UK export market is growing – but SMEs risk getting left behind

British businesses are ambitious for international growth and see exporting as key to their success, according to new research released from Alibaba Group, in partnership with Institute of Export and International Trade.

The study of more than 3,000 UK businesses found nearly half (49%) of their annual revenue is generated from exporting goods overseas. Over seven in 10 (73%) of business owners surveyed anticipate their export sales to increase in the next 12 months, with almost a quarter (24%) saying they expected a “significant increase” in sales.

Beyond the economic benefits, the research indicates that these exporting businesses are also more resilient, with just over four in five (81%) saying exporting had made their business stronger. Eighty-two percent of respondents said exporting had fuelled innovation within their companies, while 79% of businesses said they had increased their headcount as a result. Some 79% said exporting had relieved the pressure of doing business in the UK.

When it comes to export markets, British businesses surveyed are looking close to home.  Nearly three in 10 (27%) regard the UK’s nearest neighbours in the European Union (EU) as their top export market. Looking to future growth, North America (30%), Asia (24%) and China (24%) present the biggest opportunities.

Despite the positive outlook, many businesses who export or have exported in the past perceive challenges that could stand in the way of their export ambitions. Nearly a quarter (22%) cited supply chain and logistical issues as the biggest barrier, followed by increased paperwork and red tape (20%) and competitive pricing (20%). Economic uncertainty (19%) and lack of cultural awareness/familiarity with the overseas market (19%) complete the top five potential barriers to export.

A significant number of UK SMEs are yet to begin selling overseas – nearly a quarter (24%) of those surveyed do not currently export.

For businesses focused on international growth, more than seven in ten (73%) of those surveyed are currently using online marketplaces to boost their export sales. Three in 10 (30%) started working with online marketplaces during the pandemic, with the pandemic providing a strong impetus for businesses to adopt digital tools.

Roland Palmer, General Manager of UK, Nordics & the Netherlands, Alibaba Group, said: “The big picture is British businesses believe export is integral to their success and recognise that international markets represent their best chance of transforming their business potential.

“Our research suggests significant opportunities can be found in overseas markets, enabling businesses to accelerate growth and mitigate risk at home.  However, it’s vital businesses – especially SMEs – get the support they need.  At Alibaba, we’re focused on levelling the playing field when it comes to unlocking opportunities on the global stage.”

Marco Forgione, Director General, Institute of Export and International Trade (IOE&IT) said: “This research confirms what we have long known – that exporting firms are more sustainable, profitable and resilient – but also sheds light on some of the many challenges that prevent businesses from exporting at all or exporting as much as they could.

“The whole trade community needs to work together to combat and reduce these challenges. IOE&IT is committed to promoting trade as a force for good and doing all we can to help every business start or expand its export activity, regardless of size, sector, or home market.”

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