Foreword
Councils have long played a significant role supporting exporting. By working with stakeholders, they have conducted trade missions and provided bespoke advice and businesses support through growth hubs. Councils have used political and institutional connections with places in Germany, China and elsewhere to help build connections between international and domestic markets.
In the context of the Government’s levelling up agenda, exports will play a key part in the Government’s post Brexit ambitions. Local government can help fulfil these ambitions.
Councils have demonstrated their place leadership role by working with national government to support their communities through the pandemic and are now turning their attention to the significant economic challenges that have resulted from COVID-19. Councils stand ready to work with the government as an important partner in their ambition to build back better and level up the country, including supporting local businesses to increase exports. This is why we have included contributions from the Department of International Trade (DIT) to help with this guide.
The exporting industry is complex and difficult to navigate. The Local Government Association (LGA) has therefore commissioned this guide to provide a resource to councils looking to support local firms to increase their level of exports. This guide covers an introduction to international trade, including the benefits it can bring to local economies. We have surveyed local businesses on the types of support they need and have provided checklists and best practice case studies to help you get started. The guide also explores how councils have engaged diaspora communities to help bring the benefits of trade to wider and diverse communities.
Local government have real ambitions for their local economies, and opportunities to support businesses in exporting. This guide will help councils achieve these ambitions.
Cllr Kevin Bentley
Chair, People & Places Board
Introduction
DIT are developing a refreshed Export Strategy to ensure firms can take advantage of new market opportunities. It will raise the exporting culture of the UK, take advantage of our independent trade policy, and target the world’s fastest growing economies.
UK exports totalled £690 billion in 2019 and, notwithstanding the impact of coronavirus on global supply chains, it is likely that trade in UK goods and services will continue to play an important part in the Government’s ambitions to increase national growth and prosperity as part of its ‘levelling up’ agenda.
Local government has long played a significant role in the promotion and furtherment of overseas trade, working alongside the private sector, Local Enterprise Partnerships (LEPs) academic institutions and other central or sub-national organisations to: conduct trade missions, signpost/provide businesses support; organise local trade fairs; and using political, institutional and community connections to help establish trade between local firms and international clients.
The conclusion of trade talks between the European Union and the United Kingdom has placed a renewed focus on the opportunities to increase levels of global trade, particularly the exports of goods and services. It has also introduced a significantly new trading context.
As we rebound from the impact of COVID-19, increasing the international ambitions of local SMEs presents local government with an opportunity to advance their local vision, contribute towards sustainable growth and help deliver on the Government’s ‘levelling up’ agenda.
International trade is a complex layered landscape of players and support. This guide highlights some of the key opportunities, partnerships and considerations in this new landscape to help councils find their place and at the beginning of this journey.
Everyone in the public sector, private sector and academia has a role to play in helping realise this ambition.
"The UK’s innovation, creativity and outstanding services have never been more relevant to a changing world...this is the moment for government and business to show leadership and ambition, backed by action, that will position the UK as the most competitive, dynamic and future-focussed economy in the world”
Andy Burwell, International Director, CBI
COVID-19: role of international trade in economic recovery plans
‘Build Back Better: our plan for growth’ sets out the Government’s plans to support growth through significant investment in infrastructure, skills and innovation, and to pursue growth that levels up every part of the UK, enables the transition to net zero, and supports their vision for Global Britain.
Whilst much of the detailed policy will emerge from the new UK Board of Trade (see next column) it sets out some of their key ambitions which include, lining up the export strategy with key sectoral priorities and plan for growth.
COVID-19 has had a profound impact on global trade and has led many businesses to review their business model.
Innovative companies are already looking to the future and in some respects (especially for high-value services) virtual meetings and on-line delivery has made international trade easier and less geographically dependent.
Councils, with their local knowledge, have a vital role in supporting their small and medium sized enterprises (SMEs) to raise their international ambitions.
Promoting trade and investment will be at the forefront of the UK’s economic recovery from the COVID-19 pandemic. The recent report from the UK Board of Trade, ‘Global Trade, Local Jobs’, recommends that the UK should promote an ‘export-led recovery’ by seeking to internationalise the economy. Priorities should include:
Case study: Wicks Manor
Essex-based farmers and butchers, Wicks Manor, faced a sharp drop in sales to pubs and restaurants during the COVID-19 lockdown.
Eager to find alternative routes to market, Wicks Manor looked for support from the Department for International Trade (DIT), to help the business ramp up its exports to supermarkets in Singapore, Hong Kong and Malaysia.
The company claimed that international trade provided a lifeline during the pandemic, with exports increasing from 20 per cent to 40 per cent of sales enabling the business to maintain nearly a full staff count of 45 employees.
Executive summary
Need to know
This report highlights how local government can support local businesses with their international ambitions. Helping the Government hit its ambitious growth in trade and bring local jobs and increasing social value to your area.
