This export module has been developed by the BFM with the aim of enhanciing the skills of the person in a company responsible for export in line with the project's aims of the development and tranfer of best practices in human resources.
On completion of this module the individual should:
- Understand the importance of exporting
- Know how to set up an internal infrastructure to enable exporting
- Know how to identify new export markets
- Know where to go to access the best advice and support
- Have developed a draft export plan
- Identified targets to measure your exporting success
As with most manufacturing industries, the furniture sector has experienced enormous import penetration in the last couple of decades. The market for the budget, low and low-medium ends of the sector has been saturated. At the same time export opportunities have opened up like never before, for example, in countries like Russia and China where British brands are valued and where the middle classes are becoming larger and more discerning in their purchases. In fact, across the world, British-made furniture is invariably considered to represent quality. For UK furniture manufacturers therefore business strategies are changing to encompass export as well as sales at home.
However, despite evidence that furniture export values are increasing for the industry as a whole, selling abroad is still a new market for many companies and their export share of sales remains fairly low. BFM surveys show that while some companies export more than half of their total production, the average share of sales turnover devoted to exports stands at only 5%. There are therefore unparalleled opportunities for sales growth.
PLEASE UNDERTAKE EXCERCISE 1
Throughout 'Getting Started', other learning resources are used, for example:
However during 'Getting Started' many more resources will be identified.
SECTION 1: WHY EXPORT?
Current objections from companies to exporting include:
Exporting furniture, indeed international trade per se, has never been easier. Trading-wise the world has become a much smaller place and you are just as likely to have a customer several thousands of miles away as you are in your immediate locality. There are opportunities in traditional markets such as Europe, Middle & Far East and the USA as well as the high growth economies like China, Russia (and devolved countries) and India.
As more and more British furniture manufacturers embrace the global marketplace, not to do so might mean being left behind, as your competitors increase their turnover in the many lucrative markets that exist around the world.
Indeed, feedback from overseas buyers’ confirms that there is significant interest in UK manufactured furniture in a variety of overseas markets. They suggest that UK companies should approach exporting in a more professional manner and have a clear strategy in place.
Whilst exporting has never been easier, practically speaking, it is important to remember that two of the essential requirements are patience and trust. Your product, price and promotion may all be right but building relationships with your potential clients is crucial.
'Getting Started' will support you in allaying some of the concerns and provide solutions to barriers that are perceived to currently exist.
It hopefully too will give you the knowledge and confidence to implement a considered export strategy for your company and provide a network of contacts that can support you throughout the entire process.
PLEASE UNDERTAKE EXCERCISE 2
According to the Furniture Industry Research Association's Export Guide, academic research confirms that exporting companies:
SECTION 2: HELP & SUPPORT
Although your business may have an established UK market, there's often no reason why it couldn't successfully compete overseas too, growing your revenue and profit. The EU alone for example has more than 500 million consumers; China 200 million (middle class and growing) and if we narrow our view to cities such as Moscow, there is a population of 12 million.
But before you start exporting you need to have sound knowledge of your would-be markets. You also need to consider whether your products are right for each target market and whether you have the necessary resources.
The following sections seek to outline the primary steps that can be taken, in order to gain as much information, advice and support as possible to increase your confidence and make exporting as straightforward as possible.
There are a number of public bodies, associations and organisations that can provide significant information, advice and financial support to a UK furniture manufacturer wishing to export – these are outlined in sections below.
The BFM - offers help & support to its members and has developed an on-line advisory tool, The Export Portal.
The Furniture Industry Research Association's Export Guide points out, export is not confined to the realm of large companies, by making reference to research showing in general terms 2 in 5 of the smallest exporters in the UK (that is, with fewer than 10 employees) already do business in at least one high growth market.
SECTION 2.1: UK TRADE & INVESTMENT (UKTI)
UK Trade & Investment is the government organisation designed to help UK businesses export and grow overseas and therefore it should be the first organisation to contact. The organisation operates nationally, internationally and regionally through a network of advisers. UK Trade & Investment seeks to help UK companies in three main areas:
Advice and support
Preparing to Trade – Your local International Trade Adviser can help you to assess your firm’s needs and plan for sustainable success in your chosen market. You can also access advice on the linguistic and cultural challenges of operating overseas. International Trade Advisers can also provide impartial advice on all aspects of international trade as can a network of Regional Support Centres.
For those New to Export the UKTI has set up a variety of initiatives which will check your potential for export and take you through the mechanics. UK Trade & Investment’ will provide planning and the ongoing support you need to begin an export operation.
The Preparing to Export Programme takes you through 10 key steps to developing an export plan and is supported by Passport to Export designed to improve capabilities with support tailored to company need. The whole programme is accompanied by numerous videos and case studies.
The UKTI also caters for those who are Experienced in Export wishing to enhance their capabilities and develop new markets as well as those who wish to concentrate resources to Exporting Online. In respect on Exporting On-Line the UKTI again provide videos – for example on Localising international websites for foreign target markets and Effective social media marketing.
