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Why is exporting good for business?

Posted on 2nd December, 2019 Why is exporting good for business?

International trade is an intrinsic part of the business world. It involves goods or services produced in one country being bought by someone in another. If it is a product you are exporting, the product will need to be transported there and you will need to be partnered with a logistics provider to facilitate this. The seller of such goods is the exporter, the foreign buyer is an importer. The logistics partner is a link in the supply chain. 

A distribution company will be able to help both with the storage and packing of the products, and also with the actual process of exporting the goods. Exporting goods often requires the involvement of customs authorities and this involves a certain amount of knowledge of customs regulation. If you’re looking to branch out into an export market, it can help your business in a number of ways. One way is that you can develop new market-specific products. This will encompass such things as market research and the creation of a new product – so-called Research and Development. You might find that by tailoring your offering you find new products that would work well in your home market.

Working on the margins

The price point of the product will increase, as a result of added costs such as transportation. Many firms begin their global expansion by exporting to neighbouring countries, to minimise transportation costs.  We are fortunate that the UK is closely aligned with a large adjacent trading bloc in the EU and also enjoys wide global trade arrangements. There are different sets of rules for countries outside the EU, with World Trade Rules applying. These are considerably more complex than EU regulations and each country will have its own cultural and language that may be very different from western European culture. 

Once a product is established, it may be an option to begin a production site in the country, thus expanding your offering abroad in other ways – such as local employment. The product can then be made in situ, reducing logistical costs in terms of transportation. Making the product regionally is especially useful in the case of products that are bulky and have a high transportation cost associated with them.

The obvious huge benefit of exporting is the extra revenue it can generate. The initial leap into new markets can be expensive, but in the long-term the money is well spent if the product is successful. Some products have a shelf-life – particularly fresh produce and foodstuffs – and the logistics of freighting them long distances can introduce such factors as refrigeration to the trade equation.   

Racing to new markets

New markets can open up as a result of many things, but there are also many trade barriers in place too. These can be inbuilt protections that include government regulation and laws and can protect domestic products or stimulate cheaper imports. In this way government policy can define how successful an economy becomes.

There has been much talk of tariffs on imports and exports in the news recently, which can be imposed by governments as a form of tax. Tariffs can be used to stimulate the domestic manufacture of a product, which is being undercut by a cheaper import.    

It is obviously easier for larger companies with greater revenue to become successful exporters. For small and medium enterprises (SMEs), with fewer than 250 employees, selling goods and services to foreign markets can be more difficult. This can be through a combination of a lack of in-depth knowledge of trade regulations, various cultural differences and languages, as well as the added strain on resources and staff of expansion. Some SMEs export, but nearly two-thirds of them sell to only a single foreign market.

On the road to success with Boughey

Boughey Distribution is moving towards the export market and can help with firms that are looking to expand into new markets. Knowledge and expertise are worth as much as efficiency and capability when it comes to handling goods for export outside the UK. Boughey can provide a safe pair of hands when it comes to moving into the export sector, so get in touch with us today.

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