Mental barrier holds back British exports
Sunday 31 March 1996
Export trade accounts for 25 per cent of Gross National Product each year and is said to be a key element in Britain's improving economic performance. Consequently, by ignoring such a huge market, many businesses may be limiting their growth and failing to meet their true potential. Research published last week by Barclays Bank indicates that those that have already gone down the export route are positive about it. Seven out of 10 businesses with turnover of up to pounds 10m questioned said they were more optimistic about exporting than they were last year, with just 3 per cent saying they were pessimistic.
Moreover, a quarter of exporters expect their overseas operations to develop into the main part of their businesses.
And while three in four of non-exporters say that nothing would encourage them to trade overseas, the Barclays research suggests that those businesses that do export appear to be reaping the rewards of their overseas activities. One in six states that exports already account for most sales and a further one in four expects this to be the case in the future.
The study also indicates that many businesses do not gain from this activity because they overestimate how difficult it is. There is evidence that exporting is usually a simple extension of domestic trade and rarely involves the expense of recruiting staff with international trade and language skills, says the bank.
It found that only one in 10 exporters employs specialists in international trade. Exporting activity is undertaken by the owner or managers in nearly four out of five businesses, while half of exporters plan their overseas trade within normal working activities.
The main reason for the reluctance of businesses to trade abroad, cited by two-thirds of those that do not export, is a belief that their product is not suitable for an overseas market. In many cases, says the bank, this may reflect a failure of the business to investigate the market fully rather than a lack of an opportunity. A further 12 per cent say they have enough demand at home, which may suggest a lack of awareness of possible threats to their domestic operations from overseas competitors.
However, Barclays points out that concerns traditionally associated with foreign markets, such as not receiving payment, language barriers and red tape, do not tend to worry exporters.
Barclays believes that if firms can be encouraged to start exporting, they will not look back.
It suggests forming a partnership between businesses, the Government and Business Links and other providers of advice to create an atmosphere in which small businesses feel able to test out overseas markets.
David Lavarack, the small business services director at Barclays, says: "With existing exporters so positive about their experiences, it is disappointing that so many small businesses appear to be passing up valuable opportunities.
"In an increasingly competitive market, businesses need to grasp all opportunities, such as exporting, not just as a prerequisite for survival but to ensure future growth."
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