The UK will trigger article 50 before the end of March, triggering the formal process of leaving the EU.
Does that mean it will be easier or more difficult to trade overseas?
If I have a business that is already making sales in the UK, should I be looking within Europe or outside?
According to Liam Fox, International Trade Secretary, "International trade is the lifeblood of the British economy, the driver of our prosperity. Commerce is part of our national DNA." We, as business owners will either make this happen or trade between the UK and the rest of the world will decline.
So, if we are to trade outside of the UK, which countries should we choose and how do we approach it. Obviously, there is no single answer; but what there are signposts to help you navigate the within each country.
Often, the first country to be opened up is because of personal links – having been brought up in one country, someone has now settled in the UK. They understand the culture, the systems, have contacts and can speak the language.
But if that link is not there, you have to start somewhere. The newly formed Department of International Trade, building on work undertaken by the DTI, have produced guides for selling overseas (https://www.gov.uk/government/collections/exporting-country-guides).
There is always a cost in opening a new market and that must be taken into account when looking at the profitability within the business model. DIT arranges trade missions to countries of particular interest and may subsidise visits on that mission, giving a chance to not only meet potential clients, but also network with others exporting in similar spheres. These are not frequent and so using the missions must tie in with your business requirements.
Another line of support is your bank. Most banks now utilise the links to the DIT database and show you details of the markets in foreign countries and any tenders by country and by business sector.
There are also a number of databases of live tenders that can be searched; some free, some requiring a subscription.
The countries consulates or commissions here in the UK will also provide information about the country and advise on how to trade in their country. The information may be limited as they may not know details about your specific products.
The legal framework - You will need a local lawyerPayments - Advance payment, letters of credit, documentary collections, open accounts
Time in the country - Time must be spent seeing clients and expanding the market. Making appointments, researching new clients may require a local representative that could be directly employed, or an agent
Currency fluctuations - Hedging or forward purchasing can give greater certainty
Product Suitability - There may be different technical standards that must be met
The referendum has caused some businesses to rethink strategies. No one knows what the outcome of the negotiations between the UK and the EU, yet business will not stand still in that time. Therefore business must decide – trade with the EU, knowing there is uncertainty on tariffs and bureaucracy or trade outside Europe where the tariff levels and bureaucracy is known.
Research is essential. The level of trade expected and time frames are key to a decision. For example, if you can expect tobe profitable in trades within the EU inside of 2 years, then you can review the position nearer the time and this should not be a barrier to trading in Europe.
Business is about taking chances. Becoming an international trading company adds a new dimension and can be seen as raising your business profile in addition to extra profits. But it is more risky than operating in the domestic market.
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Last updated: 23 January 2020 | © KIS Bridging Loans 2020 |