International Trade: Create export value by focusing on your product
WEST Yorkshire-based global publisher Emerald Group exports 92% of its business. As the world has changed, so has Emerald’s business.
“We’ve found that about ten years ago our product changed from being a physical print product to a digital product. When this happens, the world is suddenly a very different place,” Emerald’s finance director Simon Cox says.
“There are no ports to worry about and no handling agents and the risks are massively minimised because you don’t have a physical product to protect.”
Cox says that due to the changing nature of the business, the areas of concern are now a lot different.
“We worry a lot about how we trade in a different country – do we physically have people on the ground or do we work with an agent who is out there on the ground for us? That all brings a lot of different challenges.
“The regimes are so different, too. The spectrum of regimes we work within are huge and we’ve got to take that pretty seriously – that is quite a lot for the chief executive or managing director to take on. You really need someone in the business who is going to run with that and take that forward because it is pretty
much a full-time job and especially when you’re dealing with 30 or 40 countries.”
The company manages a portfolio of nearly 300 journals and over 2,350 books and book series volumes. Currency fluctuations can also cause global businesses, such as Emerald, headaches.
Cox gives businesses one simple message when it comes to setting your budget:
“Set it and forget it,” he says.
“There is a lot of fluctuation out there. 45% of our revenues come in US dollars and back in May the rate was $1.72/$1.73 and everyone wondered where it was going and now we are down to $1.56 and forecasting that in 12 months, it could be down to as low as $1.40. That swing is 10% of your top line potentially gone. So it is a dangerous game to try and predict the market.”
Cox said with financial planning and working with the bank, you can lock in a rate and work from that.
“You have got to lock in and then you can budget for that, so you can make decisions and with confidence can say let’s do this or say this year’s not a good year because we are going to suffer a bit of pressure on our currency. You set it and forget it.
“Don’t look back at the market because it is a casino. You’ve got to be a magician to really work out which way it is going to go. You create value by creating a product, not by guessing currency markets.”