It shows:
- international trade provides benefits locally and nationally
- exporting drives growth and innovation within companies, driving up local productivity
- ambitious entrepreneurial companies help local areas thrive, bringing employment, raising skills and realising local ambitions
- entrepreneurial companies need an encouraging economic environment, business support and finance
- the support layout is often overlapping and confusing to navigate. We should avoid reinventing the wheel.
- leaving the EU has opened potential further flexibility in how local government can support businesses in their trade ambitions.
Local government have a unique offer bringing local knowledge of businesses and skills, economic agendas and wider diaspora in addition to local connections and business support. But they can’t do it alone.
Below we set out some key actions and connections that local government can make to support this agenda.
Checklist: Your actions - stimulate
- Bring an internationalisation agenda to the fore in relevant sections of your economic vision and strategy.
- Highlight your key infrastructure and international connections, whether Ports, Free Ports, Airports etc.
- Work closely with partners in Academia, Local Enterprise Partnerships (LEPs) and Business Support Hubs to promote the benefits of international trade, especially at events with ‘new to export’ companies.
- Think about a joined up internationalisation strategy covering inward investment and international trade.
- Work closely with DIT and MPs to
- promote exporting companies with press releases/ social media
- use #ExportingisGREAT to maximise the reach
- host or support a trade promotion and networking event.
- Encourage your local businesses to join the national Facebook Community Group – facebook.com/ExportingisGREAT.
- Encourage local businesses to become Export Advocates with help from your local trade team.
Checklist: Your actions - advise
- Ensure that the local offer is clearly articulated and the roles for each organisation are clearly understood.
- Use your website, business hub and other communication to tell local businesses about support available
- highlight Information about trade events happening near them
- encourage peer to peer networking between new and existing exporters.
- Point businesses to DIT for:
- advice on how to start exporting
- information on where to sell their products
- help selling online
- financial support to start or scale up exporting.
Checklist: Your actions - collaborate
- Local government should engage with and connect relevant companies to existing processes like trade missions:
- Sub national bodies: Northern Powerhouse, Midlands Engine
- DIT
- CBI/ FSB/ Chambers
- Catapults.
- Engage with wider networks and bespoke connections
- commonwealth and global government associations
- existing twinning or civic partnerships
- community and diaspora groups.
Checklist: Your actions - fund
- Ensure you and your business support organisations clearly understand where and what national and private support is provided and direct businesses accordingly.
- Keep abreast of developments and emerging examples of bespoke support being provided under the new regulations.
- The response to the current subsidy control consultation is likely to highlight specific areas which are assumed to comply. Nevertheless, this is a complex area and legal advice should be taken.
What is international trade?
International trade allows countries to expand their markets and access goods and services that otherwise may not have been available domestically.
International trade takes many forms and ultimately is our shop front to the rest of the world, the basis to form long term relationships that lead to economic and social benefits.
There is a close relationship between international trade and Foreign Capital Investment (FCI) flows.
International trade is more complex than domestic trade as companies need to navigate the rules and regulations of both countries. Generally, international trade is governed by rules set via the The World Trade Organisation (WTO) at a base level with individual Trade Agreements layered on top.
These agreements and rules determine both the tariff and non-tariff barriers (NTBs) firms face when trading overseas.
There are broadly two types of export:
Trade agreement: Trade agreements set out the rules that cover trade between two or more countries. They aim to make trading easier between those countries. They do this by reducing the restrictions on imports and exports between them. A free trade agreement aims to reduce tariffs to zero.
Non-tariff barriers: are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs and include for certification and inspection regimes for example.
Britain's place in the world
The UK is one of the world’s largest exporters but its share of global exports has fallen over the past ten years by more than any other nation, apart from Germany and France
In 2019, the export of goods and services accounted for 31.6 per cent of GDP in the UK, putting it fifth in the G7 export rankings. Though, the UK share of global exports remains broadly similar to France, Italy and Canada, the UK has however experienced a small decline in its share of global exports past ten years (2009-19).
With this backdrop, the Government are developing a refreshed Export Strategy to ensure firms can take advantage of new market opportunities through better support, better incentives, and a better business environment.
It will raise the exporting culture of the UK, take advantage of our independent trade policy, and target the world’s fastest growing economies. In doing so, it will drive our transition to net zero, foster a dynamic and productive economy, support jobs, and level up every region in the UK.
There is a dedicated network of UK based and overseas agents from the public and private sector that are dedicated to maximise these opportunities.
Councils play a pivotal role connecting the local to the global, working closely with these partners, such as the DIT regional teams to:
Where are our key markets?
