- PwC report shows seven in ten exporting businesses anticipate an increase in exports, but only a third have developed a strategy
- Approach to exporting is complacent in light of Brexit, warns Chief Executive of Chartered Institute of Marketing
A new report published today [Tuesday 1 May] by the Chartered Institute of Marketing, in association with PwC Research, warns that the UK’s small and medium-sized businesses are naïve to the exporting challenges created by the country’s exit from the EU.
The report, Export Ready, backed by politicians and senior marketing professionals, reveals that seven in ten UK exporters expect to increase exports over the course of the next three years. Yet the majority of those interviewed have failed to develop a specific export strategy and are instead passively waiting on orders from existing customers.
The warnings echo the Office for Budget Responsibility’s recent prediction that Brexit will depress the UK’s export market share. Key findings from the Export Ready study include:
- 70% of exporters anticipate an increase in exports over the next three years. Only 4% of existing exporters say exports will decrease.
- Yet only a third of exporting businesses (34%) say they have an export strategy.
- Businesses with an export strategy are more confident they will increase exports and that they have the skills to sell in new markets.
The research also finds that measures from Government to encourage businesses to increase overseas trade are not getting through. Only around one in seven of those firms that have never exported, plan to consider doing so, while a shocking 59% said they are “very unlikely” to consider exporting in the next three years.
Chris Daly, CEO, Chartered Institute of Marketing said:
“With Brexit approaching, our research has uncovered a worrying level of complacency from British business. Too many firms appear to be crossing their fingers and hoping exports will continue to grow. Without a clear strategy to break into new markets, business is in for a shock when the UK leaves the European Union. These findings must serve as a wake-up call for businesses to think again on how they make themselves export ready.”
Baroness Fairhead, Minister of State for Trade and Export Promotion:
“Although UK exports have grown to represent 30% of the UK’s GDP, this figure remains lower than that of other nations in Europe and close to 90% of UK businesses do not sell their products and services overseas.
Marketing professionals have invaluable understanding of the trends and operation of overseas markets and can help companies at every stage of their export journey to
capitalise on opportunities to sell abroad.”
Skills gap bigger barrier to exports than tariffs
The research explored the main barriers to UK businesses seeking to export their products and services; finding that successful exporters identify a lack of skills and know-how as greater barriers to exporting than tariffs:
- 40% of businesses said that having the know-how to adapt their marketing strategy to unfamiliar cultures and markets was a major exporting challenge.
- A quarter (26%) said they struggled to access the right marketing skills.
- A third (33%) said they lacked confidence in approaching new markets.
- Only 13% said that off-putting tariffs were a problem.
Commenting on the findings of the survey, Julie McLean, PwC Research project leader said the UK SME sector still has some work to do:
“We’ve identified the challenges that face the UK’s SMEs, but recognising the challenge is also the first step to overcoming it. And this challenge comes down to a lack of marketing knowledge to plan for export activity and a lack of confidence to actually take the first step.
“This may be worrying, but it’s not a crisis. Overcoming these challenges should not be beyond the capacity of the firms themselves, their advisors, marketing professionals and Government. We were once described as a nation of shopkeepers – now is our chance to become a nation of exporters.”
Marketing’s contribution to the economy
The study also details, for the first time, an holistic view of the contribution of the marketing sector to the UK economy.
PwC estimates that the UK marketing industry employs up to 415,000 people and generates £36.5 billion in annual gross value added (GVA). This amounts to 3% of the UK’s entire non-financial business economy.
Lord Bilimoria CBE DL, Crossbench Peer and founder of Cobra Beer:
“I would love to see more British businesses join me in my mission to boost the presence of British brands overseas. Exporting abroad makes businesses more productive and is an important source of growth. New businesses should be looking to export from day one.
Going global is an important step for all businesses. The most productive firms in the UK are those who can sell goods and services overseas, however more than two thirds of businesses do not even consider it. By encouraging growing businesses to export overseas the government can ensure new jobs are created and businesses from overseas are encouraged to invest in UK supply chains.”