Exporting is good for Britain but

Transcription

1 BUSINESS IS GOOD FOR BRITAIN Exporting is good for Britain but MARKET BARRIERS STIFLE OPPORTUNITIES Chambers of Commerce are recognised across the UK and around the world as leading supporters of international trade. Chambers deliver trade support and advice, as well as a range of specialist services, to businesses of all sizes in Britain s exporting community. Given the need to rebalance the UK economy towards exports to secure recovery and long-term prosperity, the British Chambers of Commerce (BCC) commissioned a major international trade business survey in Q to which 8,073 businesses responded. The survey clearly demonstrates that Exporting is Good for Britain. Since the BCC last surveyed Chamber s in 2011, the share of responding businesses actively exporting goods and services from the UK rose from just over a fifth (22%) to nearly a third (32%). Yet the survey also shows that a number of challenges, barriers, and obstacles remain. The BCC and the Chamber Network will be working hard over the coming years to overcome these obstacles, working closely with companies and with Government, and will help to unlock the potential of Britain s existing and future exporters. It is often claimed that growth of the UK s export sector is held back by a focus on traditional or mature markets at the expense of larger and faster-growing ones - especially in Asia. This survey confirms that the EU remains the most popular destination for UK exports and is also seen by many businesses as providing the greatest prospect for growth in the short term. Just under half of Chamber exporters see the large and faster-growing BRIC economies of Brazil, Russia, India and China as the best prospective markets for increasing business over the next twelve months. But there is a size-and-sector divide: large exporters that are part of an international group or supply chain and operating in the manufacturing and transport sectors are the most likely to perceive the BRICs as the best platform for growth. Micro and small businesses are much less likely to have penetrated these fast-growing markets, or see them as a route to future growth. And medium-sized businesses often seen as the foundation of Germany s export success are less optimistic than large ones about future prospects in markets such as the BRICs, Asia and the Middle East. Exporters perceive external barriers to market entry and to increasing sales volumes to exist across all export destinations. Regulatory differences are the most commonly cited but language and cultural barriers also feature prominently. In some markets, like Africa and the Middle East, political risk is the major concern. These influence decisions about when and where to export. Worryingly, exporters to the fast-growing BRIC markets are the most likely to encounter barriers that hold back sales. To support UK business expansion in these markets, the Government must press for greater progress on free trade agreements via the EU; and ensure publicly-funded support for exporters is targeted and not piecemeal. Closer to home, the Single Market must be deepened so UK businesses can more comprehensively and seriously treat the EU as its home turf. SKILLS SOCIAL CONNECTIONS RED TAPE MARKET OPPORTUNITIES MARKET BARRIERS TRANSPORT CONNECTIONS BUSINESS COSTS ACCESS TO FINANCE BUSINESS PLANNING PRODUCT MARKETS

2 MICRO AND SMALL EXPORTERS LAG FAR BEHIND LARGE COMPANIES IN ACCESSING GROWTH MARKETS Large businesses are the most active in fast-growing, non-eu markets 88 per cent of Chamber exporters currently export to the EU compared to 47 per cent for the BRICs and 55 per cent for other Asian and Middle-Eastern markets (including Thailand and Saudi Arabia) Nearly three-quarters of large exporters trade with BRIC, but only a third of micros are engaged in these large and fast-growing markets Large firms are also more active in trading with the Americas, CIVETs (Columbia, Indonesia, Vietnam, Egypt and Turkey) and in the Pacific To where do you currently export? 100% 80% 60% 40% 20% EU Member in Asia including the Middle East BRIC in Africa EEA outside the EU in the Americas Other in Europe (non-eea or non-eu s) CIVET in Oceania Large (250+) Base: 229 Medium (50-249) Base: 524 Small (10-49) Base: 903 Micro (0-9) Base: % 3%

3 Large businesses perceive greater opportunities for growth in the fastest-growing economies of Asia and South America Around two-thirds of large exporters see the BRIC economies as a top platform for export growth in the next 12 months, compared to around half of mediums and a third of micros For micro, small and medium-sized businesses, EU markets are seen to provide the greatest opportunities for export growth in the near term yet BRICs are now considered nearly as important as Europe by medium sized companies Which of these do you believe will provide your business with the greatest opportunities for growth in the next 12 months? 80% 70% 60% 50% 40% 20% 10% EU Member BRIC in Asia including the Middle East in Africa CIVET Large (250+) Base: 228 Medium (50-249) Base: 524 Small (10-49) Base: 902 Micro (0-9) Base: 812