At country level, the US is by far the largest market for UK exports, accounting for one-fifth of UK exports in 2019. This was followed by Germany, Netherlands, France, and Ireland. In total, the EU accounted for 42 per cent of UK exports.
| Country | % share of UK exports |
|---|---|
| US, including Puerto Rico | 20.4% |
| Germany | 8% |
| Netherlands | 5.9% |
| France | 5.9% |
| Ireland | 5.3% |
The US is also the UK’s biggest export growth market - over the past decade, the value of UK exports to the US increased by an amount greater than for any other nation and was around the level for China, Germany, France, and Netherlands combined.
| Country | £ million |
|---|---|
| US, including Puerto Rico | +£70,218 |
| China | +£28,873 |
| Germany | +£19,767 |
| France | +£14,366 |
| Netherlands | +£12,656 |
Where are our key markets?
In percentage terms the picture is similar, Over the last decade, two countries have significantly increased their shares of UK exports: China (from 1.9 per cent to 5.3 per cent) and the US (from 17.3 per cent - 20.4 per cent).
| Country | PP increase |
|---|---|
| China | +3.4 pp |
| US including Puerto Rico | +3.1 pp |
| Hong Kong | +0.5 pp |
| Switzerland | +0.4 pp |
| South Korea | +0.3 pp |
The countries experiencing the largest decline in their share of UK exports were all EU countries ie Spain, Belgium, Netherlands, Ireland and Germany.
| Country | PP decrease |
|---|---|
| Spain | -1.1 pp |
| Belgium | -1.0 pp |
| Netherlands | -1.0 pp |
| Ireland | -0.9 pp |
| Germany | -0.7 pp |
What benefits do they bring?
The evidence shows that exporting businesses experience higher growth, productivity, and are more likely to innovate. Exporting helps businesses to grow because it: leads them to create new products and services; makes them more productive; and gives them more customers to sell to.
Controlling for age, size and other factors, exporting firms have been found to have a higher probability of survival, as firms increase their productivity after entering export markets, while exporting is also associated with improved financial performance. Exporting has significant positive effects on productivity, innovation, and R&D. (BIS 2011)
These benefits can be harnessed to support and drive local economic growth. In particular, improving local resilience and supporting your economic ambitions.
What benefits do they bring?
Case study: Gothards - an artisan ice cream maker with global reach
Granny Gothards is an artisanal ice cream producer based in the South West of England which has not only survived but thrived during the lockdown by expanding their product range and market reach through the exploitation of export sales.
Established in 2012, Granny Gothards uses traditional methods to produce a unique range of high-end ice cream and sorbet products which were originally sold locally through fetes, summer fairs and local chefs and available only in around 12 flavours. Since then, however, the company has expanded their product range and market base substantially and currently produce over 195 flavours which they export to top chefs and high-end restaurants all over the world.
Like many other businesses, Granny Gothards was hit hard by COVID-19 as home sales from visitor attractions and restaurants diminished during lockdowns. However an inquiry from a distributor in Dubai resulted in a £3 million deal which has allowed them not only to bring staff off furlough at an earlier date to meet existing demand, but will provide an opportunity to increase production levels outside of the peak summer period.
In addition to the more obvious benefit of increased sales, Granny Gothards can also be seen to have benefitted from risk reduction (market spreading), a reduction in production peaks and troughs and the introduction of new ideas and innovation to their business – the Dubai contract, for example, resulted in the addition of various new flavours to the range including rose water and cardamom, charcoal and coconut and salted honey.
Exports now account for over 60 per cent of Granny Gothards sales compared with 35 per cent before the lockdown and the company is continuing to develop overseas opportunities in China, the US, India and Saudi Arabia with support from the DIT whilst maintaining/expanding its presence in home markets through deals with Waitrose and other established retailers.
What benefits do they bring?
Exports bring huge benefits to local economies -recent research undertaken for DIT found that nearly 6.5 million full-time equivalent (FTE) jobs in the UK are directly supported by exports (3.8 million directly and 2.7 million indirectly) – equivalent to 23 per cent of the UK total.
When knock-on spending effects of export-supported jobs are taken into account, the overall estimate for export-supported employment rises to 11.3 million FTE jobs (or 39 per cent of the UK total). The research also found that goods-exporting businesses are 21 per cent more productive and that jobs directly and indirectly supported by exports are 7 per cent higher-paying.
Across England and Wales, exports support hundreds of thousands of jobs in each region, particularly across the Greater South East, the North West and the West Midlands. Broadening out these areas of high export activity will provide a great opportunity to meet the Government’s mission to ‘level up’ the UK with higher productivity and higher-paying local jobs.
| Region | FTE jobs supported by exports | FTE jobs supported by exports (% population) |
|---|---|---|
| North East | 168,000 | 6.4% |
| North West | 630,000 | 8.7% |
| Yorkshire & the Humber | 418,000 | 7.7% |
| East Midlands | 384,000 | 8.1% |
| West Midlands | 511,000 | 8.8% |
| East of England | 563,000 | 9.2% |
| London | 1,717,000 | 19.6% |
| South East | 914,000 | 10.1% |
| South West | 430,000 | 7.8% |
Source: Fraser of Alexander Institute, 2021
What benefits do they bring?
