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Managing risk: Can your company afford not to do business overseas?
FOR an increasing number of companies overseas trade is a requisite to leverage the costs of doing business in a home market where margins are increasingly being squeezed.
More than ever, the investment costs of new product development mean businesses cannot afford to launch a product with just the UK market in mind.
That was the experience of several business leaders at a round table discussion on the importance of managing risk in overseas markets, held at the offices of Lloyds Bank in Manchester.
Martin Morgan, regional trade director for Lloyds Bank, said: “There are so many opportunities around the world – why restrict yourself to the UK? Around half of our overseas sales are to Europe but there are also opportunities elsewhere because other parts of the world are still growing.”
International trade adviser Lynne Gillen has worked at UK Trade and Investment for 13 years and said the last three or four years have seen a noticeable increase in businesses activity overseas.
“There is a definite change in pattern – people did see the EU as an obvious option but now they are being more creative, going to Africa with products that are obsolete in Europe for example,” said Gillen.
Tony Rafferty, chief executive of Printing.com, added: “You need to look at how to exploit what you have in new markets. The UK is too small for us to develop something just for that market – we have got to think on a wider scale.”
Andy Gossage, chief operating officer for Ultimate Products, said consumers are hyper price conscious and now have the tools to help them, through smart phones and price comparison sites, meaning margins are tougher.
“So you need to leverage your overheads. The shelf life of products is shorter now. However, we can take a product to a market that was dead 10 years ago for you but it is new to them, and then we can leverage that investment. You have got to go international to survive.”
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Meanwhile, in the online sphere fast growing online retailer The Hut Group currently sees a third of its business coming from overseas – but it plans to grow that further.
Commercial director Steve Whitehead said: “It’s great if the rest of the world is your largest market – it feels like a safer place to be.”
Dave Cheetham, group chief financial officer for Klarius, which manufactures car exhausts and other parts, said it is seeing huge opportunities in China and Japan.
“They are developing at such a rate that the cars they drive are the same as here. That means there are massive opportunities for us,” he said.
