Fresh frontiers: new markets to consider in 2018
Businesses already trading believe international opportunities are increasing. But which new markets offer the best potential?
The rapid rise of globalisation means there are more international opportunities for businesses than ever before. And the ever-changing economic conditions do not seem to be hampering the potential options.
According to new research from American Express, 77 per cent of UK organisations already trading internationally believe the opportunities are increasing. 50 per cent are looking to trade with new markets over the next 12 months.
But identifying lucrative new markets can be a daunting task. Where are the new trade opportunities, and how can businesses ensure they expand into these successfully?
Think beyond the obvious
While there are many logical factors to consider when looking at potential new trade partners – whether these are down to common cultural and linguistic bonds or simple supply and demand between two markets – businesses shouldn’t limit themselves to the more obvious trade partners.
Alongside the survey, we commissioned the Centre for Economics and Business Research (CEBR) to identify a list of top 20 countries with untapped potential for trade. The economic drivers they considered included business environment, corruption and transparency, regional trade agreements, and current trade flows.
When it comes to the top global markets for trade potential with UK businesses, the US takes the top spot. This isn’t surprising when you consider that it’s the largest economy in the world in terms of nominal GDP, and third largest in terms of population – as well as being home to low trade barriers.
But the rest of the list is more eclectic. Alongside Australia and Japan, the Nordics feature prominently, with Norway, Finland, Denmark and Sweden all ranking as top ten ‘fresh frontiers’. Although they are relatively small economies, their trade attractiveness and appealing trade agreements outweigh the size of their economies.
And what’s clear from this list of fresh frontiers is that there are plenty of untapped opportunities closer to home, in markets many of us may not have previously considered. Identifying which new markets will complement your existing trade strategy will be key to success.
Act global, think local
Businesses must undertake due diligence when expanding into any new markets – but this is even more imperative if the market is relatively unchartered.
Understanding the local landscape can make or break trade success. Who is your competition? Who is your local customer base? What regulations and trade agreements will you need to abide by? While in-market organisations and consultants can give you a head start on what to expect, nothing beats getting to know the region first-hand and gaining a comprehensive grasp on the local scene.
Don’t let payments hold you back
Despite the opportunities offered by international trade, 71 per cent of UK businesses revealed that they found the process of making and receiving payments abroad complex. But payments needn’t be an obstacle to your international trade strategy. There’s now a wide choice of payment tools and solutions that can offer you as much support as necessary, so that you can focus your time on the more important aspects of your trade plans.
Exchange rate volatility and economic changes were also cited as the biggest challenges to both current and future international trade activity. And rightly so – changes in exchange rates can not only make payments difficult, but have a knock-on effect on prices, profit and wider trade plans.
When it comes to exchange rate volatility, FX forward contracts are an important way to protect your business from fluctuations in currency prices. But surprisingly, they are used by less than half (42%) of the UK businesses we surveyed.
While trading with new markets can be daunting, preparation is everything. But the majority of businesses in our survey agreed that they expect to see business growth through international rather than domestic trade over the next year – so there has perhaps never been a better time to assess new trade potential around the globe.
The top 20 “fresh frontiers” for the UK are: