How SMEs can best tap into opportunities overseas

Martin Davidian, Managing Director, Sales, UK North and Ireland, FedEx Express
Martin Davidian, Managing Director, Sales, UK North and Ireland, FedEx Express

Led by a government drive, exporting has been steadily creeping up the news agenda and now sits at the top of ‘to do’ lists of businesses of all sizes. The message is clear: to achieve fast and sustainable growth beyond an individual and national level, businesses need to proactively enter new markets. But, with a whole world of opportunity: where to start?

Most small and medium sized enterprises (SMEs) – whether young or established - would be wise to consider markets outside of the UK. Yet knowing where to start can be challenging as it very much depends on the sector you’re trading in and what your company is looking to achieve in the short, medium and long-term.

Traditionally, the UK tends to export to mature markets close to home, such as France or Germany, but it’s easier than ever to tap into less-known markets further afield. That’s where building a strong network of trusted and supportive partners who are experienced in trading internationally come into play, to improve the chances of success. With this network in place and an indefatigable can-do attitude, British businesses have a big opportunity to become world-renowned in any number of different sectors.

At FedEx Express we often speak with businesses shortly after they receive their first order from overseas. These businesses haven’t necessarily gone looking for international clientele but, in the digital age, they’ve been offered a fantastic growth opportunity on a silver platter.

Of course they want to make the best of the opportunity, and are pleased to learn there is a wide range of support available, from everyone from UKTI, to logistics providers. One of the key pieces of advice we offer is to explore the market in that country to gauge if there is further growth potential. This doesn’t have to involve a major financial investment, as jumping on a plane can be enough to gauge main competitors, market share and price points, and teamed with local support and data insights can provide a much clearer picture of the opportunities available. Even just using the internet to research important market information is a great place to start.

To help businesses in the healthcare, hi-tech and fashion sectors, we’ve drawn on our years of exporting experience to detail the markets of opportunity, as well as advise on overcoming the main challenges.

1 Healthcare advice

The majority of UK healthcare companies already require a global mindset given the nature of the industry’s supply chain, making global expansion a more logical and instinctive move than in some other industries.

It’s vital to embrace the potential to expand your international presence – companies who do so can achieve fast and sustainable growth by tapping into new markets, as well as identifying new global supply sources and manufacturing geographies. The key is to explore where the strongest demand exists for your products and/or services and to be as flexible as possible when entering new markets, staying fully informed of the potential complexities of this innovative and ever-changing sector.

When exporting, specific clearance and regulatory requirements should be identified, understood and factored in, and note that these can change at an alarming rate depending on which market is being entered. Make sure you gain clearance up front and ensure full descriptions of pharmaceutical products being transported are given to ease the process.

There are several “fruitful markets” for healthcare companies at the moment. Dubai, for example, is a very healthcare-focused city-state with many people traveling there for treatment from overseas. Japan and Korea are also worth considering as their respective Governments are investing a great deal in the private healthcare sector, diversifying the market and inspiring growth[1].

Elsewhere, China is the third largest healthcare market in the world, seeing growth in double-digits,[2] and simply cannot be discounted. You’ll need to bear in mind that China is well-known as an attractive market and that you may face stiff competition from other UK and European firms, as well as potentially stringent regulatory barriers which will need to be carefully investigated and fully understood. Healthcare markets in both Brazil and India are also both booming[3], with increased amount of potential for UK companies to explore. Although complex from a regulatory perspective due to dangerous goods complexities and import clearance processes into these markets, it is worth considering as the rewards could be plentiful. With Brazil the fifth largest country in the world based on area and population, it’s a market definitely worth considering[4], however worth noting all shipments to Brazil containing products for resale do require the recipient to engage a broker for the clearance process

In all of these markets, having a thorough understanding of the culture and its approach to doing business is vital. While things like business etiquette may seem relatively minor, not following the correct protocols could be a deal-breaker. That’s why it’s a great idea to speak with a logistics provider that specialises in the country as this will give you on-the-ground insight.

If transporting human or animal materials/samples then you will require precise commercial invoices that outline the source material and the reason the item is being shipped; research, development and diagnostic use are most common. Items used for treatment will also require pre-market approval from a nation' sanitary or healthcare regulatory body as do any medical devices. It’s also worth considering if your human products are regulated by the Human Tissue Authority or whether your animal-based product needs an export health certificate, or require specific regulatory checks at first port of entry, such as a phyto or veto-sanitary inspection.

Healthcare and pharmaceutical products often require a sanitary permit and you may need the recipient to sign before accepting. In many countries, for example Italy, there are specific healthcare processes compared with those in the rest of the EU and at FedEx, we have the ability to provide insight to handle procedures of this nature – making sure the correct import licences are in place.

2 Hi-tech advice

If you are trading in automotive parts or other hi-tech goods then understanding the prospects and where the main manufacturing bases are in the world is important. Gauge if it’s worth producing a part of your product or its entirety overseas or whether domestic manufacturing and consequent exporting is worthwhile in terms of potential cost. Outsourcing business or IT services by implementing a near-shoring model is also worth considering. With near-shoring in Eastern Europe currently booming[5], businesses should reflect on the mutual benefits that can be gained.

If you do decide to manufacture overseas, it is wise not to choose a country but to pick a supply chain where it is cheaper and more economical to build. The hi-tech sector is defined by its research and development and considering some of the world’s most technologically advanced nations including China, Singapore but also the Netherlands is a good place to start. This is because these nations have established and accessible infrastructures in place that can help you get to market as quickly as possible. That said, emerging markets in Brazil and India are rapidly coming to the fore and offer a very viable alternative to the established markets. Don’t forget to take the fact that British-made products are often held in high esteem into your decision.

When it comes to exporting hi-tech materials or products, make sure the value of the shipments are declared. If a hi-tech product is shipped complete, a list of parts is unnecessary. If it is incomplete then parts should be identified by their individual part name and value. That said, it should also be communicated if the assembly of a product differs to the origin of key components and can be depicted as: manufactured in UK, assembled in China. The country origin of each part must be communicated and is usually determined by the location the last major operation was conducted.

Fashion advice

By capitalising on the growing appeal of “Brand Britain”, the UK fashion industry has already seen huge growth from e-commerce. In the fast-fashion age, an efficient supply chain is absolutely invaluable in getting the latest designs to market quickly, both at home and overseas.

Building on this mounting interest in British labelled clothing, first time apparel exporters should consider exploring European markets as a first step. Given the current Free Trade Agreement and short transit time, it is a natural first step to take.

Further afield, the US is the fruitful market to enter and it is worth taking note of the fashion hubs – New York and Los Angeles[6] – and targeting accordingly. When entering any market, consider the price point carefully. If you are exporting to a market with a taste for high-end fashion such as the UAE, consider your value proposition before getting started.

The quality of British products is important and even if manufactured in India and transported back to the UK before being sent to the US, or equivalent, this should still provide huge appeal. You may even consider building Britishness into your branding, for example by sewing a “made in Britain” tag onto each garment.

It’s vitally important that you take customs clearance into careful consideration. For example, you will need to declare the exact textiles used to create each garment based on their percentage by weight; the stitch count should be considered for knitted garments; gender, construction and garment design also play their part. Additionally, consider how to receive the duty and tax on each product as there are certain complexities in Canada and limitations regarding exporting apparel to the US given the complex paperwork required. This includes only allowing up to 800USD worth of goods to be transported to an individual per day[7]. Customs can be fiddly, but with support and guidance from the right expert, can actually be quite easy to manage.

[7] John Stoten, Global Clearance Solutions Specialist – Senior Clearance Solutions, FedEx Express Europe, April 2016