Concerned about risk exposure

Economy is not bouyant enough

Guide to exporting: Identifying international opportunities

By UK & Trade Investment

Key opportunity markets

Many UK rms begin exporting by entering established markets. The EU, with its open borders and shared import/export procedures, provides UK companies with unrestricted access to more than 500 million consumers, while the US continues to be our number-one export market, offering opportunities across a wide range of sectors Below is just a small sample of the markets where UKTI have identied opportunities for UK companies. Construction Mexico, Egypt, Algeria, Brazil, Singapore, New Zealand, Malaysia Financial / professional services Mexico, Russia, UAE, Canada, Taiwan, Bahrain ICT Netherlands, Brazil, Greece, China, Bangladesh, France, Latvia Creative & Media New Zealand, India, Brazil, Hong Kong, UAE, Malaysia, Mexico Low Carbon Brazil, India, China, US, Canada Life Sciences Germany, Turkey, Russia, China, Ireland, Switzerland, Hong Kong. Leisure & Tourism New Zealand, Brazil, Mexico Food & Drink Mexico, Italy, Indonesia, India, Egypt, Brazil

High-growth markets
UK exporters are also increasingly embracing the myriad of opportunities offered by the worlds emerging economies many of which are experiencing rapid rates of growth. Such high-growth markets include the BRICs (Brazil, Russia, India and China), whose dynamic economies will provide a wealth of prospects for UK rms in the coming decades. In addition to the BRICs, there are other fast-growing markets with great potential, such as the so-called CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). These often smaller markets have much to offer, and UKTI International Trade Advisers (ITAs) are well placed to guide exporters on how to select the best territory to target. To speak with UK Trade & Investment further contact 0300 365 1000. Growth in such markets is driven by rapidly rising populations and GDP levels. Research has shown that the middle classes in China and India, for example, are set to increase household expenditure fourfold over the next 20 years. The Chinese middle class is forecast to grow from 172 million to 314 million in the next ve years more than the entire population of the US. Excerpt taken from; your export opportunity: our insight For the full guide please contact info@ uktiyorkshire.co.uk or call 0300 365 1000

Full sector reports for all the above market and sector combinations are available to download FREE from the UKTI website www.ukti.gov.uk

Guide to exporting: Overcoming barriers to exporting

By Natwest

Mark Eastwood, Director, Commercial Banking, Leeds 0113 33078438

As UK companies look to nd new markets for their products and services, they are confronted with the very real challenges that go hand in hand with overseas expansion. These challenges include managing cash ow, but also being aware of the risks. There is, however, much that can be done to manage those threats, and businesses should not fear the unknown, as long as they are prepared and equipped with the proper tools and information. Below are some top tips from NatWest for overcoming the barriers to foreign trade.

1. Know your overseas markets

Just as you would domestically, take the time to understand your potential overseas markets. Is the product or service that you offer relevant to a particular market, and what do you need to do to make it accessible to potential customers? A very straightforward example: most Chinese households own a rice cooker and most UK kitchens contain a potato masher, but not the other way around. Once you decide your product is relevant, then its time to nd out if it would be adapted for export and what regulations have to be complied with for each specic market. Identifying likely prospects as well as competitors will probably mean visiting each market. It is also crucial to understand all the risks involved, both political and nancial. Individual country risk proles are as diverse as their economies and, when developing a new business, it is important to be mindful of gaps in corporate governance, risks related to the lack of the rule of law, and incomplete institutions governing goods and capital markets. Above all, remember you need to be condent of the demand for your goods. Understanding the potential for growth and being knowledgeable about the competition will help.

2. Develop your business plan

Expanding into new markets is a major undertaking, it is important to move at the right pace. Dont stretch yourself too thinly; concentrate your time, efforts and money into the one market you are condent that you can succeed in. If you are an exporter, you can often sell your goods to overseas markets in a number of different ways. Particularly, when starting out, it may be easier to look for a partner who already understands the market, rather than going it alone.

Guide to exporting: Overcoming barriers to exporting

By Natwest Mark Eastwood, Director, Commercial Banking, Leeds 0113 33078438

3. Research all likely costs

Understand all the costs you are likely to incur, including shipping costs, banking costs and uctuations in exchange rates (if applicable). Consider how customers will want to pay you, and what payment terms will be expected, and how this will affect your working capital and cash ow. - use this information to talk to your bank about how best to fund your business requirements.

