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11 September 2012
In The Plan for Growth the Government argued that improving the economy’s prospects requires encouragement of “investment and exports as a route to a more balanced economy”. This would not only reduce the trade deficit, but increase employment and growth. SMEs have become a particular focus due to their export potential. To explore these issues, Reform convened a roundtable seminar with Crispin Simon, Managing Director, Trade SMEs at UKTI, on the theme “Promoting global growth of UK SMEs”. The event was held under the Chatham House rule and some of the key themes are discussed below.
UKTI is at the heart of the Government’s strategy for increasing exports, along with BIS and the Foreign Office. In 2011 it was set the target of increasing the number of UK SMEs exporting from 20,000 a year to 50,000 per year by 2015, while also having to reduce headcount and spending. UKTI’s functions and support must therefore be well designed and have maximum impact. This raises a number of questions:
Who should be supported?
With limited resources, UKTI has set out to target those companies with the potential to deliver the highest return. As UKTI set out in its five year strategy Britain Open for Business: Growth Through International Trade and Investment, this means: “Targeting services at innovative and high growth small and medium sized enterprises to encourage more companies to export and help existing exporters penetrate more high growth and emerging markets”. However, there is debate whether this and a focus on particular sectors is the right strategy as it could be perceived to be “picking winners”. There is also debate over the balance of helping companies that have already managed to break into overseas markets to expand and helping those that currently do not export at all to make sure support is as productive as possible.
Which export locations to target?
There has been a clear focus from Government on the BRICs and emerging economies where governments are demanding better infrastructure and growing middle classes are demanding more products from the West. There is no doubt that these markets play an important role in the global economy and that this will increase in the years to come. However, in some cases exporters working closer to home in Europe feel that support is lacking. Not all SMEs have the risk appetite to trade in more complex developing markets and the market knowledge is not always there to advise whether demand for products exists. The UK should also make the most of relationships with countries where there are clear historic ties and existing business links.
Information and communication
There should be a clear focus on finding the relevant market for a product rather than adopting a scattergun approach when encouraging businesses to export. Companies need high quality information to make choices regarding where to sell and who to sell to. Better use of technology could improve access to information. Indeed, there is a strong case for further use and development of technology by all stakeholders involved – for example through virtual exhibitions of UK companies, webinars from overseas posts and apps which can make transactions in a range of currencies possible. In this sense, technology can be as important as the people on the ground and can allow the strengthening of relationships over a period of time, for example following a trade mission.
Methods of delivery
In addition to its own staff in the UK and 1,300 staff in 96 posts overseas, UKTI works in partnership with other bodies. In the UK the delivery of regional support has been contracted out to partners, including local Chambers of Commerce. The role of the private sector is also critical. For example, some banks are organising trade missions for high growth SMEs and are focused on helping companies with export finance. Banks working across world markets are an obvious way of reaching overseas customers. Trade associations also have a key role to play due to the expert knowledge of their sectors globally.
As the balance of the global economy continues to shift, the UK is right to be more outward looking in the drive to secure renewed prosperity. UKTI is at the heart of this strategy and has made a strong start to delivering more for less to achieve these goals.
Reform roundtable seminar on “Promoting global growth of UK SMEs”, introduced by Crispin Simon, Managing Director, Trade SMEs, UKTI, on Thursday 6 September 2012.