Can exports still kick-start growth?

Given that the entire leadership of the Eurozone has just tripped off to China, cap in hand, to ask if it’s got any pennies going spare, it’s no surprise that the British Government also sees the solutions to all its troubles in the Far East. But David Cameron’s dreams of kick-start UK growth by persuading businesses to export to markets like China might need to be put on hold: a new survey has found that 31% of businesses have missed revenue targets on exports to emerging markets in the past year. So perhaps exporting isn’t quite the magic bullet we had anticipated…

The survey, by accountancy giant Deloitte, spoke to 628 executives from companies in 34 different countries. It found that among their biggest challenges to launching in emerging economies, 43% of businesses have had trouble making their products or services affordable to the locals, while 40% have found competition to be stronger than they expected. Another 40% said they had been having problems creating brand awareness while – and here’s one the Government could definitely find a way to help with – 39% said their biggest hurdle was ‘navigating protectionist policies and government bureaucracy’.

The Coalition has been doing its bit to try to encourage exporting. Not only has it promised to extend its Export Credit Guarantee scheme (although whether that worked is debatable), but David Cameron has led a number of trade missions to China, India etc, to try to drum up a bit of business. So help is available – even if, at the moment, it’s fairly limited.

Still, those who have been successful at it have advice to offer, re. the best ways to make an impact in emerging economies. For 62%, using local sales or service centres was the best way of doing it. 60% said they had designed a product or tailored their service offering specifically to the region they were targeting. And 56% of firms said it was better to have a company-owned supply chain. Although in the case of smaller businesses, that might be rather a big ask.

One interesting comment came from Deloitte’s managing director of global consulting, John Kerr, who pointed out that instead of grouping countries together, it’s important to make the most of their individuality. ‘It’s time to stop focusing on emerging markets as a group and start focusing on specific countries individually,’ he said. Wise words indeed.