Just one in 10 small businesses in the South West are planning to export in the next 12 months

Alibaba

Despite strong demand from international markets, just one in ten of small businesses in the South West are planning to do business overseas in the next year.

New research, released today by Alibaba Group, highlights that businesses risk missing out on the potential of export to support their growth and recovery through the Covid-19 pandemic, due to common misconceptions related to cost, complexity, and even cultural barriers.

One of the most significant concerns among small businesses in the South West is that they are ‘too small’ to succeed beyond British borders, with nearly a quarter saying their size puts them off exporting. Meanwhile, 12 per cent fear there isn’t strong enough demand for their products overseas, while 11 per cent say it’s simply too confusing, and they wouldn’t know where to begin exploring international market opportunities.

For those who are planning to sell their products outside of the UK in the next 12 months, the decision has often been reactive, rather than part of a strategic growth plan. The research reveals that nearly a quarter of small businesses in the South West say the Covid-19 pandemic has pushed them to look for new international opportunities, while 16% are planning to do so in an effort to counter the impact of Brexit.

Europe tops the list as the most popular target market for businesses that are planning to export, with over a third saying that is where they’ll be looking to sell their product next. This is underpinned by a strong feeling among small businesses that it is easier to export within Europe than to markets further afield. This is attributed to demand primarily, with more than half saying that they believe there is demand for their product in Europe, while 32 per cent put it down to cultural familiarity.

Just 17 per cent of small businesses in the South West, with global ambitions, are looking to the Middle East, while only eight per cent are looking to China.

According to the IMF, China’s retail market had already rebounded to pre-pandemic levels in August, and accelerated in September, demonstrating the resilient spending power of Chinese consumers. This was evidenced by Alibaba’s recent record breaking 11.11 Global Shopping Festival, where $494 million dollars’ worth of UK goods were sold during an 11-day period.

Despite these figures, many small businesses in the South West are overlooking the opportunity due to a perceived lack of demand. Just under a quarter give this as the reason for not considering China as part of their growth strategy. This perception could cost British businesses dearly, given the strong and growing demand among Chinese consumers for international goods.

From luxury goods to health and beauty and nutrition, Chinese consumers hold ‘Brand Britain’ in extremely high regard for its quality and heritage. This demand has remained resilient over the course of this year, and through the pandemic. Alibaba’s annual 11.11 Global Shopping Festival this year shows this in action. The UK was once more among the top ten markets for brands selling into China, selling around half a billion dollars’ worth of goods to Chinese consumers though Alibaba’s platforms.

David Lloyd, General Manager of UK, Nordics & The Netherlands, Alibaba Group, said: “Large companies have always been good at exporting their products around the world. Now, technology is making it just as easy for small businesses – who may not be recognised brand names in their home market – to tap into demand for British products from overseas and to shine on a global stage.

“We helped British brands sell an incredible $494 million dollars’ worth of products in just eleven days during our 11.11 Global Shopping Festival this year.

“As consumption increasingly shifts online, businesses of all sizes need a digital strategy, to allow them to tap into and maximise growth potential in new markets. As small businesses build their growth plans for 2021 and beyond, I would strongly encourage them to explore the role and potential of export within this, and consider how they can take advantage of strong economies in less familiar markets. The opportunity is there:  it’s easier than you think and it’s too big to ignore.”

The research was commissioned among 126 small businesses in the South West by YouGov from 20-23 October 2020.

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