International trade brings with it many hurdles and barriers which, when overcome, can be the key to unlocking an array of huge new markets.
The classic epitome of success for a British brand is to ‘crack America’, such is the challenge of appealing to a new audience and the massive success it can bring. The UK market for everything from consumer goods to media consumption is extremely big relative to its geographical size, which is why so many other countries want to export to the UK.
Here are 5 things a business needs to consider if they are to make a success of trading abroad:
- Customs/duty: you cannot determine the true value of a trade without factoring in the extra cost for export duty and other taxes
- Culture: Knowing the behaviour and principles of the audience you are selling to is important. A product might delight one market but offend others
- Forecasting: Use existing data and trends to calculate how much you need to order for that region, otherwise face having a shortage or glut of inventory
- Brand dilution: exclusivity in one region may be preferable to ubiquitous exposure. Could entering a new market alienate your core audience?
- Economies of scale: supplying or acquiring a lot more quantity brings with it some savings and other costs that may not be present in smaller quantities.
One criticism of the British economy is that we don’t export enough, compared to how much we import. Exporting involves manufacturing more than our local market can consume, so you can scale up the operation without fear of over-supply.
Unsurprisingly, importing does the opposite. British consumers will generally go for the value option, and the nature of the world economy is such that products made in the Far East are a lot cheaper for retailers and suppliers than those made locally. This means that UK manufacturing is not as strong as the likes of China and India, so the British economy sees less taxes and jobs from this sector.
Scaling up a manufacturing operation with a view to exporting almost always provides a boost to the local economy. This is why governments often provide subsidies to companies wishing to expand their UK supply chain.
Importing can still mean creating jobs in the logistics industry, because goods made abroad still have to be delivered from port to warehouse, then stored and delivered on to the retailer and customer. For more advice on the legal side of trading abroad, visit the government’s new exporting site.