The UK is a major global exporter and importer, but despite global demand, latest HMRC statistics reveal that for the last two years exports have remained flat whilst imports have grown steadily. This offers great opportunities for SMEs looking to enter the export market, but it makes sense to tread carefully, as we explain.
The good news is there is a huge demand for British made products worldwide. Recent research by the Department for International Trade (DIT) found that products branded ‘Made in Britain’ or marked with the British flag are 64% more likely to be selected by buyers in eight of the key export markets worldwide.
As your insurance broker, we can access expertise that will supplement our own advice to help you understand the risks associated with exporting and how best to manage them. They can include areas such as credit, quality, transportation and logistics, language and exchange rates, along with legal and political risks. It is not just about selling your product.
There is huge demand for British made products worldwide.
Illustrating the need for adequate insurance, a company manufacturing baby milk powder initially relied on insurance provided by their shipping company. Their first shipment of milk powder to China revealed their packaging was not adequately protected against tropical temperatures, and much of the product was damaged.
Unfortunately, they found the damage was not covered by the shipping company’s insurance policy, as the fault lay with the design of the packaging. They are now reassessing the level and quality of their insurance cover, as well as quality control for their packaging, highlighting the need to stay in control of your insurance requirements and not rely on others.
Not getting paid is another danger, as a number of exporters found when a Madeira-based trading house defaulted and disappeared, leaving large amounts owing to many UK suppliers. In some cases, the trading house had been paid by European buyers but had not passed on the money to the UK exporters. It may seem a good idea to export goods on credit terms rather than ask for cash, and use a trading house if you have little knowledge of overseas buyers, but it is essential to have credit insurance in place. Without it, one of the UK exporters would not have received payment for £250,000 of supplied computer peripherals.
As these examples show, it is essential to research your market, plan ahead and have appropriate insurance cover, especially given the uncertainty over Brexit, a devalued pound and fluctuating exchange rate.
The import / export market insurance is a specialised field and we use many resources to ensure you receive the right advice and cover for your needs. We can advise on how to transfer, reduce or remove risks, drawing on specialist insurers to provide cover that appropriately protects your interests. We would also suggest looking at www.great.gov.uk, which offers a huge pool of resources, as part of the Government’s new export campaign, ‘Exporting is Great’.