The latest round of data from the Office of National Statistics on the performance of the UK’s export market has indicated that the trade deficit narrowed in May – helped largely by a boost in exports of 6.6 percent. The data also indicated that exports to non-EU countries saw a significant increase – suggesting that UK businesses are starting to find work arounds to the Eurozone worries in search of growth. As the UK begins to trade its way out of recession, Neil Kuschel, Sales Director, DHL Express UK & Ireland
looks at the way ahead.
With the world’s eyes on the UK this summer, targeting countries with an appetite for ‘Brand Britain’ is a good way to identify markets to kick-start exporting programmes. With positive export data and the onset of the summer’s events, businesses should feel confident about ongoing trading conditions.
To get started straight away though, businesses should consider researching the markets currently reporting growth, or being predicted as having great growth potential, such as the BRIC nations, Brazil, Russia, India and China. Economists argue that the BRIC markets could become larger than the world’s current six most developed countries in less than 40 years and with the added benefit of falling outside of the Eurozone troubles, these markets make a wise starting point for fledgling exporters. DHL has put together its key insights for exporters planning to commence trading with these booming nations.
Although internet penetration in Brazil is about 40% of the population, users have placed Brazil in the top three countries that spend the most amount of time online, meaning that e-commerce entry might be the most strategic for an SME. Although consumer purchasing in Brazil has become more cautious, the middle class now represents more than 50 percent of the 185 million Brazilian population, meaning that there are still significant purchasing opportunities for businesses looking to target that market.
Businesses looking to trade with this nation should be aware that in Brazil business is seen as personal – so people are just as important as profits. For this reason, businesses are encouraged to initiate trading through a local contact, known as despachante – who can become an advocate for the business and introduce you to the right people.
Russian audiences have a significant appetite for international brands, particularly in the luxury sector - presenting opportunities for retail businesses looking to import. The Federation of International Trade Associations
(FITA) notes that Russia is open to foreign trade in spite of strict legislation and tariff policies - it is among the 20 largest importers in the world. Recent reports indicating that Russia’s economy has grown by 4.4% over the last six months should encourage exporters. The Russian ministry is set to revise the country’s growth forecast for the rest of the year as a result
Roughly a third of the size of the United States but home to one sixth of the world's population, India clearly is a country that’s young in more ways than one. 40 percent of India is under 19 (the median age is 24), meaning that it’s a fruitful place for businesses targeting the youth sector. Reforms over the last decade include increasingly liberal foreign investment and exchange regimes, industrial decontrol, reductions in tariffs and other trade barriers, the State Department reports, all of which pave the way for UK importers hoping to target that market.
If your business dealings in India involve negotiations, always bear in mind that they can be slow. Indians do not base their business decisions solely on statistics – instead they use intuition, feeling and faith to guide them. Always exercise patience, show good character and never exhibit frustration or anger.
With a population in excess of 1.3 billion people, China is home to the world’s single largest consumer market—a market that represents approximately 20% of the planet’s population. The country has formally joined the World Trade Organisation
and as part of this far-reaching trade liberalisation agreement, China has agreed to lower tariffs and to abolish market impediments, the U.S. Department of State
Despite witnessing an apparent ‘economic slowdown’ with latest figures indicating China’s Q2 GDP growth
is at 7.6 percent - it’s worth highlighting that this figure is still remarkable when compared to the performance of any other global market. In fact, with a combined strategy of an expansionary monetary policy and investment led stimulus, China has seen year on year annual growth of 9% throughout the recession. Recognising the great potential, DHL recently invested $175 million in opening a North Asian Hub at Shanghai Pudong International Airport
to facilitate the movement of goods in and out of China.
While the tips highlighted above should put you in good stead, you should plan to carry out further, in-depth research before beginning to trade with any of these markets. Other considerations may include factors such as exchange rates, customs charges, taxes and business regulations, as well as linguistic or cultural differences and levels of demand for your products or service – all of which can impact your business relationships and the success of overseas trading.
Fortunately, there are plenty of resources available to help business navigate international trade, for example UK Trade & Investment
(UKTI) which offers a range of services for UK exporters, including a flexible business tool called the Overseas Market Introduction Service
(OMIS). The British Chambers of Commerce
(BCC) also offers export training services.
Exports account for 60 per cent of the country’s productivity growth; with a considered, well-planned export strategy, there is little reason why your business cannot join the businesses reporting export growth from the last quarter and achieve success internationally.
Neil Kuschel, Sales Director, DHL Express, is responsible for overseeing sales in the UK, particularly within the business and SME sector. He has previously worked out of DHL’s Sub Saharan Africa (SSA) head office in Cape Town, South Africa where he was responsible for the strategic development of sales, marketing and customer service functions for 49 countries in that area. Kuschel is now focused on giving guidance to SMEs on issues such as importing, exporting, emerging markets, customs regulations and cultural differences - all of which can impact the smooth running of the business.