New to Exporting? Top 5 Risks UK Firms Need to Consider

14/05/2015

By Marine Bochot, UK head of risk at Euler Hermes


Foreign trade has always been a cornerstone of the British economy, and with economic growth facilitating a rise in business confidence, the number of firms exporting is on the rise. This is particularly visible among the SME sector. According to a recent report from YouGov, the number of SMEs expecting to export in 2016 is growing and those already trading overseas are looking to expand the number of markets they trade in.

However, exporting does not come without risk, and for many firms new to foreign trade it can be a steep and difficult learning curve. Businesses should be cautious and ensure they avoid the pitfalls and financial problems from trading abroad. However, keeping the following five factors front of mind for each current and future export market will help pave the way to export success.

1. Currency fluctuations

Fluctuating exchange rates are particularly difficult to budget for, and shifts can significantly impact product demand in foreign markets should prices be pushed up, swallowing profits and putting pressure on bottom lines. The current strength of the pound is having a marked impact on UK exports, particularly across the Eurozone, and firms should keep a close eye on currency changes across all their respective markets and adapt product strategy accordingly.

2. Trade barriers

Both EU and international markets have seen recent growth in protectionism, with trade becoming more segmented as advanced economies move to preserve market share in the wake of growing involvement from emerging nations. In light of this, trade-restrictive tariff barriers are growing in number, which can have a negative effect specific products margins in certain countries – for example, Turkey recently raised customs duties on imported footwear by 50 per cent.

Firms should also keep an eye on non-tariff measures when assessing current and future... continued on page two >

 

 

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