Are you exporting? Are you thinking of exporting?
We invited a panel of international trade experts and business owners to discuss the opportunities presented by exporting - and the issues businesses face.
Mark Collings, Head of International for Santander SME Banking
Mike Coomber, Director, Rivertrace
Lev Denker, Trade Advisor, Department for International Trade
Paula Kemp, Breakthrough Business Manager, Santander Business
Julianne Ponan, CEO, Creative Nature Super Foods
Helenor Rogers, Founder, Troo Foods
Jeremy Taylor, CEO, Gatwick Diamond Business
The help available
Julianne: We were exporting to Scandinavia when the DIT approached me to speak at an event, thinking we were one of their clients. Actually we’d had no contact with the DIT at all. However, we then met with one of their trade advisors, Adrian Denn, and he has been absolutely incredible.
We had an agent in Germany who wanted to take a fee of every single order that went out, which was awful. Adrian managed to sort this out for us very quickly. I always call Adrian if I have a problem.
It is very helpful to have someone at the other end of the phone who knows what they’re talking. However, the DIT does need improve their trade missions. Some have been fantastic but we have had others where the guaranteed buyers haven’t turned up, which was a waste of our time.
Mike: We’ve been exporting instrumentation that monitors pollution from ships and offshore platforms for 34 years. Marine is above defence in terms of exporting, which generated in the region of £5 billion in tax for the government last year - yet this sector only has one DIT advisor. By comparison, the creative sector has a 22 advisers. It is important as although there are many places to get information, it is usually incomplete.
There doesn’t seem to be enough joined-up strategy. Baroness Fairhead, Minister of State for Trade and Export Promotion, is producing an Export Strategy, so hopefully we will see the government departments cooperate. We should certainly exploit the overseas consulates better because there’s a wealth of information and talent that’s being squandered.
Julianne: We have lots of Chinese distributors at shows asking for samples, but we’re nervous as we’re currently not trademarked in China.
We recently came across the Madrid Protocol. This is an international system for obtaining trade mark protection for a number of countries or regions using a single application. You can choose the US, Switzerland etc. We’re doing that at the moment. So we’ve got our trademark in the UK, Europe and Iceland. We have quite a broad spectrum but we don’t have China or Hong Kong.
With China it’s the first to register and that’s scary because someone could easily take pictures at a trade show and register it. If someone else beat us to it and then we’re going to have to pay a hefty fee to get that trademark back.
It is very expensive. You could easily spend over £15,000 just getting the UK trademark done.
Helenor: I think that’s just one of the risks of business. One of the brands I used to work on was Nair, the hair removal cream, which sold well in the Middle East as there’s quite a big market for hair removal there. And there was a lot of Nair in the Middle East that wasn’t coming from Britain! It was coming from China.
What can you do about it? You just have to tell your distributors in the Middle East “That is not our stuff. It looks like our stuff, it’s got our address on it but it’s not our stuff. You know you have to buy it from us.”
Paula: China’s consumers are actually quite savvy and they’ll know whether something is British made. You see some exporters make a product in China, ship it back to the UK, brand it and add the final touches - and export it back to China. But they want authenticity. If they can afford Mulberry they’ll buy Mulberry.
Financing an export campaign
Mark: The best banks will be able to help their clients as they really understand and are interested in the business. The real value is how the bank assists in the whole support mechanism.
There are a number of different finance tools that are in the market now. Historically there was a traditional working capital tool which was around invoice finance. Now you can look at other financial instruments around supply chain finance where the risk is actually taken on the buyer, not just on the seller.
In terms of getting paid on time, you need to prepare well. Do the due diligence when it comes to your trading partner.
Mike: We use credit insurance which doesn’t cost a huge amount of money. There are about half a dozen insurers in the market. They will ask about your top 20 customers: which countries they’re in, the average payment days etc. They will assess this information and calculate the risk.
If an account is in the tens of thousands then we will get it underwritten. And the premium is pretty light. You’re never going to find yourself in court having to pay out for a tribunal.
