As the Brexit debate continues, there has been more talk of trade than there has been in decades.
There needs to be. The EU is overwhelmingly the UK’s most important trading partner, accounting for 48% of total exports and 55% of imports. 78% of UK exporting companies do business there.
But whether it’s trading relationships with Europe or with countries further afield, it’s something the UK clearly has got to get better at. Our trade deficit is second in the world only to the US and no more than 15% of firms in the UK sell anything overseas.
The answer - provided by thousands of CBI members - is that exports begin at home. The basics that are crucial for success in a global economy include the need for skilled people, an immigration system that focuses on contribution rather than numbers and effective infrastructure.
How innovation drives exports
These points are echoed by CBI members about what they feel lies behind their exporting achievements – and where more support could be offered.
Amino Technologies, spun out of Acorn Computers, has flourished as part of the tech cluster that Cambridge is known for. The company delivers software and hardware solutions to pay TV companies. With limited opportunities in the UK (thanks to the dominance of Sky and historically slower broadband), two thirds of its business is in the US. Success there has given it the confidence to follow the opportunities in Asia Pacific and Latin America, as those markets develop in a similar fashion.
Mash Direct produces ready-made mash and vegetable dishes – and has found success in surprising places, such as Dubai, because of a proactive focus on regions where there is a lack of competition from other businesses.
For Jarl Severn, Managing Director at medical device manufacturer Owen Mumford, innovation and exports work hand in hand to fuel the company’s growth. 90% of its sales are overseas and if it didn’t export, it wouldn’t have developed the products it has.
But he also emphasises the importance of clarity in trading relationships. As the US makes 50% of the world’s purchases of medical devices, it’s Owen Mumford’s biggest market by far. And although Severn remains convinced that “any good player will be able to do well in America”, he recognises the market is “getting a little bit more closed”. He adds that customers there also want to understand how robust their supply chains will be after Brexit.
And when there are currently no guarantees British suppliers will have the same eligibility to supply into Europe after Brexit, Severn is already seeing customers there making preparations just in case.
Match fit for Brexit
But Ben Towe, Group Deputy Managing Director at cold-rolled steel manufacturer Hadley Group, believes it’s the UK’s strength in innovation that will save it from the worst affects of Brexit.
“The threat [to our business] is there. We are concerned about the duties. We are concerned about border controls,” he explains. “Our international clients have said they’re not happy about it either, so they’ve gone out and they’ve tried to seek alternatives. They are available, of course. But they have to be alternatives at the right price.”
40% of the company’s turnover is generated overseas – and despite losing contracts from some European quarters, it has more than offset them by moving swiftly to take advantage of the current favourable exchange rate to win new business.
“Ultimately, the level of innovation in the UK economy is enormous and we produce some of the best products, and we have some of the best people. We should make more of that, be more positive, and just go out and grab the opportunities.”
Reputation leads the way
And whether its goods or services, the UK has a positive reputation to build on. Plymouth's Princess Yachts are an example of a company that improved its fortunes by making more of its "Built in Britain" status to aspirational consumers overseas.
And Darren Baxter, Group CEO of warehouse management software firm Indigo, credits a similar appetite among foreign businesses for spurring his company’s success in Asia.
“There’s an insatiable appetite for importing cheap consumer goods produced by South East Asian companies, but when it comes to ASEAN firms buying B2B products and services, the reverse is true and ‘Brand GB’ is held in high regard,” he explains, pointing to fast-growing businesses “keen to adopt best practice”.
Indigo spotted the opportunity two years ago and started to establish operations there, initially setting up in the Philippines before expanding to Hong Kong and Singapore with dedicated subsidiary companies.
To expand in Asia, Indigo tapped into support from a range of places, including Invest HK, the British Chamber of Commerce and the CBI. Trade shows also formed a major part of the company’s research.
“Attending CILF (China International Logistics and Transportation Fair), one of the region’s largest trade events for the sector highlighted the fact that that few UK logistics software companies were actively targeting mid-range businesses in Asia and yet demand for our products and services would be likely to grow as the local economies grew,” he explains.
Taking part in trade missions to Turkey, Brazil, Colombia and Mexico has been important to Amino Technologies, says its Group CEO Donald McGarva. Dinners hosted by the embassies were a “great opportunity” for inviting and talking to potential customers. But this only works, he adds, if your senior people make the time to go themselves.
“Because you’re travelling with other people – and not necessarily competitors – on these trade missions, there is quite a sense of shared learning,” adds Newable’s Manson. “It’s very powerful in giving people the confidence to take the next step.”
Indeed Mash Direct’s Hamilton believes that peer support and sharing experiences has been key in helping the company expand – even if it’s just a matter of picking up the phone to other businesses from your office. “We’re all in the same boat – sometime literally, in that we’re shipping our goods together and hoping to consolidate to reduce costs.”
A helping hand?
But all of them believe the government could do more to help.
“If it’s the cornerstone of our Industrial Strategy to be strong through innovation and export, I think we’re hitting the right note on innovation but I think we’re far from getting it right on exports, especially for SMEs,” says Owen Mumford’s Severn. He points to the success of R&D tax credits for encouraging innovation, but wonders why there is no equivalent for exporting, which can be just as high-risk.
And for Hadley Group’s Ben Towe, there’s a reason why SMEs don’t all export: they need help to scale first. Yet he believes there is less support for medium-sized and large companies who could benefit from it more.
“Successive governments have announced countless small-scale export policies, leaving a plethora of support schemes and a patchwork of good intentions,” said the CBI’s Fairbairn. “Yet as Brexit looms, we need strategic direction, consistency, a common framework, in which firms know whom to approach, and what help they can expect.”
Government ramps it up
And the Department for International Trade (DIT) is listening. On 18 June, Secretary of State Dr Liam Fox joined the CBI’s inaugural International Trade & Investment Council, bringing together CEOs from some of Britain’s most successful international businesses to work with government to “get this right”.
And Baroness Fairhead, the Minister for Trade and Export Promotion, says the government is intent on ensuring British businesses are well placed to rise to the challenge of exporting – both with the EU and markets further afield.
She adds that it’s “critical” that the government’s Export Strategy should tie in closely to its Industrial Strategy. “The Industrial Strategy has already outlined the government’s long-term plan to increase the productivity and earning power of people throughout the UK, and the Export Strategy will aim to create the framework to support UK exporters to expand internationally on the back of this.”