Case study: UK and Australian space agencies to develop 'Space Bridge'
Through the work Oxfordshire was doing with the Australian Trade and Investment Commission (Austrade) a visit was arranged to the Harwell facilities which subsequently developed into the Oxford/UK-Australia ‘Spacebridge’ initiative which aims to boost trade and investment between the two countries.
The two national agencies are now working with the UK’s Department for International Trade (DIT), industry leaders, the UK’s Satellite Applications Catapult and the new Australian SmartSat Collaborative Research Centre to establish this world-first concept for international space collaboration.
The Space Bridge complements the local economic vision: The Cambridge - Milton Keynes – Oxford Arc, which notes that the Arc is home to the largest space cluster in Europe, competing against global aerospace players such as Silicon Valley in the USA and other emerging clusters in Europe and Asia. In addition to large corporates, such as Airbus Defence and Space, there are also a range of SMEs from start-ups in the European Space Agency Business Incubation Centre to rapidly growing companies such as Oxford Space Systems.
SME's role in the ecosystem
Small and medium sized enterprises (SMEs) are the lifeblood of local economies and account for 99.9 per cent of all businesses in the UK. As such, not only are SMEs considered the cornerstone of existing economic activity, they are also key generators of new employment - research shows the top 10 per cent of ambitious SMEs account for the majority of local employment growth in the UK over any three to five year period and a key characteristic of such SMEs is their propensity to export.
SMEs, as a whole, can be seen as critical to the success of local economies. Exporting SMEs, in particular, are likely to grow faster and be more innovative - research for the FSB #GoingGlobal Campaign shows that annual turnover of exporters was nearly three times that of non-exporters (£935,000 v. £390,000).
Our survey of exporting SMEs across England shows that they are poised to expand their global horizons even further.
Whilst correlation doesn't equal causation, providing a supportive local economic environment which encourages international ambitions is likely to produce knock on benefits locally.
"We buy raw materials locally, we buy tooling locally and employ from the local job market. Our sales are mainly exports”
SME business owner
What do businesses want?
Why do businesses need support?
Despite the potential benefits of exporting, market failures and other barriers deter many UK firms from trading overseas and prevent many businesses who already export from expanding into new markets.
The Government identifies seven key barriers to exporting:
Our survey of exporters found that businesses were most likely to report costs and tariffs as barriers to exporting more.
The first step to exporting is often the hardest, with our survey showing that it is usually derived from an ad-hoc request.
What support do businesses want?
Top five areas of support required:
- Identifying new market opportunities
- Sales and marketing, including market knowledge and identifying possible business partners
- Access to trade events, missions and webinars
- Export strategy and planning
- Introductions to new supply chains
Source: LGA: Survey of Exporters. 2021
Whether new to the idea of exporting or veterans looking for new markets, businesses appreciate support in key areas that support their ambitions.
Much of the support required is identifying and engaging in new markets. The most important factor for a business to consider when deciding to export is product/market fit.
It is for the reason of best market fit and common goals that sector-based approaches are increasingly popular.
Some councils provide specific support in these areas and have offices in overseas territories. Sunderland’s International Strategy being a good example which includes offices in Japan as a reflection of the importance of Nissan.
Scale is important to effectively deliver much of this. Consideration needs to be made of what the right level of government/geography is appropriate to deliver which type of support.
Case study: Sunderland City Council
Sunderland’s ‘International Strategy’ builds on its twinning arrangements with Essen, Germany and Saint-Nazaire, France, and friendship agreements with Washington D.C., USA and Harbin, China. The strategy focuses on forging strong links between local and international businesses, strengthening the international dimension in educational and cultural activities, sharing good practice with other cities, and raising Sunderland’s profile internationally.
Sunderland City Council also employs independent consultants in Japan and the USA reflecting key global employers with a strong presence in the city. While they work primarily to promote inward investment opportunities, they also provide points of contact for local businesses looking to explore export opportunities where appropriate.
Where do businesses go for support?
Businesses look towards sources of support they know and trust. Our survey of exporters found that businesses were most likely to go to existing contacts/friends and family for help with exporting. Other popular sources of business export support included business associations, the Department for International Trade (DIT), local and regional government, and professional advisors.
Around half of the businesses would look to local & regional government for support on exporting, though historically only around 30 per cent have actually done so, indicating that there is room for improvement.
In this mixed landscape of names and providers, it is crucial for there to be clarity about the role, nature and extent of support each provider brings. The government’s ‘no wrong door’ approach when businesses seek export support can be achieved through effective joining-up of/across government, local partners and the private sector.
Source: LGA: Survey of Exporters. 2021
What support is available?
Who provides business support for international trade?
Business support for international trade is a complex landscape of public and private sector organisations and services. Alongside the support provided by the UK Government, through such channels as the Department for International Trade (DIT) and UK Export Finance, there are many other business and export support providers across the private and public sector who are often the first point of call for businesses.