Mark: If you go abroad and secure a significant contract, there is the issue of how to finance the deal. If you’ve got either a bank or another partner who can really understand the risk of the buyer, they’re likely to take a risk on the buyer, not just the seller. This can allow the necessary cash to enter the supply chain.
Lev: We work very closely with the banks and don’t compete with them. If a bank is not willing to take a risk to lend to you, the government can step in through UK Export Finance (UKEF). We will guarantee your bank for up to 80% of the loan if you don’t get paid. There are other instruments like that where the government can help.
We don’t and can’t compete with the private sector, but we will take on risks that others might avoid.
The important thing is talk to your banker or UKEF at a very early stage. The advantage is that you know what’s available so you can commit to it more freely. This will come across when you’re speaking to a potential buyer. If you are hesitant you can put doubt in a buyer’s mind
Paula: It’s worth remembering that buyers are interviewing you too. If they really want your product you can ask for a substantial amount of it upfront because you know they’re doing their due diligence on you as well.
Julianne: All export for us is paid upfront. That’s why we love export.
We work really well with our distributors - We’ll go out there to meet them and we know them personally before we start business.
I know we’ll reach a point where we’ll have to finance it. I know that’s going to come because now they’re starting to ask: “We’re upping all our orders with you. Can we please have credit?”
The Brexit effect
Mike: To my business it has made absolutely no difference and Europe is our largest export market, then Asia and then the Americas. They all move. It’s a plaything of the politicians. The people you deal with don’t really care. If there’s a need for the product, they want it, provided the price is competitive. It comes down to relationship, price, performance and reliability.
Reverting to world trade rules would create an impact but it’s such a small amount that we’ll absorb that. I see more opportunities than I see disadvantages.
Lev: One positive effect may be that it encourages some companies to look further than Europe. We have been advising companies that it’s your easiest market, it’s next door, you get on an EasyJet, you’re there in 45 minutes. But you can get better margins and better deals maybe in other markets.
Maybe further afield, UK quality is even more highly regarded because it’s a novelty. Maybe we need to encourage companies to look into that.
Jeremy: Whatever happens we’ll adapt, and I think that the mantra is: “Be ready but have agility”. In fact, that’s possibly where the SME is probably a bit better placed than global manufacturers because they can respond quicker to exciting opportunities.
If you’ve got that preparedness and you’re ready to go, then you have the agility to do something interesting.
Paula: For the last 10 years, we have seen increases in exports to non-EU countries. It’s as if we were already breaking away from only trading with Europe.
Jeremy: It goes back to the phrase: “Go and be somewhere” which I heard when I was in my 20s. You would go to a country and you dig a ditch. I went to America just to see what happened and I dug ditches in the Texas heat because I could get 50 dollars a day cash to go and spend on drink. And as business people you’ll go and dig a ditch in another country.
I wouldn’t touch a shovel in this country in my 20s. I would think, “Why would I work for that sort of thing? Are you mad?”
The issue of whether we have the attitude to go and have a go is bigger than Brexit. I think it’s appalling the way our government has collapsed into inactivity as a result of Brexit.
Helenor: Just do it. SMEs have got to get off their backsides and go places and put themselves out there. Don’t stand in a corner.
Mike: Be in it for the long term. Don’t expect a 5-minute return on your investment because making relationships takes time. That’s what business is all about, relationships.
Jeremy: There is the old adage about the shoe manufacturer who, centuries ago, went to North Africa and declared, “No-one buys shoes. No-one wears shoes.” A few years later another shoe-maker went there and said: “No-one wears shoes – yet!”
Have a plan but plan to be ready.
Lev: What would really help in the future is to create opportunities for businesses to get together to network. Getting around a table is important. It’s great to see Platinum Business Magazine facilitating these events.
Mark: It needs to start with the SME and then the right trusted advisors. We should just be proud to be British and just get on with it. Other markets really want to meet with us and really want to buy our products. You just need to get in front of the right ones.
SMEs interested in finding out more about how Santander can support your business with trading overseas,
please contact Paula Kemp on email@example.com