Every firm should have an export strategy. It ought to be as mandatory as an HR or fire safety policy. Shareholders should berate executives who steer clear of exporting. They should harangue them and, if they don’t change their ways, fire them. No excuses are valid.
“You have to be big to export” is instantly disprovable. As some wonderful British firms are proving, it is feasible for small, but ambitious, firms to go global.
Take maternity clothes retailer Tiffany Rose which has 18 staff. Founders Christian and Tiffany Robinson yearned to tap the vast international markets. So Tiffany Rose hired staff with the right language skills, made the website accessible to foreign buyers and now exports to 80 markets. Turnover should pass £3 million this year, with exports soaring from 40 per cent to 60 per cent of total sales in a year. This performance recently landed Tiffany Rose a Queen’s Award for Export.
“Shipping is hard,” is an objection with some merit to it. Booking containers, loading lorries and tracking goods is not an amateur’s game. This is why many exporters outsource the process.
Gadget retailer Firebox.com outsources international logistics to partner Arvato, which handles the warehousing and shipping to foreign destinations. The approach ensures that Firebox.com has flexible capacity as Arvato can offer more or less warehousing space depending on the time of year or according to demand levels. There are also economies of scale by going through a specialist logistics provider.
If you sit at home, terrified of venturing into new markets, you’ll never find out what you can achieve
Maybe you worry foreigners won’t understand your product. Jim Walker of Walkers Shortbread wasn’t confident either when he started exporting in the 1970s.
“Would the French or Germans like our shortbread?” he recalls. “It was certainly not something they were familiar with.” As it turned out, not only did European markets show an appetite for Speyside-made shortbread, the foreignness was an asset.
“We were the only shortbread brand in those markets. It is far better to be niche and have the market to yourself, than be in a saturated market like the UK,” says Mr Walker. Walkers Shortbread currently exports to 90 markets, always making a virtue of the Scottish origins of the product.
“It’s expensive to set up overseas and we don’t have the money.” Ah, but a fat cash outlay might not be required. Distributors and agents are a perfectly valid way to crack markets on the cheap.
Texane makes wheels that drive many of the world’s subway and airport escalators and travelators. After a few years of selling direct to the US and France, managing director Arnab Dutt switched strategy and went in search of local distributors.
“If you’re a UK-based industrial products company, it is certainly possible to export from the UK without overseas representation or branches, but I would suggest it’s a lot easier if you have an agent or a distributor because they know the local market and have the contacts,” says Mr Dutt.
“Overseas offices and staff are a major investment. I don’t believe it makes sense to set up an office in another country until you have reached the point where the economies of scale kick in, when a market accounts for a third of your sales and there is growth of 25 per cent a year, for example.”
Other quibbles don’t stack up. Fear you won’t get paid? Look at credit insurance and letters of credit. Worried you won’t understand the legal requirements of your new market? Come on! There is a long, long list of organisations desperate to help you, including the international chambers of commerce.
By exporting you may find a new market which proves much hungrier for your product than the UK. After all, the domestic market is a mere 62 million citizens on a planet of more than 7 billion.
Growth here is anaemic. By comparison the OECD (Organisation for Economic Co-operation and Development) says China will grow 7.4 per cent this year, India more than 5 per cent and Indonesia by 6.2 per cent. The Middle East, North Africa and Pakistan grew 4.4 per cent last year, and sub-Saharan Africa close to 5 per cent.
In the end, the best way to banish doubts is to be inspired by success stories like Frequency Telecom, a Chessington-based vendor of mobile phone accessories. International sales are now £17.8 million of its £27.2-million turnover and rose 88 per cent last year.
Boss Gareth Limpenny says British firms underestimate the resources available to them, such as language skills. “We are on the edge of London,” he says. “So whatever language we need to recruit, we can always find someone within half an hour.” His team can now handle 14 languages.
With experience of exporting to markets as diverse as Russia, Sweden and Germany, Mr Limpenny says: “Don’t be arrogant and don’t go crazy by going all in. Do your research and explore your markets first.” Above all, he says, don’t be daunted. Because if you sit at home, terrified of venturing into new markets, you’ll never find out what you can achieve.
