How to stay agile in a shifting trade environment

 

Lesley Batchelor, a renowned champion of exporters, talks us through the issues and opportunities facing British businesses as the UK withdraws from the EU and the parameters of international trade start to shift.

About the Author

Lesley Batchelor is Director General of the Institute of Exporting & International Trade. She is also CEO of Open to Export. Awarded an OBE in 2014, Lesley was named as the CBI/Real Business First Woman in Business Services for 2015 and voted CEO of the year for the Trade Association Congress 2015.

“Being competitive is crucial for businesses when reacting to changing trade conditions, grasping opportunities in both new and existing markets and offsetting the impact of higher costs,” says Lesley.

To achieve that competitiveness, she continues, businesses must focus on:

“Even experienced businesses will be entering a whole new world of documentation as we withdraw from the EU.”

  • Quality – building a reputation for goods and services that meet and exceed customer expectations and ensuring that you protect and maintain that reputation through all of your customer interactions.
  • Marketing – getting the word out and selling yourself and any unique features that set your business and its products or services apart.
  • Pricing – ensuring that your raw material costs and end product pricing remain competitive and profitable. It’s a fine balancing act to protect your margins whilst not squeezing suppliers and compromising quality.

Getting it right and reducing risk

Focusing on these areas is vital, but Lesley says, “being competitive also means getting it right first time. Even experienced businesses, particularly those currently exporting to the EU, will be entering a whole new world of documentation as we withdraw from the EU. Protectionist markets like the US, or culturally different ones like China can be very unforgiving. Getting it wrong can cost you financially and reputationally.”

At the moment, EU membership conveys benefits that include tariff-free trade and light touch documentation. But it’s a bit like being a member of a private member’s club – once we leave, those benefits will end. And, with the Government indicating a hard, or clean, exit with no guarantees of access to the single market, direct and indirect costs of exporting to EU countries will likely increase.

A deeper pool of trade opportunity

EU membership has previously acted as a safe harbour for many exporters to trade with numerous countries and avoid more complex markets where the higher cost of trade increases risk. Now, as trade with the EU moves to terms more akin to trade with the rest of the world, Lesley advises that: “Businesses need to recognise that exporting takes real skill and learn to do it properly, to manage the risks and ensure that their goods and services and the way they are delivered can compete in more open waters.

“We’ve had years of not valuing international trade and people not realising how important it is. Now it’s on everyone’s radar but it’s getting more difficult,” she says.

Competing globally

That’s where organisations like the Institute of Export & International Trade can add real value. “British businesses have this terrible habit of selling on an ex-works basis,” explains Lesley. “That puts the onus on the customer to work out how he's going to get your goods from your warehouse, sort out the insurance and take the risk on the exchange rate. That’s plainly uncompetitive. If you want to buy something from somebody, and you have a choice between doing the leg work yourself or buying from someone who gives you a price you can understand and delivers to your door, you're much more likely to buy from the latter.

“That’s how trade in the real world works and we have to become more efficient at it so we can compete globally.”

All in all, the message is clear. The international trade landscape is changing and UK businesses need to be prepared. But it’s not a question of waiting and seeing what happens. Businesses need to look at ways they can differentiate themselves and be more competitive now.

“Being competitive will be absolutely crucial for businesses when reacting to changing trade conditions.”

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