HSBC feature: Exploring new horizons can be a passport to growth
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Mark Ashworth
Peter Helliwell
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Maintaining a solid domestic business is the primary focus for many companies in Yorkshire, especially considering the uncertainty caused by the UK’s economic downturn. However, as the domestic market continues to pose challenges, HSBC believes businesses should consider what opportunities lie beyond these shores. In doing so, a business can diversify risk and capitalise on growth opportunities by harnessing new revenue streams. The recent HSBC Going International study conducted amongst 500 UK businesses either trading internationally or planning to in the future, reiterates our view. The study reveals that 38 per cent of domestic-only UK businesses see international trade as crucial to their overall survival. This increases to 90 per cent when speaking to those who are already trading overseas. In Yorkshire and Humberside, over a third of businesses are already trading internationally, with 88 per cent of these reporting that international trade is vital to their long term success. In fact, we believe the only way the UK will recover quickly and sustainably from the recession is by trading her way out. That calls for increased commitment to the export of goods and services. Exposing a business to overseas opportunities makes it more competitive, more productive and better equipped to deal with economic challenges. One market that is of particular interest at present is the United States. Despite the pressures of the current global economic climate, trade links between the UK and the US remain strong, and an extremely large, developed market emerging from its own recession presents a real opportunity for smart businesses to act now. Equally, for many companies, the double benefit of trading with a country with a common language and an absence of cultural differences makes for an attractive proposition, easing the transition from dealing with domestic markets to growing internationally. However, while the opportunities are extensive, the same rules apply here as for any market around the world. In short, businesses should always do their homework and consult with the experts prior to expanding into a new market, wherever it is around the world. For example, the country’s location means there are only a few hours of crossover in business hours between the UK and the US every day. This may seem like a minor point, but it is essential that businesses spend time considering how they can manage this to ensure communication channels – and relationships – remain open and most importantly, effective. A shared language and culture may also suggest shared financial and legal systems, but this is not the case. As a result some companies may find they are required to have a licence in order to trade in the US, or there may be federal or state tax obligations to fulfill. In addition, it is important for businesses to consider how customers will pay for goods and services. Although there are many similarities in the way our countries trade, the US has a greater reliance on cheques as a method of payment than the UK and there will need to be appropriate facilities in place to handle this. In addition, businesses will need to agree payment and financing terms in advance, as well as credit and other risk mitigations. In summary, international markets present extensive opportunities, but whether you are considering opening new trade lines with China, or setting up a Joint Venture partnership in the US, preparation and expert insight is crucial. HSBC has unrivalled experience in facilitating trade with any international market, and the unrivalled tools and systems to make the transition both easy, and successful. For more details on the advice and support HSBC can offer you, contact: Peter Helliwell: 08455 858091 Mark Ashworth: 08455 831695
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