Critical to the delivery of a collaborative export strategy is the effective joining-up of these services, ensuring that services are complementary and businesses are signposted to the right support at the right time.
Understanding the existing services and support and building on this, rather than creating more overlap is key to optimise the benefits.
In addition, inward investment teams are often completely separate to export support teams though there is some evidence of emerging local ‘internationalisation’ initiatives that tackle this divide, this is a strategy that is being pursued by Oxford LEP amongst others.
We ...want to adopt a ‘no-wrong door’ approach across government so that businesses do not need prior knowledge of the ‘right’ public body to access the available export or business support.”
Who provides business support for international trade?
- Central government: Department for International Trade (DIT), UK Export Finance, Foreign & Commonwealth Office, Department for International Development, Department for Business, Energy & Industrial Strategy/Intellectual Property Office, Department for Environment, Food & Rural Affairs, Department for Digital, Culture, Media & Sport, Department for Transport, Territorial Offices, Innovate UK.
- Industrial bodies: Chambers of Commerce, business representative organisations, trade associations, business councils (eg China-Britain Business Council) , professional membership bodies.
- Local government: Councils, combined authorities, Local Enterprise Partnerships/growth hubs, pan-regional organisations (eg Northern Powerhouse and Midlands Engine).
- Intermediaries: Finance providers, accountants, lawyers, consultancies & advisory firms, logistics & technology specialists, eCommerce marketplaces, universities.
Support provided by central government
|
Stimulate Encourage and inspire businesses that can export but have not started or are just beginning. |
●GREAT Campaign/great.gov.uk
●Export Academies
●UK Export Champions
●Parliamentary Export Programme (PEP).
|
|---|---|
|
Advise Help businesses access the right information, advice and practical assistance. |
●Great.gov.uk
●DIT Regional team
●Intellectual Property Office
●UKEF Export Finance Managers
●UK-based sector teams.
|
|
Collaborate Connect UK businesses to overseas buyers, markets and each other. |
●Ministerial visits & missions
●HMG’s International network
●Prime Ministerial Trade Envoys
●UKEF supplier fairs.
|
|
Fund Ensure no viable UK export fails for lack of finance or insurance from the private sector. |
●UK Export Finance offer.
|
Support detail - central government
The UK Government provides a range of export support services. Key services include the following:
The Department for International Trade (DIT) helps businesses export and grow into global markets, through its UK-based trade advisors and network of overseas posts.
Local support can be accessed through DIT’s regional trade teams, who can provide face-to-face support to help SMEs develop export plans and online strategies to access overseas markets, in partnership with other local public and private service providers. These regional teams tend to concentrate on existing exporters to help increase the value of their contribution. DIT also has a number of sector-based teams, which tailor DIT’s services to the specific needs of different sectors. To find out more, please e-mail [email protected]
Great.gov.uk is the Government’s digital platform for businesses seeking information and guidance on exporting as well as access to DIT’s services. It offers a range of services and tools to help businesses increase their knowledge and capacity to export, and connect with overseas buyers. Along with the export academies this digital front door is likely to be the main entrance to central government services for new-to-export SMEs.
The Intellectual Property Office (IPO) offers advice and information to help exporters realise value from their intellectual property (IP) and mitigate potential IP-related risks when moving into new markets.
The Government’s international network of HM Trade commissioners, ambassadors and high commissioners utilise their government-to-government relationships and local insight to open new markets, reduce market access barriers, provide market insight, and support UK businesses to reach new customers.
Local MPs may be involved in DIT’s Parliamentary Export Programme, providing advice and support to businesses interested in exporting. Find out if MPs in the council area are involved and liaise with them to encourage local businesses to take part..
Support provided by other organisations
|
Stimulate Encourage and inspire businesses that can export but have not started or are just beginning. |
●growth hubs
●networking events and local trade clubs.
|
|---|---|
|
Advise Help businesses access the right information, advice and practical assistance. |
●growth hubs
●certification and documentation
●regular membership communications
●export hubs.
|
|
Collaborate Connect UK businesses to overseas buyers, markets and each other. |
●trade fairs, missions and shows
●virtual trade fairs, missions and shows
●advice on local market access support
●twinning and other civic relationships
●working with diaspora communities
●export hubs.
|
|
Fund Ensure no viable UK export fails for lack of finance or insurance from the private sector. |
●limited bespoke local support
●banks, insurance and other professional services
●export hubs.
|
Support detail - other organisations
Growth hubs are a key mechanism for providing export support in local areas. Growth hubs are local public-private sector partnerships, which integrate national and local business support and ensure that business support meets local needs. They provide face-to-face professional advice to businesses and signpost them to appropriate public and private sector support.
Certificates and documentation services are often a key requirement to export goods between countries. These include: export health certificates, food safety, preferential origin and free sale etc. Some of these services are provided by councils.
Diaspora communities are a community from the same country living in another country as a community. Supporting these communities to expand on existing international links can increase opportunities.
