Is China the future of SME exporting?

Thursday 24 December 2015

Many of the UK's small to medium-sized enterprises (SMEs) export products around the world, and a large percentage of these small businesses are looking for more international opportunities in the coming year. However, the areas of the world that UK companies are exporting to is changing.

It used to be the case that the US was a main destination for UK goods. In the last year, however, there has been a significant shift in this relationship, as China has become more of a consumer nation and therefore more of a focus for SMEs, according to new research from Western Union Business Solutions. The nation now sees more exports than the US for the first time.

This is especially unusual as at the beginning of 2015 a mere nine per cent of UK SMEs exported to China. However, that figure has now grown to over 25 per cent, while only 23.7 per cent export to the US. China is now the second-most important nation for British small businesses to export to.

The main market for UK SMEs is still Europe, however, with 76 per cent of businesses exporting to the EU. However, some research disputes this. The Federation of Small Businesses (FSB), for example, estimates that as much as 82 per cent of Britain's SMEs export to Europe.

John Allan, national chairman of the UK FSB, said: "It's encouraging to see this research from Western Union Business Solutions showing many small and medium-sized businesses shifting the focus towards emerging growth markets such as China and India. However, many micro and smaller firms are still exporting to more familiar grounds."

Mr Allan added that his organisation's research "suggests there is still a long way to go to unlock the export potential to these emerging markets". However, Western Union Business Solutions' study seems to show otherwise. The UK's SMEs are certainly looking to expand overseas, with more than 50 per cent of the 1,137 businesses questioned saying they are increasing the countries they are exporting to.

On average, UK SMEs export to 2.7 countries. This trade is worth 27.2 per cent of their revenue, and it is only set to grow. Almost half of surveyed businesses said they expected exports to grow over the next year, with around 40 per cent having seen this occur in 2015.

By Victoria McDonnell

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