New research reveals how UK SMEs do business overseas

In an ongoing programme of research, UKTI has produced two new reports which explore the trends in emerging in international trade for UK companies.

Aimed at small to medium businesses, they offer an insight into the ways SMEs are doing business abroad today, and how small businesses can thrive in today’s new era of internationalisation

New markets, new ideas: how exporting fosters innovation and growth

The research findings captured in this booklet suggest that many British companies are embracing a new era of internationalisation. This can be seen in both an increasing number of companies doing business overseas and the rising number of firms that export from an early stage. The report also investigates the benefits business experience as a result of exporting including increased levels of growth, productivity and innovation:

• More young companies are grabbing international opportunities from an early stage; almost one in five (17 per cent) new companies currently active abroad are classified as ‘Born Global’ – so have been doing business overseas since the outset.

• 37 per cent of firms less than five years old reported no significant barriers to doing business overseas; over a third (35 per cent) also reported significant growth due to exporting.

• Around 38 per cent of companies said that exporting delivered a level of growth not otherwise possible. Companies generally reported a significant return on investment from doing business overseas in terms of improved financial performance, higher levels of innovation and productivity.

• Many internationalised firms experience a ‘virtuous circle’ where exporting leads to new innovation, and where those innovations then lead to further exporting. Over half of all firms (53 per cent) said that a new product or service evolved because of their business overseas.

Discovering high growth - how UK SMEs are breaking into high growth markets

Across the world, high-growth markets are becoming increasingly important to UK SMEs across all sectors. Most economists agree that the biggest story of the twenty-first century will be a shift in the economic centre of gravity from the developed world to high-growth markets such as China, India and Brazil.

The report captures a snapshot of how SMEs today are approaching these markets, and look at the difficulties in market entry as well as ways to overcome them.

Companies of all ages and sizes are finding success in these markets, not just bigger businesses. Two in five small exporters (with less than 10 employees) already do business in at least one high-growth market.

Those SMEs that enter one high-growth market can find opportunities in neighbouring and other markets; a study found that almost one in three SMEs used entry into one high-growth market as a ‘springboard’ into another.

From surviving to thriving: doing business overseas

The first in the ‘Doing business overseas’ series, this report was compiled by UK Trade & Investment, based on a survey conducted with the Institute of Directors’ Director magazine during July and August 2010.

Despite the global economic slowdown, the results of the survey show that the vast majority of exporters remain confident about the future and plan to export more over the next 12 months. Companies generally expect the number of countries they deal with to increase over the next three years, and having a British brand is regarded by most as an advantage when trading overseas.