Trade fairs, missions and shows are international trips that provide opportunities for businesses to connect with new customers and build new supply chains.
Since COVID-19, there has been a move towards virtual missions.
Export hubs: New trade and investment hubs will be established to boost trade and investment and level up the country. Including a new second major DIT site in Darlington.
The hubs will also create a critical link between the regions and the resources of the Office For Investment. The hubs will be home to teams of export-and-investment specialists, who can provide businesses with expert support and advice.
Funding and providing export support
Historically, much local business support , including for exporting, has been funded via EU regional development funds. Leaving the EU provides an opportunity to rethink what is possible.
The key to providing innovative support services will be balancing the trinity of: opportunity, funding and the rules.
Opportunity - businesses are likely to find the opportunities and will turn to local, sub-national and national government to find funds that fit within the rules to provide support.
Funding - it appears that more funding for export support is going to be concentrated within DIT. Even sub-national bodies struggle to find funds to support international trade services from their main funding pot.
The UK Shared Prosperity Fund, the domestic replacement for the ERDF programme, is likely to be a leading funding pot for business support more generally. Other emerging funding pots like Levelling Up Fund may have a role to play.
Some business and providers have also recently seen funds from UKRI programmes to encourage overseas innovation.
Some councils have noted that these funding sources may not be available to support activities outside the UK, so it will be more difficult to develop the international links, i.e. little incentive for an EU partner country to get involved.
For businesses the government has launched the Internationalisation Fund which is a matched fund accessed via one of DIT’s International Trade Advisors.
The rules - whilst the exact shape of the new UK’s subsidy regime is under consultation, the new regulations around state aid could allow councils more opportunities to help support business and involve less bureaucracy
Ultimately the framework will remain governed by WTO rules. The key restriction remains that you cannot reduce the capital cost of exporting (through direct export subsidy). However you can subsidise a company to improve competitiveness.
The final policies are likely to be considerably less prescriptive and look more like a broad set of principles. Whilst for some this ambiguity might be challenging, for the ambitious this presents an opportunity to innovate and drive change.
Recent innovations in support
Export Academies
Export Hubs
Leveraging local links and diaspora
Virtual Missions - Impact of coronavirus
Central government - new initiative
Case study: Export Academy Pilots
The Export Academy, from the Department for International Trade (DIT), gives small and micro-businesses the know-how to sell to customers around the world with confidence. The new Export Academy Pilots launched in late-2020 are designed for smaller businesses who are starting to think about exporting or are tentatively making the first steps towards internationalisation.
This pilot programme is being rolled out for businesses with turnover <£500,000 in the Midlands, North of England and the South West of England.
Primarily online delivery, due to the pandemic, the academy features educational events, independent learning, networking and group mentoring. The aim is for participants to leave the course with a completed export action plan to take their business to international customers.
Export Academies also showcase the support that’s available from DIT and its local trade offices, including the chance to join future trade missions and access grants and funding.
Leveraging local links and diaspora
Councils are place leaders and have close links to local communities and wider civic engagement as well as in-depth knowledge of their local employer base.
These local links can be used to build international relationships and help develop successful international trade and investment opportunities. The ultimate rewards can be large, not only in economic terms but there is the potential to foster good relationships with different communities and increase social value.
There is a long history of municipal twinning between towns and councils. These, mainly civic, arrangements have typically led to cultural and school exchanges but have had limited commercial value.
More recently there has been more of a focus on the outcomes that are being sought from these engagements, whether this is seeking a commercial outcome from the beginning or expanding academic collaboration.
There has been a renewed focus on the connections between diaspora communities, in addition the Northern Asian Power Mission case study, Bristol City Council and the local DIT team from Business West are organising a similar event for May 2021
Given the potentially long time horizons involved with building international links of this nature and the importance of scale to drive a critical mass of opportunities, much of this activity is now conducted at a geographically region, sectoral or other specific factor.
Councils should be enabled to take the opportunities offered by these activities to showcase their strengths and connect the relevant parts of their community or business world.
Connecting the diaspora
Case study: Northern Asian Power Mission
The Asian business community makes an enormous contribution to UK plc, providing the backbone of UK enterprise with a share of over 11 per cent of new business start-ups. According to research published by the CBI, the British Asian community also generates around 10 per cent of the country’s GDP despite making up only 4 per cent of the population.
Northern Asian Power Mission represents the best of Asian businesses across the UK’s Northern Powerhouse. It has recently followed up the success of ‘2020 Powerlist’ with a one-week virtual trade conference to encourage diaspora communities to connect and increase trade and investment with the aim of building trust and starting to forge long-term relationships.
Keynote speakers came from public sector (government officials, MPs and mayors), academia, business groups and the businesses community itself from each country with different sectors showcased on different days. Importantly, the conference allowed connections to build at civic level (G2G), academic level and business Level (Trade and Investment)
Events like this present an opportunity for councils to engage more broadly and encourage growth from thriving local communities whilst recordings of the event offer continued engagement opportunities.
