Margot James & Nick de Bois MP: Why exporting is good for Britain

Now has never been a better time for businesses to get exporting, with the economy on the up-swing and business confidence on the rise.

Politicians are unanimous on the need for businesses to be ambitious and think international for growth. Tory MP Adam Afriyie wrote for us that it can be a risky business but the potential rewards could help secure the UK’s “political and economic future”.

In keeping with the export theme, we asked two MPs to write for LondonlovesBusiness.com who are passionate about trade and exports. Both are London MPs and former businesspeople.

Read on for what they have to say.

Margot James MP
Margot James is MP for Stourbridge, aide to trade minister Lord Green and chair of the All Party Parliamentary Group (APPG) for Trade and Investment.

I set my own business up and ran it for fifteen years before selling it to WPP in 1999. After I sold it and completed the standard ‘earn out’ phase WPP offered me the opportunity to head up their network of specialist healthcare communications consultancies across Europe.

The network had sales of approximately 50 million Euros and we were represented in 14 countries. This was my first consistent experience of international business and I found it very absorbing. The network allowed us to win more global business from pharmaceutical companies in the US and Japan as well as those companies headquartered in Europe.

It stands to reason that if you think of your market as extending well beyond this country, you can build a much bigger business than you can by sticking to the home market. Too many SMEs do just that in the UK. Only 20% of our SMEs export compared to an average of 25% (and more in Germany) across Europe.

The All Party Parliamentary Group on Trade & Investment, which I chair, commissioned the Institute of Directors to undertake research in to attitudes to exporting among SMEs. The research found that although 82% of exporters sell to fellow member states of the European Union, business there had declined by about 10% since the start of the crisis in the Eurozone.

Forty seven percent of respondents told the IOD that the area they expected the biggest increase in sales from this year was Asia. So the APPG organised a trade mission to Singapore and Indonesia in March of this year. We took companies from two sectors with us; firms engaged in the creative aspects of infrastructure and educational institutions.

We discovered a huge opportunity for Britain to export educational services throughout the ASEAN region. We met the Indonesian trade minister, Gita Wirjawan, who summed up his country’s need for education with the words “we don’t want our kids to be selling coal and palm oil”

More than half of Indonesia’s population is under the age of thirty. They are hungry to learn but, according to Balfour Beattie who we visited in Jakarta, are largely unskilled. There is a need for government, the private sector and foreign providers to invest heavily in new standards and vocational learning for those sectors that have been identified as having high growth potential. For example infrastructure, oil and gas, and ICT. Britain is recognised as a world leader in education and should benefit from the undoubted need for more vocational as well as higher education.

The new and booming middle class in Asia also provide a huge opportunity for luxury goods and services. Although manufactured goods will remain crucial, the market for legal, financial and property services is growing rapidly and these sectors are areas in which London has a significant comparative advantage.

Mr Wirjawan also said that “the Japanese and the South Koreans are successful in Indonesia because they come and set up shop here.” That is just what Prudential did a few decades ago and their office in Jakarta has just closed a record year of growth in the insurance premium market. The proportion of profits likely to be returned to the city of London from the Pru’s Indonesian office is valued at £120m this year.

I came away from Indonesia and Singapore thinking that if I had my time in business over again, I would make sure I had operations in those markets capable of leveraging the immense opportunity that exists there.

The main reason I would have the confidence to do that is the excellent support provided by UKTI. The passport to export programme would be my starting point, that you can do right here in London and it gives you the nuts and bolts of selling abroad. Once you have completed this stage UKTI will provide your business with one Overseas Market Introduction Service free of charge (you can purchase more of these if you wish to look at different markets). You are then ready to get the help UKTI and the British Chambers of Commerce abroad in your priority markets.

When I was in business it never occurred to me that the Government might actually be able to help. Well, things have changed, because through UKTI and the Foreign Office there is certainly a great deal of help for the first time exporter in 2013.

Nick de Bois MP
Conservative Nick de Bois is deputy chair of All Party Parliamentary Group (APPG) for Trade and Investment, and MP for Enfield North.

If you are working in or running one of London’s reported 805,085 SME companies, I want to share something with you: the future of the UK economy lies with you.

There, simple – that’s the economy’s problems solved. We can all look forward to years of sustainable growth as part of a balanced economy now that you know that!

Well, fair enough – that’s a touch flippant, but I suspect when you have found time to read or listen to the news you will have seen many commentators express a similar view: that SMEs are best placed to drive recovery in the UK via an expansion of export markets.

Those commentators are right, the opportunities for SMEs to get involved with exporting are tantalising for all entrepreneurs and rewarding for the wider UK economy. That’s why the Government’s policies are focused on helping break down the barriers to exporting and promoting opportunities.

While the potential in this field has been widely recognised, the UK still has much to do and the backdrop of weak economic growth creates a new sense of urgency.

We are well below many of our European partners in the share of SME exporting companies; and yet research continually highlights the extra potential available for SME exports to stimulate growth and how it can strengthen your business.

In 2012, multiple reports called on UK businesses to exploit the country’s strong brand and world class reputation to export to businesses and consumers around the globe. I have visited trade shows and joined delegations and witnessed this salesmanship myself.

Not to mention the 25 years I spent building and running my own company in the events industry before entering Parliament.

When I first entered the export market, it was in response to the first export order which had been placed with the company, not because we were looking for it, it came to us. Until then, I had made the mistake of assuming the barriers to exporting were too daunting and that my efforts were better off back in the UK in a more familiar, but ultimately saturated domestic market.

When I eventually took the plunge on the back of my first overseas order, there was little help and advice around from the government. Whilst that is certainly not the situation today, the challenges exporters face remain much the same as they did then. The barriers to export vary from region to region, including worries over how to develop contracts, difficulties in arranging local banking needs and possible customs and bureaucratic delays in addition to potential language issues.

As someone who remains deeply sceptical of Government departments’ effectiveness, I was dubious as to what the BIS (Business Innovation and Skills) department could do to help new and existing exporters. The unit responsible for this within BIS is the UKTI (United Kingdom Trade & Investment division). In my day, its equivalent body underperformed and under achieved but things have improved since 1990. And so they should have.

Because the UK Government is seeking to drive up SME exports they have increased availability of export finance and also provided additional funding for UKTI. At the same time, the Foreign and Commonwealth Office has a stated aim of improving “commercial diplomacy and economic expertise” which will expand the UK’s reach and resources in some of the fastest growing regions around the world.

So if you are one of the 50% of Londoners who work in or run an SME the multiple export opportunities are there and may suit your business; the support and advice is available if you want it.

It could be good for you, and good for Britain.

London Loves Business

 

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