Demystifying the international opportunity
What stops British businesses really going for it on the international stage? Very often, it is fear of the unknown: those businesses that have yet to start selling overseas aren’t sure where to start, fear they’ll be tripped up by unforeseen pitfalls, or
Herein lies an irony. Santander’s research shows many of these businesses have much more international experience and knowledge than they realise. The Santander Trade Barometer 2018 Annual Report, published this autumn, provides insight on the attitudes of international businesses as well as those domestic businesses with the size, scale or ambition to go international.
Our research shows trends in key challenges that are preventing international businesses from growing further overseas, as well as barriers that are preventing domestic businesses from beginning to trade. We found that 27% of businesses surveyed described themselves as purely domestic. Yet many of these companies have various dealings overseas: they buy from overseas suppliers, have overseas subsidiaries, or own assets outside of the UK. In fact, just a quarter of these seemingly domestic businesses have no overseas links at all.
Building on existing experience
This has been a consistent theme of the Trade Barometer, Santander’s biannual survey of the attitudes and confidence of British businesses. And by capitalising on the knowledge they’re building up, they could very often begin making inroads into overseas markets.
There is every reason to put aside the fear factor. The Trade Barometer shows a clear link between international aspiration and business confidence. Crucially, these aspiring internationalists are more likely to be confident of growth over the next three years than those that intend to remain domestic; they’re also more likely to plan higher levels of business investment. Our research shows 15% of domestic businesses now have plans for international expansion, up from 9% in the summer – good news in itself.
This is not to suggest internationalisation is a walk in the park: the barriers to expansion overseas perceived by domestic businesses are all too real. The Trade Barometer shows these companies worry they lack the time and resources to target overseas markets and are concerned they do not have the skills required to internationalise. They’re uncertain about how to make contact with new customers in overseas markets and they struggle to find reliable foreign representation.
The importance of the right ecosystem
How, then, to square the circle? How do we ensure that more impressive British businesses can overcome their lack of confidence in exporting in order to realise the improved growth prospects that internationalisation offers?
Lack of demand isn’t the problem. The UK is the world’s 10th largest exporter, selling high-quality goods and services in markets all around the globe. Rather, to build on these strong foundations, we now need to create a much stronger ecosystem of support around British companies seeking to make their mark on the world stage; we need to ensure they have the best possible chance to exploit the opportunities of international trade while mitigating the risks.
No single organisation can develop this ecosystem by itself. This needs to be a collaborative effort that harnesses the skills and networks of both the public and the private sector.
However, banks such as Santander have a huge responsibility to play a central role in providing clients with access to both banking and non-banking support at every stage of their internationalisation journey.
Deep, holistic and tailored support
Moreover, that support must be deep: exporters need to be sure they will be able to access help anywhere in a new market, particularly since they will often be setting up, at least initially, outside the biggest cities. This support must be holistic: for example, would-be exporters need help to identify the best opportunities and to build links in their chosen markets as well as support with the financial practicalities. And it must be tailored: no two exporters have the same requirements.
For businesses able to leverage such support, internationalisation is a golden opportunity. Many companies already have the building blocks of an export strategy in place, even if they don’t yet realise it. Now is the moment to be ambitious.
By John Carroll, Head of International & Transactional Banking, Santander UK.
Read more about the Santander Trade Barometer