New research reveals the benefits of exporting and the challenges businesses face

Thu 27 Apr 2023
Posted by: Richard Cree
IOE News

global services trade

The importance of international trade to UK businesses has been reinforced in a new study of more than 3,000 UK businesses by Alibaba Group, in partnership with the Institute of Export & International Trade (IOE&IT). The UK Opportunity Report - Global horizons: helping UK businesses grow through international trade has revealed both the benefits of export and the challenges that prevent firms from selling goods or services overseas.

The research finds that almost a quarter (25%) of British businesses do not currently export. But for those that do, on average almost half (49%) of their revenue comes from export sales. And the positives for businesses engaged in exporting were wide ranging.

Benefits of exporting

Asked if exporting has boosted their company’s revenue, 82% of businesses agreed, a view shared by 97% of the largest firms (500 or more employees) and 68% of the smallest (two to nine employees).

But beyond boosting revenue, 82% of exporters also reported that international trade has fueled innovation, with 81% saying exporting has made their business stronger and 79% of businesses agreed exporting has led to increased headcount.

The research found that exporting also enhances production capabilities, with 80% of respondents agreeing that exporting had inspired their business to widen its product range. Another consequence of operating in new markets is technological advancement. 81% of companies said exporting had driven the digital transformation of their business.

Almost four fifths (79%) of businesses agreed that cross-border trade had eased the pressure of doing business in the UK, a view shared by 68% of the smallest firms and 96% of the largest. And 80% of businesses claimed that exporting is critical to their business’s future.

Marco Forgione, director general of IOE&IT, highlights that the report confirms a lot of what the Institute has been saying for some time, that trade is a powerful force for economic and social good.

“This research both confirms what we have long known – that exporting firms are more sustainable, profitable and resilient – but also sheds light on the challenges preventing businesses from exporting at all or exporting as much as they could.

“Politics, global supply chains and traditional trading relationships have been disrupted and face a period of significant uncertainty and instability. The whole trade community needs to work together to combat and reduce these challenges.

“This report also helps to showcase the important role e-commerce and marketplaces play in growing international trade, especially for smaller businesses.”

Roland Palmer, general manager, UK, Benelux & Nordics, for Alibaba Group adds that for the UK right now, trade is more important than ever,

“International trade is widely recognised as a key driver of growth, benefitting businesses that export and the UK economy. Furthermore, the UK’s recent economic challenges underline the importance of advancing prosperity by accessing new markets and customers.”

The challenges

Respondents were asked to name the biggest hurdles and challenges they face in exporting. The top 10 issues named were all an issue for almost a fifth of respondents. The biggest single issue was supply chain and logistical issues (22%) followed by increased paperwork and red tape (20%) and price competition (20%).

Economic uncertainty, lack of cultural awareness/familiarity, regulatory barriers, political uncertainty, and a lack of exporting expertise were named as issues by 19% of respondents, while 18% said they struggle to find a trusted export partner or face a lack of demand for products in overseas markets.

Future trade

But there are clearly opportunities, too. Not least for diversifying customer bases and building resilience into operating models, which were named as key reasons UK businesses are looking to become first-time exporters.

Looking to the future, over seven in ten businesses (73%) expect their export sales to increase in the next 12 months, with almost a quarter (24%) saying they anticipated a “significant increase” in sales.

The issues raised in the report – including the benefits of trade, the challenges smaller exporters face and practical solutions to overcome them – will be discussed on a live webinar hosted by IOE&IT on 11 May.

To register for the event click here.