Impact of COVID-19
COVID-19 has fundamentally changed how businesses can be supported in their international ambitions. In particular, travel restrictions have curtailed most physical events.
This had lead to much innovation in the sector and some fantastic virtual events, which offer the ability to get experts and businesses in the room without the cost and time associated with travelling for extended periods.
Virtual events also allow much more flexibility for showcasing different sectors on different days, allowing higher profile speakers from Government, business and academia to get involved more easily..
These events have been particularly good for making introductions and building new relationships both commercially (B2B) and on a civic basis (G2G).
The success of these events will no doubt mean they will continue to support internationalisation efforts after the end of the current crisis. Face-to-face events can then be employed where there is already an opportunity to explore.
“We drew on our unique energy systems knowhow and networks in-country to prepare UK firms for the Indian and Thai markets and then supported them through their virtual engagement with potential collaborators and clients. Having seen so much initial success, we look forward to building on this and repeating it for other countries before meeting up physically”
Eric Appleton, Incubation Manager, Energy Systems Catapult.
Virtual trade missions
Case study: Midlands Engine: Midlands - UK Forum for Growth
The Midlands Engine partnership brings together public sector partners and businesses to complement the activity of local and combined authorities, LEPs, universities, businesses and others. Its scale means it is better able to attract increased international interest than a council on its own.
As COVID-19 curtailed their overseas promotional activity, they built and promoted a virtual global event to make use of all the goodwill, opportunities and materials in the region and keep momentum up.
A four day event was held in November 2020 for global leaders and investors to showcase the region’s wealth of opportunities for sustainable growth, investment and collaboration.
With a different sector showcased every day, the event was a unique opportunity to involve a wider range of businesses and stakeholders than normal.
As an added advantage, the recordings of the sessions are being used as a window on the region.
How can you help?
How can you help?
At the heart of the Government’s internationalisation agenda is the desire to join up export services to provide a ‘no wrong door’ approach for businesses. Against this backdrop it is important to understand where councils can use their skills and local knowledge to gain the economic benefits.
English councils benefit from a number of advantages afforded by their proximity to local markets, businesses and investors that culminate in a better understanding of local assets, local investment priorities and opportunities, and local needs. At the same time, they are able to exploit local networks and relationships with local businesses to help join-up services, reach out to potential exporters and provide support for investors looking to relocate to the UK.
In addition, local councils have a strong grasp of the local economic agenda and their sectoral strengths. Sub-national and national government need to be pushed to prioritise these areas.
For many SMEs, the introduction of international trade is a slow process from the first ad-hoc overseas order until the implementation of a full blown international strategy. This will also be reflected in the time it takes for them to realise economic benefits and for associated societal benefits to be accrued.
Councils need to prepare for this and reflect upon it as part of their ongoing strategic economic support agenda.
The next pages outline specific areas where councils have a role to play driving the internationalisation.
- stimulate
- advise
- collaborate
- fund.
Stimulate: encourage and inspire businesses that can export but have not started or are just beginning
This is a critical area in which local government can support national ambitions, and provide both additionality and amplification.
Local government has an in-depth knowledge of local businesses and skills. Through the development and dissemination of a local economic vision and links with local anchor organisations such as academia, LEPs and business support hubs, it can ensure that internationalisation remains high on the agenda.
The most challenging area of exporting has also been identified as encouraging businesses to get involved in exporting in the first place, as businesses find export development difficult.
Much proactive national support is geared to existing exporters. Engaging businesses that are new to export is an area councils can excel at given their local work. It should be remembered that encouraging businesses to start exporting is a long game and it is difficult to get results quickly.
Your actions - stimulate
- Bring an internationalisation agenda to the fore in relevant sections of your economic vision and strategy.
- Highlight your key infrastructure and international connections, whether Ports, Free Ports, Airports etc.
- Work closely with partners in Academia, LEPs and Business Support Hubs to promote the benefits of international trade, especially at events with ‘new to export’ companies.
- Think about a joined up internationalisation strategy covering inward investment and international trade.
- Work closely with DIT and MPs to
- promote exporting companies with press releases/ social media
- use #ExportingisGREAT to maximise the reach
- host or support a trade promotion and networking event or overseas delegation.
- Encourage your local businesses to join the national Facebook Community Group – facebook.com/ExportingisGREAT.
- Encourage local businesses to become export advocates with help from your local trade team.
Advise: help businesses access the right information, advice and practical assistance
The landscape for business support is overlapping and complex. In addition to local business support hub services, there are local, regional and national bodies in both the private and public sector that provide advice and guidance to businesses.
Specific international trade advice is not only provided as part of these broad services but also by specialists such as DIT and various specific institutes and country associations.
At a local level others who export or have international connections might also provide advice and guidance. A peer group of companies can be used to inform and support other businesses.