4 PERCEIVED POTENTIAL OF NON-EU MARKETS UNEVEN ACROSS FIRM SIZE AND SECTOR Businesses that belong to an international group or supply chain are the most likely to see opportunities for growth in the fastestgrowing, emerging economies Exporters that are part of an international business group or supply chain are around 50 per cent more likely than those that are not to see the fast-growing BRIC markets as providing the greatest opportunites for growth Which of these do you believe will provide your business with the greatest opportunities for growth in the next 12 months? ALL Part of international business/ group/chain Part of an international supply chain Agent or distributor Importer None of these EU Member 53% 50% 49% 49% 58% 54% BRIC 44% 54% 54% 47% 45% 37% in Asia including the Middle East 37% 40% 41% 42% 37% 35% 31% 34% 26% 33% 32% in the Americas 20% 22% 22% 18% 17% 21% in Africa 20% 23% 22% 24% 19% 18% CIVET 12% 15% 17% 15% 12% 10% EEA outside the EU 11% 15% 17% 16% 17% 9% Other in Europe (non-eea or non-eu s) 11% 11% 14% 15% 16% 10% in Oceania 4% 5% 5% 5% 4% 4% None of these 3% 2% 4% 4% 4% 4% Base: The transport, manufacturing and education services sectors are the most enthusiastic about opportunities for growth in developing economies Over half of the education services exporters surveyed see in Asia and the Middle East as a strong platform for growth over the next 12 months Over half of manufacturers and transport service exporters saw the BRIC economies as offering strong growth prospects over the next 12 months Which of these do you believe will provide your business with the greatest opportunities for growth in the next 12 months? ALL Agriculture, forestry, fishing, mining, energy, utilities Arts, sports and recreation Catering and accommodation Construction Education Health and social care services IT and telecommunications services Manufacturing Media and creative services Transport and related activities Professional and business services Retail, hire and repair Wholesale EU Member 53% 36% 53% 74% 37% 43% 44% 51% 55% 63% 48% 56% 58% 60% BRIC 44% 43% 34% 44% 39% 46% 26% 24% 51% 28% 55% 39% 25% 39% in Asia including the Middle East in the Americas 37% 46% 31% 26% 42% 51% 41% 38% 20% 35% 34% 24% 38% 31% 28% 38% 40% 24% 20% 26% 41% 34% 44% 29% 31% 25% 29% 20% 26% 22% 16% 15% 16% 11% 27% 22% 22% 24% 19% 13% 11% in 20% 32% 13% 9% 24% 27% 19% 19% 18% 9% 24% 19% 15% 23% Africa CIVET 12% 17% - 5% 7% 16% 7% 11% 14% 4% 18% 10% 5% 8% Base

5 EXPORT SALES HINDERED BY BARRIERS TO GROWTH IN THE FASTEST-GROWING MARKETS Exporters to BRIC are the most likely to report that they experience market barriers that constrain sales 63 per cent of businesses that export to the fast-growing BRIC economies claim to experience at least one barrier that contrains sales Proportion experiencing at least one stated market barrier (regulatory environment and differences in standards, tariffs, enforcement of legal rights and protections - including contracts and intellectual property rights - language and/or cultural differences, political risk, overseas public-sector procurement rule): BRIC 63% in Africa in Asia including the Middle East 53% 56% CIVET 48% in the Americas 38% EU Member Other Europe (non-eea/eu s) EEA (non-eu s) in Oceania 28% 26% 24% 23% Base: Exporters 435-2,099 Across most markets, the most commonly-cited barrier to increasing sales is the regulatory environment and differences in standards The regulatory environment and tariffs are the most common barriers for exporters in increasing their sales in BRIC, but political risk is seen as a far greater barrier in in Africa and the Middle East Despite the Single Market, exporters still report significant regulatory and cultural concerns when operating in Europe 40% Which, if any, of the following barriers affect your ability to increase sales in the markets you currently export to? 35% 25% Overseas public sector procurement rules Political risk Language and/or cultural differences Enforcement of legal rights and protections Tariffs Regulatory environment and differences in standards Base: % 15% 10% 5% BRIC in Africa in Asia including the Middle East CIVET in the Americas EU Member Other in Europe (non-eea/eu s) EEA (non-eu s) in Oceania

6 MARKET BARRIERS HOLD BACK EXPORTERS FROM ENTERING NEW MARKETS Market barriers influence the decision to enter new markets across all potential export destinations Around half of exporters indicate that at least one of the listed barriers influence their decision on whether to export to / do business in Africa or BRIC for the first time Barriers to entering new market (regulatory environment and differences in standards, tariffs, enforcement of legal rights and protections - including contracts and intellectual property rights - language and/or cultural differences, political risk, overseas public sector procurement rules) Proportion indicating reservations of entering new markets in Africa 48% BRIC CIVET in Asia including the Middle East in the Americas EU Member EEA (non-eu s) in Oceania Other in Europe (non-eea/eu s) 28% 28% 27% 26% 43% 42% 35% Base: 254-1,686 47%

