Shifting export focus from the EU to emerging global markets is the way to flourish in these uncertain times, says Siddharth Shankar
With the lack of a deal for the UK in time for the Brexit deadline looking increasingly likely, it’s very easy to become gloomy about the economic prospects in a post-Brexit landscape.
There is some good news amongst all the gloom, however: exports.
The most recent figures from the Department of International Trade show that in the year to March 2018, exports of UK goods and services rose to £620.2 billion – a record high. International Trade Secretary Liam Fox believes that “there is every reason to be optimistic [about UK trade],” and has pledged to transform the country into a “21st century exporting superpower” to boost exports to 35 per cent as a proportion of GDP.
‘It is vital that SMEs starts looking for new export partners outside of the EU’
While there is obvious scepticism about this approach, there’s no denying that thinking outside of the EU box can lead to some exciting opportunities for UK businesses. At the moment, around half of the UK’s exported goods go to the EU. There will still be an appetite post-Brexit for British goods in the EU, and large British businesses should be able to absorb the implications of any new export regulations without too much hassle, but SMEs may well struggle with the extra costs and red tape, making it vital that this size of business starts looking for new export partners outside of the EU.
One obvious candidate are the Asian markets. With 4.6 billion people, Asia represents 60 per cent of the world’s total buying power. It has the fastest-growing middle class of the world, who have much more disposable income than ever before. There’s also a strong appetite for UK products in the Asian markets, which is partly due to the Commonwealth links. Research by Barclays Corporate Banking revealed that 64 per cent of consumers in India, 57 per cent in China and 48 per cent in the UAE were prepared to pay more for UK-made goods because they perceive the quality to be higher.
This is the ideal market for UK businesses to look to for new export partners. In fact, this is already happening – UK exports to India grew by 31.8 per cent and to China by 15.3 per cent in the year to March 2018. Having up to date knowledge about the legal and cultural differences of trading in these countries, however, is something that many SMEs may feel overwhelming. Therefore, if the government is serious about becoming an exporting superpower, it needs to be supportive towards SMEs to help them explore these new markets. From practical things, such as ensuring goods reach their destination on the other side of the world punctually, to more complex issues such as helping SMEs to improve their knowledge of the overseas market to avoid cultural, legal or economic misunderstandings, there are lots of ways that the government can facilitate these new relationships and help SMEs flourish in a post-Brexit marketplace.
There’s huge potential – the government estimates that over 400,000 UK brands and small business could export products which carry the value and heritage of Great Britain.
So, while Brexit is a challenging and uncertain time, it’s also an opportunity to forge new international relationships and make sure that brilliant British products are finding new and appreciative audiences all over the world.
Siddharth Shankar is an expert in trading with Asia and CEO of Tails Trading, trading platform helping UK SMEs to export their goods to Asia