Smaller businesses are exporting more than they import, on average

Fed-ex is probably best known as an international courier – although it does work in other areas of business services too. Its subsidiary FedEx Express has done some research into how much Small and Medium Enterprises (SMEs) in Greater London are exporting and importing – which has been published in The FedEx Great British Export Report.

The research found that over half UK SMEs export and the average SME:
•exports £553k a year to Europe and imports £535k, an average net surplus of around £18k a year;
•exports £714k a year outside Europe but imports just £410k, an average net benefit of £304k.

The research also found that SMEs in Greater London export £11,885 more per month to Europe than they import. The report points out that this trade surplus will help clear the UK deficit. Unfortunately, the report also records that the overall UK deficit (by which we assume they mean trade deficit) is around £2.8 billion.  Assuming a billion to be £1,000,000,000 (a thousand millions), it will take around 87 years to clear the deficit at this rate of trade surplus.

“British SMEs are a driving force in improving the economy,” says Trevor Hoyle, vice president, Northern Europe Operations, FedEx Express.  “The report shows that SMEs recognise how lucrative exporting can be for their business and as result more are going global, actively helping to reduce the deficit.”  This is just as well, as five years of Tory austerity measures in the UK have depressed domestic demand – which is set to reduce further as austerity continues under the new Government (similar to what has happened with the Greek economy).

Hoyle continues, “The SMEs we help to go global are talking to us with a real sense of positivity and they understand there’s a whole world of customers out there to tap into.”

For some smaller businesses however, concerns do remain.  The report shows the perceived most challenging markets to enter include the US, Australia and China, and 58% still feel they need more support to go global – whether from trade bodies, the Government, or logistics providers. They are unlikely to get support from Governments, and nor are trade bodies or logistics providers going to provide charity – so it remains to be seen if the net benefit from exports translates into profits or is swallowed up in paying the trade bodies and logistics providers for their support.

The research also showed that, while British SMEs are tending to export farther afield than a year ago, the majority continue to export to English-speaking countries or the closest localities rather than high-growth markets.  Nearly all (96%) exporting SMEs do so to Europe, while 35% do so to the US.  But just 4% currently export to Brazil, and even less than that to Mexico and Indonesia, despite their fast-growing economies and large populations.  These are the bald figures: reasons why UK companies do not export to these countries could be that their large populations are made up of the ultra poor who struggle to survive on subsistence or below subsistence incomes, creating little demand for imports from countries such as the UK. That is to say, there may well be demand – poor people may well want to buy food, clothes and consumer products – but there is a lack of means to buy goods to satisfy the demand.

When you look into it, you wonder whether it is wise to rely on traditional capitalism to bring health and prosperity to the bulk of the world’s population.

•To view a copy of the Great British Export Report containing analysis and the full findings, please visit http://www.fedex.com/gb/small-business/export-report-2015.html

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