International Trade Surveys

"Quarterly banking reports, news and information fromTEAFL."

The Exporters' Survey

Each year we produce a report on issues facing British exporters. This year's report has been published in the Global Tade Review based on responses to our survey of over eight thousand exporters in the UK The report is an independent assessment of the prospects and trends in the export market over the last year. Below you will find an extract from the latest report. You may also download a copy of the GTR report here. The full report is available on request.

"The 2007 survey of international services provided to UK companies, commissioned by The Institute of Export, has been completed and makes interesting reading. Companies are increasingly concerned but their banks have a better reception this year."

The results of a 2007 survey of international services provided to UK companies provides a good insight into how trading companies view their bankers, which banks they rate the best for providing international services and products, the strongest and weakest factors in bank relationships and areas in which they would like banks to improve.

Banks' Performance Improves

The headlines of this year’ survey include:

UK companies continue to be very concerned with their competitiveness and profi tability as they are faced with a strong supply of goods from China and India. The strength of sterling is helping importers to achieve larger profi ts. Exporters continued to struggle with the value of sterling, however, many trading with Europe in euros, which is facing less volatility.
Respondents are less critical of banks this year with the majority of banks meeting their customers’ fi nancing needs. However, respondents were critical of the charges banks levy, speed of service and the access to knowledgeable bank staff. On a positive note, respondents valued good relations with their bank manager.
The full survey analyses banks’ service levels, by turnover band, exporter, import, and their needs. Additionally, the report segments the respondents by geographical region and creates a league table for various banks within each region.
Less than 50% of respondents receive any information on government initiatives and a similar number fail to receive any support or advice from UK Trade & Industry (UKTI).
More exporters are showing business growth than in 2006.
Companies are critical of the increase in red tape and also lack of government support. Many are unable to name any minister championing exporters.
The full survey details the strengths, weaknesses, and reasons that will cause companies to move banks. This research will provide banks with key pointers in which they can protect their business or gain market share from their competitors.

Top

Export Performance

In this year's survey of over eight thousand exporters companies expressed more confidence this year when compared with last year, despite strong overseas competition. Many respondents have been faced with competition from China and India. Many exporters have been unable to remain competitive, producing high volume and low cost items. However, on a positive note more companies are selling capital goods into these markets.

Some 52% of companies surveyed reported that exports were growing with 35% of respondents stating that turnover remained static. A much higher percentage of companies with turnovers above £1mn reported higher levels of export growth. This is a significant improvement from 2006. Many respondents report sales growth areas across all geographical regions, with many of the larger companies trading in many different markets and with a spread of business from direct sales, joint ventures and subsidiaries.

There was an increase of 12% in the number of companies reporting an increase in export turnover in 2007 compared to 2006. Companies in the £5mn turnover band grew by 49%, the £6mn-£10mn band grew by 25%, the £11mn-£25mn band fell by 8% and companies with a turnover above £26mn reported a drop in export sales of 10%. Some 8% of respondents were closing their business or transferring their operations to locations outside of the UK. It was calculated that nearly 2,000 jobs have been lost. Half of these companies were foreignowned and the owners have withdrawn from the UK market.

Exporters have reported increased business demand from Egypt, China and India, however the payment terms have been very competitive and extended credit terms were sought.

Brazil has been identified as a low cost market and exporters are actively seeking western technology to improve production quality.

Export Performance of Companies in 2007 by Turnover Band

Export Turnover	Increase	Static	Contracting
Up to £1m	50%	41%	9%
£1m - £5m	93%	0%	7%
£6m - £10m	84%	13%	3%
£11m - £25m	78%	20%	2%
£26m plus	65%	20%	15%

Top

Government

Around 45% of exporters do not receive any advice or information from UKTI. The smaller companies receive less, with nearly 40% of respondents with turnovers below £10mn receiving no communication from UKTI. The majority of respondents felt the level of advice and information they receive from UKTI is poor, fragmented and of limited use. The survey showed that many companies fail to consider the investment, both in planning and cost when developing, maintaining and growing overseas markets.

Top

General Conclusion

The survey has highlighted major areas for complaints and frustration among medium and small exporters, who have little‘’ in demanding change. Most banks are providing a basic international service, ie, payments and remittances. These exporters deal mostly with High Street branches, which now provide little more than a counter service. These companies need to be more proactive and request more support from their bankers.

This support is available but many domestic branch managers do not understand the request or do not know where to find the relevant information.

The survey also flags up the conflict and differences between bankers and exporters. Few bankers have exported goods and many exporters have seldom considered the implications of a deal going badly wrong. Most smaller exporters, by their nature, are entrepreneurial and do not believe that transactions will go wrong and have the potential to wipe out their business.

Exporters voice their frustrations at banks and government and many blame the buyers for intransigence and slowness to act; but many exporters fail to take ownership for the huge percentage of letters of credit that are rejected on first presentation to banks and the costs associated with the discrepancies. Many branches have advised that much of this delay, cost and frustration could have been avoided if the exporter had shown more care and diligence.

The survey highlights many of the key areas that banks and government can address to improve the delivery and quality of service. The findings also show how exporters can help themselves and improve the service they receive from their service providers.

The full report of the annual survey is available from from us. Contact us for a copy.