Exports by SMEs are making a positive contribution to narrowing the UK trade deficit, and more growth is set to come, according to new research published today by FedEx Express.
The research, released as part of the second annual FedEx Great British Export Report, shows that while the country’s overall deficit stands at around £2.8 billion, British small- and medium-sized enterprises are helping to counteract this.
More than half (53%) of all British SMEs currently export, and almost three-quarters (72%) believe their international revenues will increase in five years. The main goods are technological equipment, industrial goods, fashion/textiles and food/beverage.
A key finding is that the financial value of exports exceeds that of imports for Britain’s SMEs. The average SME exports £553k a year to Europe and imports £535k, an average net surplus of c. £18k for those SMEs exporting to Europe. The average SME exports £714k a year outside of Europe but imports just £410k, an average net benefit of c. £304k for those SMEs exporting globally.
“British SMEs are a driving force in improving the economy,” said Trevor Hoyle, vice president, Northern Europe Operations, FedEx Express. “The report shows that SMEs recognise how lucrative exporting can be for their business and as a result more are going global, actively helping to reduce the deficit.”
Over the last year, exporting SMEs have gone from strength to strength and the number of those exporting at least 20 shipments per month to Europe has risen from 40% last year, to 69%. Whereas in 2014, 43% of SMEs who exported within Europe exported more than £5,000 per month on average, this figure has now increased to 64%. The rise in value of exports to outside of Europe was from 37% to 57% when measured on the same metric.
Hoyle continued: “The SMEs we help to go global are talking to us with a real sense of positivity and they understand there’s a whole world of customers out there to tap into.”
For some smaller businesses, however, concerns do remain. The report shows the perceived most challenging markets to enter include the US, Australia and China, and 58% still feel they need more support to go global – whether from trade bodies, the Government, or logistics providers. When asked, just one in five SMEs considered reaching new markets as “critical to success”, suggesting that many remain unconvinced of the opportunities others are enjoying.
The research also showed that, while British SMEs are tending to export farther afield than a year ago, the majority continue to export to English-speaking countries or the closest localities rather than high-growth markets. Nearly all (96%) exporting SMEs do so to Europe, while 35% do so to the US. But just 4% currently exports to Brazil, and even less than that to Mexico and Indonesia, despite their fast-growing economies and large populations.
The top European export markets for British SMEs are France, Germany, Spain, Ireland and Italy, while the USA, Australia, Canada, China and Japan lead the overseas ranking.
Among the main barriers to exports are costs, currency exchange concerns, payment worries, lack of physical presence and language issues, according to the survey results.
“The Great British Export Report shows that exporting outside of Europe can be even more lucrative, but many businesses are yet to realise this, or are still reluctant to go too far out of their comfort zone,” concluded Hoyle. “But these are the markets of the future, and those who act now stand to make the biggest gains. Ensuring our businesses have access to the right support and expertise is absolutely crucial for to helping them to grow and prosper.”
