They say that every cloud has a silver lining. Given the economic landscape, silver linings seem to have been in short supply lately. However, there are a number of indicators which suggest that UK companies will emerge stronger from the tough environment in which they currently find themselves.
During the last recession the finance director of a large manufacturing company surprised me when he indicated that the recession was in fact good for the exporting side of his business. He explained this by saying that, in ‘normal’ times, many countries tend to follow nationalistic tendencies in their purchasing habits and buy from producers in their own countries, even where the home-grown products are of inferior quality and higher cost. In recession this favouritism for local suppliers has to be replaced by cold, hard commercial reality – buyers are more driven by simple issues of price, service and quality. This potential levelling of the playing field can mean that markets which are normally difficult to break into can suddenly open up, particularly for the right products supplied in the right way and at the right price. The point we have reached in the cycle suggests that now is the time for exporters to exploit these opportunities where they can find them.
Road to success
The report of the Select Committee of the House of Lords “Roads to Success: SME Exports” was published earlier this year. The report makes 23 recommendations, all of which provide interesting insights into the challenges still facing SMEs in driving through greater volumes of exports.
The recommendations which are of particular note are those which relate to improving information available to companies which wish to export, simplifying the sources of assistance to SMEs and helping improve skill levels within sales functions.
The report’s recommendations include the following:
- Once a company is in a position to export, they then need to develop practical skills for exporting, including for example, understanding financial requirements, how to bid for finance and how to complete an export certification application.
- Trained staff are typically found only in larger companies, while smaller businesses rely on experienced staff who approach exporting in the way they have done for many years. For the export potential of these companies to be realised fully requires a change of approach which is brought about with professional training and access to high quality advice.
- The committee recommends that Local Enterprise Partnerships and UK Trade and Investment should be required to work more closely together to identify challenges to exporting and to raise awareness of UKTI’s products and services. Whilst this is something of an admission that there has been poor co-ordination in the past, and it is likely to take some time to implement, some initiatives are already work in progress which should hopefully gather pace in the forthcoming months.
- Organisations which have close links with SMEs, such as Chambers of Commerce, should consider as a priority attracting more SMEs into their organisations so that increased help can be given to exporters. Chambers of Commerce have a potentially important role to play here.
Of particular interest is the new service which is being piloted by the West Midlands Chamber. In a highly proactive initiative, the service can produce all documentation needed for any international shipment and provide specialist expertise to handle such diverse matters as letters of credit, translation services, online credit checks and cargo insurance. The scheme has the potential to not only explain the issues involved but to produce the necessary documentation by entering the data just once. When entered on the system the documents can be shared with, and collected by, the overseas customer or printed and sent to the bank or other third parties as necessary.
This is exactly the sort of help that prospective exporters need and which the Select Committee would approve of. Hopefully the pilot scheme will be a success – it certainly deserves to be – which can then be rolled out by Chambers across the country. The scheme shows that high-level policy is now beginning to filter down into positive action. It may well prove to be another silver lining.