British SME Export Growth Helps Tackle Trade Deficit The FedEx Great British Export Report 2015 canvasses the current behaviour and opinions of over 1,000 small to medium sized enterprises across Great Britain. 1
Executive Summary Last year, in the second FedEx Great British Export Report, I said the future was looking bright for British SMEs, and that it was important for them to keep pushing forward towards sustained growth and stability. Twelve months later there is no denying they have done so, and more. The findings of the second annual FedEx Great British Export Report clearly show that SMEs are exporting more than ever, both in terms of volume and value. At FedEx the SMEs we help to go global are brimming with optimism for the future, and for the opportunities they see abroad. And rightly so, perhaps the most striking finding of the report is that, while the national trade gap is widening, exporting SMEs are actually working to counteract this. They are currently exporting more than they import and are therefore making a positive contribution a remarkable feat. We could, it seems, all learn a thing or two from smaller businesses. exporting to these markets will be even easier and even faster. In the meantime, FedEx Express is effectively placed to help businesses who want to be ahead of the game. A year is a long time in business, but don t be surprised to see SMEs exporting confidence continue to grow in the next 12 months. SMEs have become the shining lights of the UK economy, and it is up to all of us to give them the tools and access they need to succeed on the global stage. Trevor Hoyle Vice President Northern Europe Operations FedEx Express July 2015 There is however still more to be done. While the top destinations for exports are in Europe and the English speaking world, British SMEs are starting to notice the potential that exists in the highgrowth markets of Asia, Africa and Latin America. As the world becomes more connected, global trade lanes will strengthen, and 2
Key Findings How are British SMEs making a positive contribution to tackling the trade deficit? Currently, the financial value of exports exceeds that of imports for Britain s SMEs. The average SME exports 553k a year to Europe and imports 535k, an average net surplus of c 18k for those SMEs exporting to European countries. The average SME exports 714k a year outside of Europe but imports just 410k, an average net benefit of c 304k for those SMEs exporting globally. Where do British SMEs export to? 96% of British SMEs who export, export into Europe. France is the number one export market for British SMEs 57% of SMEs who export, export into France. Germany is the second biggest market (4) followed by Spain (37%). 73% of British SMEs who export, do so outside of Europe with the top markets being the US (35%), Australia (24%) and Canada (20%). 16% of British SME s Export to China. Are SME exporters fully supported to go global? In total 58% of all British SMEs would appreciate more support whether from trade bodies, the Government, or logistics providers than they currently receive in order to optimise their international success. This breaks down as 30% saying the support they receive is adequate, but could do with more, 16% who feel support could be more accessible and 12% say they do not have the support needed to proceed. Only 22% of SMEs say they require no further support at all. 3
What are the top barriers exporters encounter? 88% of SMEs who export have experienced some sort of barrier with costs (22%), losing out on currency exchange (22%) and worries over being paid (20%) scoring the most highly. The report showed the top three markets viewed as the most challenging to enter are the US, Australia and China. What do SMEs see as the biggest critical challenge in the year ahead? Improving customer service, distributing products and services efficiently, and reducing operational costs comprise the top three. The ability to enter new export markets is seen as critical by fewer than one in five (just 1). Are SMEs optimistic for the future? In general SMEs feel confident about the future. In five years time, 50% of British SMEs believe their trade will be both domestic and international only 28% believe it will be domestic only, while 8% believe it will be international only. In 10 years time, 48% of British SMEs believe their trade will be both domestic and international and only 26% believe it will be domestic only (the figure who believe it will be international only remains at 8%). 4
Extended research European export/import surplus The average SME exports 553k a year to Europe and imports 535k, an average net surplus of c 18k for those SMEs exporting to Europe Outside of Europe export/import surplus The average SME exports 714k a year outside of Europe but imports just 410k, an average net benefit of c 304k for those SMEs exporting globally YoY* comparison of shipping volumes to Europe 2014: 40% of exporting SMEs shipped at least 20 shipments per month 2015: 6 of exporting SMEs ship at least 20 shipments per month YoY comparison of shipping volumes to outside of Europe 2014: 37% of exporting SMEs ship at least 20 shipments per month 2015: 5 of exporting SMEs ship at least 20 shipments per month 6 5 40% 37% YoY comparison of shipping value to Europe 2014: 43% of exporting SMEs shipped more than 5,000 per month on average YoY comparison of shipping value to outside of Europe 2014: 37% of exporting SMEs shipped more than 5,000 per month on average 2015: 64% of exporting SMEs ship more than 5,000 per month on average 2015: 57% of exporting SMEs ship more than 5,000 per month on average 64% 57% 43% 37% * Year on Year 5
Top European markets for British SME exports Top global for British SME exports France Germany Spain Ireland Itally Belgium Netherlands Denmark Sweden Norway 57% of exporting SMEs 4 37% 32% 2 24% 23% 17% 16% 15% US Australia Canada China Japan India New Zealand Brazil South Africa Mexico 35% of exporting SMEs 25% 20% 16% 13% 13% 12% 10% 6% Top European Import Markets for British SMEs Top Global Import Markets for British SMEs Germany French Italy Spain Denmark Ireland Netherlands Australia Belgium Czech Republic & Poland 33% of exporting SMEs 32% 15% 13% 11% 10% 7% China US India Australia Canada Japan Indonesia Brazil Mexico New Zealand 26% of exporting SMEs 1 15% 11% 5% 5% 5% 4% Top ten types of export 18% Technological equipment 12% Industrial/manufacturing items 12% Fashion/textiles 11% Food and beverage 10% DIY items 10% Cosmetics/health and beauty 10% Construction 10% Homeware 6% Environment & renewable energy 6% Furniture 6
Top barriers to exporting 22% Costs 22% Losing out on currency exchange 20% Worried about being paid 20% Not having a physical presence 1 Language barrier Most challenging global markets to enter Canada 10% US 22% China 13% India 11% Australia 14% Top ten critical business challenges 1 22% 20% 22% 24% 24% 25% 25% 26% 30% Ability to enter new export markets Increasing competition in our sector Attracting & retaining the brightest talent Improve visibility on social media Improve the way we advertise Harnessing technology in the smartest way Ability to find new domestic markets and revenue streams Reducing operating costs Ability to distribute products and services efficiently Improving customer experience 7
Forecasting the future and signs of optimism In five years time, SMEs believe their trade will be... 8% International 28% Domestic 50% Domestic & International In ten years time, SMEs believe their trade will be... 8% International 26% Domestic 48% Domestic & International 70% of British SMEs believe their domestic revenues will increase in five years (rising to 73% in 10 years) 72% of British SMEs believe their international revenues will increase in five years (rising to 78% in 10 years) 73% of all British SMEs are optimistic about their revenue in the next 12 months (16% are very optimistic, 56% are quite optimistic. 8
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