Exporting for growth: the SME perspective
HSBC’s qualitative and quantitative research of over 1000 UK SMEs – both those already exporting and those that are considering it - reflects a business population prepared to consider the opportunities of international trade but wary of a range of perceived barriers.
Encouraging more exports is a win-win for the UK economy and its businesses. Boosting international trade is crucial to address the country’s productivity gap and current account deficit, while exporting businesses gain strength and resilience when taking their products and services abroad.
The UK government has rightly championed exporting over recent years, including setting a target of doubling the value of exports to £1 trillion between 2010 and 2020. The ambition of this target and much of the government’s action to encourage exports are to be applauded.
Yet despite these efforts, our research has found that some SMEs do not try to export because they believe it will be complicated or risky. The impact of the UK’s decision to leave the EU adds another potential layer of complexity for business to navigate.
SMEs know that exporting can be beneficial to them, but do not always feel they have the confidence, the know-how or the support to take the first step.
Our report identifies four areas for the government, business and financial sectors to consider in order to encourage more SMEs to take their businesses global:
- Targeted incentives: a government feasibility study of the benefits of fiscal measures to encourage more small businesses to export, such as a tax credit for exporters.
Our 2013 Exports Manifesto made the case for an exporter tax credit and our latest research indicates that support for such a scheme is high. 75% of SMEs that are considering exporting, would be further encouraged to do so if there were fiscal incentives, such as rebates for costs related to exporting.
- Giving small business exporters a voice in trade negotiations: an Export Advisory Committee to give practical advice to government when considering new free trade agreements.
Working in collaboration with the exporting community, government will receive valuable advice as to the business impact of trade policy discussions. It will also create advocates in the business community to then help tailor support to SMEs in transition to any new arrangements. Such a committee should build on the success of existing business advisory groups in specific countries and regions.
- Tailoring support: existing support services must be easily accessible, consistent and clearly signposted.
While there are high levels of recognition of government support services, a clear and simplified signposting system would help to improve their take-up. More tailored support from government and agencies in priority markets would encourage 64% of SMEs to begin exporting.
- Sharing best practice: a renewed effort by banks, business groups and support services to help potential exporters gain experience through dialogue with those already trading internationally.
71% of SMEs not yet exporting said the opportunity to learn from businesses currently exporting to their target markets would encourage them to export.
Banks have a key role to play in facilitating these discussions and HSBC has been proud to sponsor a number of events this year that have showcased the best of British exports, including the International Festival for Business and Entrepreneurs Exchange series.
We are going further to support our customers’ international trade ambitions with the upcoming launch of a new Connections Hub and an Export Resource Centre, giving our customers the international network and exporting know-how to grow their businesses.
The exporting landscape
Our research shows a complex landscape; while the commercial benefits enjoyed by exporters are clear, so too are the wide range of barriers, both actual and perceived. We also find changing attitudes to international trade partners as British businesses predict new opportunities.
Download the full report here.