7 Barriers to first-time entry are seen by exporters to be lower in traditional destinations for exports Regulatory Political risk is seen as the greatest barrier to market entry if exporters were to consider trading with in Africa (cited by 31 per cent of exporters) Differences in language and culture are seen as the most influential factor in the decision to enter BRIC markets (cited by 20 per cent of exporters) and legal barriers are seen to be far lower in Europe as would be expected but still indicate some concerns on the part of would-be exporters, suggesting that more needs to be done to reinforce the Single Market Which, if any, of the following barriers affect your decision on whether to enter a new market for the first time? 35% 25% Overseas public sector procurement rules Tariffs Enforcement of legal rights and protections Regulatory environment and differences in standards Language and/or cultural differences Political risk 20% Base: 254-1,686 15% 10% 5% in Africa BRIC CIVET in Asia including the Middle East in the Americas EU Member EEA (non-eu s) in Oceania Other in Europe (non-eea/ EU s) BCC RECOMMENDATIONS Press for full implementation of the EU s Single Market Act so that UK businesses benefit from a deeper and wider single European market While The regulatory barriers are seen as lower than for other parts of the world, British business must be able to treat Europe as its home turf and reap the benefits of a Single European Market of 500 million consumers. The UK and other European governments must speed up the implementation of the priority measures launched in 2011 by the European Commission (the Single Market Act). These include measures to boost e-commerce by making it easier for businesses to transact securely online; to make it cheaper for innovative companies to obtain an EU patent; and to make it easier for SMEs for bid for public contracts across the EU. BCC has developed an eight-point plan to re-invigorate the Single Market and make it work better for businesses looking to export, including the creation of a digital single market; making a reality of the internal market for energy; and deepening the single market in services. (See

8 BCC RECOMMENDATIONS Open up new markets through free trade agreements There is a clear relationship between the volume of UK exports to overseas markets, and the formal legal agreements that underpin trade. SMEs in particular, which lack the resources of larger companies, would benefit from breaking down the tariffs and bureaucracy of markets that are not currently covered by free trade agreements with the EU. The Government s European efforts should continue to focus on concluding trade negotiations, including bilateral free trade agreements with India and Japan and further liberalising trade in services with the United States; in particular the UK and EU should use the G8 meeting in May to launch negotiations with the US on mutual recognition in particular. Re-establish foreign languages as core subjects within the UK national curriculum and in workplace training Differences Businesses in language and culture are seen as important barriers to entering fastgrowing markets like the BRICs, Asia and the Middle East. There needs to be a fundamental reappraisal of the importance of language learning to Britain s future competitive position and business success. The National Curriculum must be revised so that studying a foreign language is compulsory until AS level. It is important to ensure that the next generation of business owners are born global with language skills. must also invest in language skills for their existing staff. Additional financial incentives, such as tax credits for small and medium-sized businesses that make a significant investment in language training, could support both take-up and ensuring a tailored business language offer. Better target support for exporters to address the size and sector divides in accessing the fastest-growing markets Businesses As Additionally, that export to the fastest-growing markets are the most likely to encounter barriers that hold back sales. This partly explains why there is a size divide in these markets: smaller businesses have fewer resources to overcome these obstacles. But mid-sized businesses, often seen as the foundation of Germany s export success, are also less optimistic than large ones about future prospects in the BRICs and other markets in Asia and the Middle East. While some sectors like transport, manufacturing and education services see potential for growth in the fastest-growing economies, others are more reticent about doing business there. it seeks to expand its reach from 25,000 to 50,000 SMEs over the coming months, UK Trade & Investment (UKTI) and its partners, including Chambers, must work to address the reticence of some sectors and size groups to consider trading in new markets. Chambers of Commerce as a leading source of private-sector trade support, must help local companies to build up intercultural skills and the confidence to trade in new and unfamiliar markets. The BCC is the national body for an influential network of 52 Accredited Chambers across the UK. Representing 100,000 businesses, who together employ more than 5 million employees, the BCC is the Ultimate Business Network. No other business organisation has the geographic spread or multi-size, multi-sector ship that characterises the Chamber Network. Every Chamber sits at the heart of its local business community, providing representation, services, information and guidance to businesses and the wider local business community. FURTHER INFORMATION MIKE SPICER Senior Policy Adviser British Chambers of Commerce 65 Petty France, London, SW1H 9EU T E m.spicer@britishchambers.org.uk Other factsheets in the series are available at