Strategy: global trade

Global trade: for businesses great and small

Trading globally is not just for the big multinationals, says Linda Kozlowski, director of Global Marketing and Customer Experienceat Alibaba.com.

 

There is a common misconception among small and medium businesses that exporting globally is only for big international companies that have the capacity and connections to secure and administer major deals. Small businesses often don’t consider trading globally as they feel they are unable to compete with large, well-established companies. However, advances in technology, communications and logistics are such that businesses of any size can now access international markets and a vast range of untapped buyer groups with relative ease. Central to this is the internet, which has revolutionised the ease of importing and exporting, providing a place where all businesses can reach out to one another, connect and trade securely.

Over the next five years the UK government has pledged to put small businesses at the forefront of its plans to support international trade and aid economic recovery in the UK—including the UKTI and the Foreign & Commonwealth Office seven-point charter to champion UK businesses overseas and attract investment into the UK. Given the continued slow growth and suppressed demand domestically, these incentives present a golden opportunity for British small businesses to embrace the global market.

We recently found that approximately 80 per cent of small businesses in the UK are failing to make the most of overseas opportunities, with more than a quarter considering themselves too small to trade with partners based outside the UK (according to research conducted on behalf of Alibaba.com by Trends Research on a sample of 1,400 UK small businesses during August 2010). Even among well-established smaller companies, simple lack of experience is often cited as a key barrier, in addition to issues such as language differences.

In August this year we conducted a survey of 100 UK small and medium businesses to gain insight into some of their specific concerns when it comes to exporting. It appears that cultural differences and geographical distance play a key role in influencing business decisions, with around 85 per cent of respondents saying that they would not feel confident exporting to Asia—twice the number who were reticent about dealing with Europe. While by no means insurmountable, these problems highlight the need for enhanced advice and education for businesses and serve as a reminder for the government to widely communicate the help that is already available. 

There is certainly no shortage of demand for UK exports in the current marketplace, with Alibaba.com trade figures showing metals, food and beverage and automotive items to be particularly popular with global buyers. In April, May and June of this year the most active export markets for the UK were India, China and the US, while closer to home Turkey, Egypt, Greece and Italy showed growing interest in UK export products. It is important that UK businesses continue to build upon strong trade relationships with established markets, while seeking to be more ambitious in branching out to new and emerging regions. User statistics from Alibaba.com demonstrate that in the last year UK suppliers have continued to trade strongly amongst themselves and with other western economies, whereas previously increasing figures for markets such as Ghana and the United Arab Emirates have now dropped off.

Having access to a regular and reliable source of quality products is essential to building and sustaining a successful business. The internet and e-commerce have effectively made the whole world our neighbourhood and nearly every citizen a prospective customer; something all businesses should look to seize upon in order to prosper.

Some steps to successful exporting

1. Embrace differences: Many people worry about the cultural issues involved when working with a company based in a different country. It’s always wise to be sensitive to cultural differences, but don’t let those differences put you off getting in touch.

2. Get your finances straight: Get specialist advice on the delivery costs, tax and other financial implications of importing and exporting and make sure this is factored into the price you can afford to pay or charge. Be sure to clearly agree payment terms before any transaction takes place.

3. Know your exchange rates: The depreciation of the sterling has boosted exporters’ profits as firms have not passed all of the fall in the pound on to their buyers. This remains a good reason for firms to enter the UK export market.

4. Safety first: As you would when dealing with any new business contact, do some research. Check the background of the company. Are they members of a trade association or do they have any kind of verification/certification for the products they are developing? Carry out a credit check and ask for references.Beware of companies who just have a PO box or where the phone always goes to voicemail during the country’s standard working hours—bear in mind you may have to get up during the night to try this!

5. Make a plan to get your goods where they need to go: Factor in the time needed to export and plan accordingly. Don’t over-promise. You could consider working with an export professional to manage the process for you, especially if this is something you intend to start doing more frequently. Finally, ensure either you or your supply chain partner has insurance in place to cover the goods whilst they are in transit.

Alibaba.com was founded with the vision to help companies across the world have access to the best products and customers to enable them to grow. www.alibaba.com