4. Arrange for any nancing requirements

For exporters, receiving payment on open account (i.e. a simple payment against an invoice) at the end of the sale is the most usual way of doing business, especially in home markets. However it leaves the seller carrying the credit risk on the transaction, as well as covering what may well be a protracted payment cycle while goods are shipped and received. This is where trade nance can help. For example, an export Letter of Credit (L/C) will ensure your buyers bank guarantees that payment will be made, underpinning the transaction. It is also possible for your own bank to assume the payment risk by conrming the L/C with your customers bank. If funding is also required to fund manufacture or cover the shipping period, this may then be negotiated with your bank, based on the L/C. Where documentary trade instruments such as L/Cs are used, efcient administration (preparation, collation and tracking) will help to reduce costs and minimise delays on both sides of the transaction. Your trade bank should be able to assist with document preparation and online management information systems. A range of other trade nance instruments, including Documentary Collections, bonds and guarantees are available to support companies appropriately across the spectrum. If open account trading is preferred, your bank will be able to advise on the best payment methods and account structures. In this case, export invoice discounting is another option to ensure funding is available when you need it to support your supply chain. For companies looking to import, if your supplier wants payment or a percentage of payment before shipment of the goods, ask them to accept an Import L/C which can help to reduce your payment risk.

Guide to exporting: Overcoming barriers to exporting

By Natwest Mark Eastwood, Director, Commercial Banking, Leeds 0113 33078438

5. Think long term and build effective relationships

Developing a market wont happen overnight, so it makes sense to invest time and care in building effective relationships. This approach will be appreciated and pay dividends in markets that place greater emphasis on relationships, such as those in Asia and certain emerging markets. Once a relationship develops and a greater degree of trust exists between buying and selling parties, then the cost of doing business can also be reduced (for example, moving from L/Cs to Documentary Collections, which are a simpler and less expensive option). Be sensitive to language and cultural differences in your target markets. What is considered good manners in the UK isnt necessarily true overseas. Youll also need to be ready to translate your packaging, instructions and manuals, and the costs of this also need to be factored in. Make sure you understand the commercial imperatives your trading partners work under. Regularly liaise with your customers, agents or partners. Importers should look to build a strong, healthy relationship with suppliers key staff and management. Visiting your suppliers is often an essential part of assessing their suitability and building your relationship with them. If you are importing, you should also ensure that your supplier is able to supply goods consistently, on a regular basis and to the required quality.

6. And nalise any paperwork

Be prepared for different document requirements. Different countries often require different types of documentations over and above the standard ones usually demanded. Secure any export certicates and other documentation as soon as possible. Also, check the copyright on your products. Patents and trademarks are only recognised and protected in their country of origin, so you will need to secure additional protection in each you intend to export to. Finally, ensure any goods imported comply with all government regulations of the destination country. Failure to do so can delay the customs clearing process and incur signicant taxes.

Start exporting: How the Chamber can help

Which market?
Through the worldwide network of bi-lateral and international Chambers of Commerce, we can provide UK exporters with a unique added dimension of contacts far beyond those of UK Embassy Posts. The Council of British Chambers of Commerce in Europe operates across 38 countries and supports access for UK businesses into European markets. The British Chambers of Commerce (BCC) also provides an extensive portfolio of market guides providing information on developed and emerging markets, key industry sectors, trade missions and events. They are an essential source for companies investigating commercial trading opportunities overseas. For more information visit www.britishchambers.org.ukFor more information visit www.britishchambers.org.uk

Dont Get Caught Out

Overseas markets present signicant opportunities; however, there is usually an element of risk, which varies between different countries.Chamber International provides an arbitration service to help resolve issues where legal action would be costly, slow and damage relationships with clients. Chamber International also provides ATA Carnets for when transporting goods on temporary basis for exhibitions or specic projects. Carnets ensure that goods can be taken in and out of countries trouble free without having to pay duty/tax. For more information visit www.chamber-international.co.uk

Promote your business abroad

Chamber International offers a fast and skilful translation service to promote your business abroad. Our translators are skilled in more than 100 languages and we aim to cater for your particular industry sector. We can help with technical, commercial and legal documents, plus website and software translation. Currently one in ve businesses is losing custom overseas because it is not translating its website, or submitting it to the leading local search engines. Given that 75% of the worlds population does not speak English, translation and local listings can make a big difference to trafc to your site and to your business. Chamber International also has a highly skilled design team who will develop multi-lingual brochures to help you market your product or services abroad. For more information contact Alison Holmes on 01274 230073 or visit www.chamber-international.co.uk

Hayley Johnon Leeds, York & North Yorkshire Chamber of Commerce 0113 247 00000