34 international trade
Opportunity knocks overseas – but only some are listening
A fifth of domestic UK firms say they plan to trade overseas, but what about the rest? – asks a study from Regus
Many UK companies are selling themselves short by ignoring the potential of international trade, according to a new global study from workplace provider Regus. Despite evidence that UK companies operating internationally are performing better in the economic downturn than those solely focused on the home market, only a fifth (21%) of domestic firms intend to dip their toes into overseas markets in the next two years, compared with 39% of domestic firms in France and 26% in Germany.
Evidence that foreign expansion is good for business1 is being cold-shouldered by swathes of UK firms. Reliance on the UK’s strong domestic market may have sufficed in the past but exports play an increasingly important role in today’s economy; the CBI recently reported that by building up an export presence outside Europe, the UK economy could grow by £20 billion.2
The attitude of companies already operating internationally provides a stark contrast: 75% intend to expand still further, providing testimony that an export strategy is contributing to commercial success in the economic crisis.
The Regus Global Survey polled opinion
from over 12,000 companies around the world including 2,700 in the UK. It also investigated perceived obstacles to international trade.
‘Property’ and ‘People’ emerged as the top concerns:
• 32% of firms say the biggest obstacle to overseas expansion are the challenges of setting up a physical presence in a foreign country
• 57% of companies say that property commitments have to be very short term when setting up a foreign operation, as they do not know how quickly or slowly they will grow
• Opinion is split over the where senior management for overseas operations should hail from, with 43% favouring a mother country manager, and 57% opting for a local manager
• However, only 35% of UK firms require managers to be fluent in the local language, compared to 45% of French firms and 57% of German
Paul Briggs, chief executive, Thames Valley Chamber of Commerce Group, commented: “This report corroborates the findings of our latest quarterly economic survey that, in the current economic climate, UK firms of all sizes who have diversified overseas are faring better than those who have stayed
with their home markets. Exports is an area where future growth will come from and the Government must do everything it can to give support. More companies – particularly smaller ones – should be taking up the challenge of international trade, taking advantage of its benefits and the business opportunities that exist, especially in emerging markets. Export growth is crucial for economic stability and the UK risks falling behind its global competitors if companies aren’t encouraged to explore all avenues open to them.”
Steve Purdy, UK managing director at Regus added: “While ‘property’ and ‘people’ are perceived as potentially major challenges to overseas expansion, the wide availability of flexible workspace options around the globe make the ‘property’ element more perception than reality whilst the ‘people’ issues do require careful consideration. Decisions about whether to install a local manager or one from the mother country are critical and, we believe, rest heavily on whether sales are mainly being handled through a few major distributors, or whether direct contact with a wide range of customers is required.”
1 Various commentators have highlighted the performance gap between the UK’s international and domestic business communities. In the Q4 2011 edition of the Regus Business Tracker, UK firms operating overseas performed better in each business indicator: higher business confidence, more buoyant recruitment plans and greater revenue and/or profit growth.
2 Source:
http://www.telegraph.co.uk/ finance/economics/8897334/CBI-spots-20bn-
UK-export-opportunity.html
Avoid customs delays with an EORI number
Accountants and business advisers James Cowper is warning that importers and exporters dealing with countries outside the European Union are required to obtain an Economic Operator Registration and Identification (EORI) number.
The consequences of not having an EORI can be far-reaching. Without one goods are held by customs, often causing significant supply chain delays, yet the system which was introduced three years ago is often misunderstood or overlooked.
Ruth Corkin, head of VAT services
at James Cowper, explained: “EORIs are an EU requirement and crucial for all communications with any EC customs authorities. Customs officials throughout the community use the unique numbers as a credibility check. Obtaining one is straightforward and usually only takes 48 hours but it’s surprising how commonly businesses overlook the need to register and become frustrated with the consequences.”
EORIs are linked to VAT numbers and different application forms are available for those registered and not registered for VAT in the UK. It
is usually possible to start using the number immediately after applying.
Corkin added: “Not having an EORI can also affect individuals and small businesses who are not usually involved in importing and exporting. A smart new laptop purchased from a US eBay seller or goods for a one-off business exhibition are likely to require an EORI number, for example.”
James Cowper recommends that anyone who thinks they might be affected seeks advice from their accountant or tax adviser.
www.businessmag.co.uk
THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2012
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