The Government’s ‘no wrong door’ approach when businesses seek export support can be achieved through effective joining-up of/across government, local partners and the private sector.
Your actions - advise
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Ensure that the local offer is clearly articulated and the roles for each organisation are clearly understood.
- Use your website, business hub and other communication to tell local businesses about support available.
- highlight Information about trade events happening near them
- encourage peer to peer networking between new and existing exporters.
- Point businesses to DIT for:
- advice on how to start exporting
- information on where to sell their products
- help selling online
- financial support to start or scale up exporting.
Collaborate: connect UK businesses to overseas buyers, markets and each other
At a political and civic level, international trade is based around a reciprocal relationship, where there are win-wins for both sides. Practically, this means that scale is important.
Increasingly, it is recognised that a sector-led approach is able to produce the best results as introductions and relationships can be tailored more precisely.
Historically, local government has been involved in building overseas relationships through twinning, civic relationships and occasionally even having overseas offices.
To engage a sufficient number of companies for events and missions, it is more and more practical to look at a scale above local government.
Whilst most successful activities at this level will be delivered outside the council, there is still a role to engage through existing bespoke relationships, eg Sunderland City Council, working closely with DIT, has provided match funding for ERDF-funded trade missions and incentives for businesses to attend international trade shows, where this has been identified as a need through its account management role.
Your actions - collaborate
- Local councils should engage with and connect relevant companies to existing processes like trade missions:
- sub-national bodies: Northern Powerhouse, Midlands Engine
- DIT
- CBI/ FSB/ Chambers
- Catapults.
- Engage with wider networks and bespoke connections:
- commonwealth and global government associations
- existing twinning or civic partnerships
- community and diaspora groups.
Fund: ensure no viable UK export fails for lack of finance or insurance
The majority of financial support for businesses will not be provided by local government - central government and the private sector are the key providers.
As noted previously, the rules surrounding state aid and subsidy have changed, creating an opportunity for councils to create innovative and bespoke support packages for businesses. This might be particularly useful to support the growth of key sectors highlighted in economic visions.
An example of a programme using European funding was Kent County Council’s Interreg Europe ‘SME Internationalisation Exchange project’, which looked at ways to help SMEs overcome barriers to exporting. As part of this project, a pilot voucher scheme was offered to a small number of Kent businesses to bring in a dedicated export manager to help implement a strategic project or work on an export-related challenge.
Your actions - fund
- Ensure you and your business support organisations clearly understand where and what national and private support is provided and direct businesses accordingly.
- Keep abreast of developments and emerging examples of bespoke support being provided under the new regulations.
- The response to the current subsidy control consultation is likely to highlight specific areas which are assumed to comply. Nevertheless, this is a complex area and legal advice should be taken.
Short term Brexit issues
There is no doubt that the UK departure from the EU has caused some immediate issues, both with respect to trading with the EU and internally - with Northern Ireland.
Almost two thirds (63 per cent) of exporters surveyed by the LGA said they needed ‘immediate operational help’ eg help with Brexit-related legal and regulatory issues, export controls, documentation, logistics and distribution.
Moreover, over one half (56 per cent) of exporters were looking to the public sector to provide this support.
Providers of support services indicated that queries to them were getting more complex and that this is likely to continue when the Trade & Cooperation Agreement comes into full force.
Your actions - EU transitions
- Understand the clear roles that each support organisation plays.
- Ensure your business support partners, LEPs and business organisations are collaborating.
- Update your website and business communications to reflect this.
- Ensure your departments and local providers of certification ( Export Health, Food Safety, Preferential Origin, Free Sale etc) are clearly signposted and trained on the latest rules.
Case study: Kent International Business - Joining it all up
Kent International Business (KIB) is an ‘umbrella programme’, which brings together the key export support organisations operating in Kent. Developed to address the challenges of a fragmented business support landscape and Kent’s poor export performance compared to other areas of the South East, KIB aims to simplify the business support landscape and provide a seamless link between the County’s export support services.
KIB is led by Kent County Council, in partnership with the Department for International Trade, Kent Invicta Chamber of Commerce, the Federation of Small Business, Institute of Directors, HSBC, Enterprise Europe Network, and the University of Greenwich. Day-to-day activities are managed by three members of staff at Kent County Council and are mostly externally funded through, for example, European Interreg funds. A local steering group meets regularly.
The KIB website provides a platform to raise awareness of the benefits of international trade and to signpost businesses to appropriate export advice. The website includes the ‘Kent Export Pathway’ – a guide which maps out local export services and helps businesses to identify the right support for each stage of their export journey.
KIB has also led a series of programmes and activities including: overseas visits/ trade missions for local companies in key growth sectors, stands at international trade fairs, sector-based networking events, and vouchers for companies to bring in dedicated export managers. KIB has also developed strong relationships with European neighbours in key sectors, such as Food & Drink, Health & Life Sciences, and Digital and Creative.