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SME Resource

Challenges of exporting

There are a number of challenges UK companies face when looking to trade beyond our borders. We’ve listed a few below:

  • RESOURCE: Setting up an export operation is human capital heavy; pressures on capacity, production, and skill sets can be significant;
  • MARKET DATA: Researching foreign markets is undoubtedly more challenging and resource intensive for a company than researching its own domestic market, particularly if it is looking to export to less developed countries where some data simply isn’t available;
  • CULTURE: Understanding different cultures, ethical standards, negotiation styles, and ways of conducting business can seem very daunting to potential exporters;
  • FINANCE: Trading internationally can involve upfront investment that can impact on a business’ cash flow. Furthermore, as it takes time to develop new markets, the return on this investment is not likely to be immediate;
  • RISK: Many companies are put off by the risk of exchange rate fluctuations and non-payment for goods and services by foreign buyers;
  • RED TAPE: Some companies will require Export Licenses and specific documentation to sell their goods abroad; this can appear excessive and daunting;
  • INTELLECTUAL PROPERTY: Protecting intellectual property abroad can be complicated and involved;
  • LEGAL SYSTEMS: Understanding the different legal requirements and compliance issues in foreign markets can seem daunting, i.e. employment practices, taxation, currency dealings, packaging and label requirements, and so on;
  • PAYMENT TERMS AND SYSTEMS: Trading internationally will likely require a company to change the payment terms they offer and the systems they use to receive payment;
  • CREDIT RISK: Companies are often dissuaded by a fear that they will be unable to accurately assess the creditworthiness of international customers;
  • POLITICAL LANDSCAPE: The political landscape of the foreign market a company is looking to trade with can impact its business plans i.e. political instability can impact a government’s ability to enforce law and implement policy.
“Red tape, be it domestic or international, can act as an unnecessary barrier to export growth. 25% of current and previous exporters believe that UK regulations are a barrier to exporting. International regulation also stifles export growth, with 33% of them suggesting that overseas regulations present a barrier to trading globally.”
British Chambers of Commerce
“Research published by the Institute of Family Businesses suggests its members have some very specific concerns that act as barriers to increasing their export activity. 60% say they lack the local market knowledge to confidently target new markets – and that they do not have the resources to resolve this issue. Many do not know how or where to find partners in overseas markets.”
Independent