The new year has arrived and with it ushered in a new era for the UK. The protracted flurry of activity towards the end of last year that led to the free trade agreement with the EU, came more with a whimper than with a bang.
So, it is a new world, it is a new day, but are we feeling good?
My sense is that we have been suffering a national hangover that will take time to clear. We are under lockdown again, which is mentally exhausting, there are major stresses for importers and exporters at the borders with the EU, there are issues and niggles with interpretations of the new rules and all of these things take time to work through. Overlaid on all this is the difficultly caused by Covid, and exacerbated by winter weather.
Where does this leave us?
Firstly, we need to put the EU frictions, excluding the vaccines debacle, into perspective: the biggest opportunities for exporters still lie outside the EU. Exports to the EU as a percentage of the total have been falling for many years and in 2019 were less than 45% of UK exports. The fastest growing economies in the world are not in the EU!
As an independent country we have forged over 60 free trade agreements, with our application for accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and more major agreements in the pipeline. (The CPTPP is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, making the CPTPP the third largest free-trade area in the world by GDP). This provides a real chance for expansion of opportunities across the world.
In many ways global export expansion is much easier for SMEs now than it was pre Covid; virtual operation means there is no longer an expectation of physically visiting a market. Trade missions and events have become virtual, customer meetings are virtual. Not only does this save an enormous amount of money, but perhaps more importantly it dramatically widens bandwidth to speak to customers and prospects through time saving. This could be a critical factor for smaller companies without the benefit of phalanxes of export managers.
Freight to and from the far east has been facing issues recently with sky high costs and shortages of available container slots. However, this is predominantly East-West with vastly more imports into the UK and Europe than the other way round. This is leaving empty containers stranded in the West, whilst badly needed back in China. I believe that this is a short to medium term problem that market economics will resolve, however in the short term it creates an opportunity in exporting to the Far East. British goods, especially with the Union Jack on, have a premium reputation and desire across the world. Our food hygiene standards are highly respected, as are our fashion, engineering, and many other sectors. That desire for British products, combined with the universality of the English language, create a tremendous opportunity for United Kingdom companies to export their products worldwide.
Which brings me back round to the EU, our closest neighbours. There is very real political friction over the new rules and the deliberate awkwardness of some of those neighbours at the border. The health sanitary rules are also getting in the way of some trade.
The Cheshire Cheese Company has been in all the press over the problems they have been having. This multi award-winning North-West producer has been expanding internationally, but their online sales to the EU have ground to a halt. Laurence Bass, one of the owners of the company told us: “We are now required by the EU to provide full Health Certification for all sales of dairy products, though frustratingly, this is not required for EU products coming into the UK. It isn’t viable for us to pay for the Vet certification (ca.£180) for our online consumer sales, given an average order of £35-£40. We don’t have these problems with other countries, for instance the USA, as there is an allowance for sales for personal consumption not given by the EU. This problem is not simply for consumer sales, as their wholesale business has additional bureaucracy and costs, although their wholesale exports are continuing. There are solutions as Laurence informs us: “We are looking to use distributors in each territory to fulfil our online orders, or possibly set up our own fulfilment centre in the EU. Either way we are working hard to arrange something so we can keep all our customers happy”.
The UK Government say they are working closely with UK companies and the EU to resolve these teething issues and help companies to meet the new requirements. There are growing opportunities for UK companies to use export opportunities to expand turnover and thrive in the post Brexit, post Covid world, and there is a lot of help available including potential grants towards developing the strategy and tactics to enter markets. It is also worth remembering that the UK has a very strong services sector and there are a multitude of opportunities to sell overseas – without any of the freight or import bureaucracy. There are many markets around the world that are similar to home markets. Find these and you will be feeling good.
Tony Goodman MBE is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com