There is also a government Export Finance Scheme. It helps UK exporters by ‘underwriting’ bank loans offered to overseas buyers of UK products and services. This means it takes on the risk of the loan from the bank, so that the bank is more likely to offer it. It can also help exporters to raise tender and contract bonds, access working capital finance and secure confirmations of letters of credit.
Information and opportunities
As indicated above, UK Trade & Investment’s national and international network can help you gather intelligence on target markets and overseas business opportunities.
Opportunities – Sales leads are the lifeblood of any business. You can register for opportunities to be sent to you by e-mail for your particular sector.
The UKTI through the Export Market Research Scheme (EMRS) will provide free advice on how to carry out market research into new markets although the UKTI does not conduct the research itself. However, Small and Medium Enterprises (SME’s) may be eligible for a grant of up to 50% if their research project is accepted by the UKTI and it could include the purchase of a pre-existing market report. There are a number of organisations providing country and sector specific advice and there are easily found through web search engines.
Overseas Market Introduction Service (OMIS) — through this service the UKTI facilitates the use of the services of UK trade teams, located in British Embassies and High Commissions & Consulates across the world. Typically this will involve either a detailed written report into opportunities that exist or an actual visit to the overseas market that you are targeting and appointments will be made with potential clients. OMIS services are priced depending on the individual request.
A service package could include:
To establish British involvement in a particular country including any specific business arrangements and the UK government provide such a Country Resource.
In addition, an Export Communications Review is avialable which will enable you to find out how your business can be helped.
The UKTI has published an excellent guide based on researh to the benefits of exporting entitled Bringing home the benefits:- How to grow through exporting.
Making it happen
To be a successful exporter you need to spend time in your markets and build lasting commercial relationships with your clients and partners.
Trade shows are an effective way to meet contacts and customers face to face.
UKTI through its Tradeshow Access Programme (TAP) offer eligible companies funding towards stand space, stand construction and freight costs.
Intermediaries, mainly trade associations and chambers of commerce, support UK companies in these activities. These Accredited Trade Organisations (ATO’s) recruit companies to participate in UK groups at exhibitions all over the world. Grant support for exhibitors is available for SME’s and focused mainly on those who are new to exporting.
If you are eligible, you could receive up to three grants (for separate exhibitions) to help you acquire knowledge and experience of exhibiting effectively overseas, as part of your longer-term export strategy.
Where an ATO is not supporting an event, eligible businesses may also apply for funding via the Solo Scheme. Funding is available, as a contribution towards eligible costs.
Training Events are a Regular Feature of UKTI Support Services and are charged at a nominal fee.
The type of information you will need to cover in a market research project includes:
SECTION 2.2: TRADE ASSOCIATIONS
Some trade associations within the furniture industry also offer sector-specific export services that can assist your planning, research and knowledge such as the British Furniture Manufacturers Association - BFM – which is also an ATO for certain shows.
- Sector and Market Information provided through country specific contacts
- Sales Leads and Business Enquiries
- Inward and Outward Trade Missions
- Overseas exhibitions
- Marketing support
- Knowledge and experience
- Networking and contacts
Trade association membership can be a valuable resource to assist your exporting knowledge and support base.
SECTION 2.3: MENTORING & CLUSTERS
Although not a particularly common occurrence in this country, a successful export tool used, in Italy for example, is mentoring.
A more experienced furniture manufacturer will advise, assist and support a company that is new to exporting with practical advice on how and where to export.
Clusters, again prevalent in parts of Italy, are groups of companies linked either by product, geographical location or common aims, who work closely together. When it comes to exporting, the companies may use the following options to achieve economies of scale, reduce risk and increase the chances of success:
- Joint marketing
- Sharing exhibition stands
- Freight consignment
- Knowledge sharing
SECTION 3: MARKET & COUNTRY INDENTIFICATION
Good markets for British furniture exist all over the world. The secret is to choose the best one for you based on your individual circumstances and requirements. Outside of Europe, some of the most popular destinations for UK furniture include UAE, Hong Kong, Russia, China, Saudi Arabia, Australia and Japan.
You'll need to understand the culture of your target markets to establish a successful relationship with your potential customers.
Below are listed several factors that will help you determine which markets will provide the best chances of export success:
1. Knowledge Gathering – There are numerous sources available to gain general business information on individual countries across the world. These are some of the main ones:
Knowledge will include the risk of doing business in a particular country and again there are free sources for this information:
When you investigating or have established a market overseas you are likely to spend some time there and it is also worth gathering basic information on the profile of the country such as from:
We have already referred to market research on your particular sector and products and often you will need specialist help on this to augment any data you are able to gather. However, you will find that there is quite a lot of information available free on-line if you take the time to search the web.
2. Currency fluctuations – a country with a weak currency against the British pound, or with a volatile, rapidly changing currency is not a particularly good option for a new exporter as this will provide difficulties when pricing. Rates and trends can be found on the web – for example ECB.
3. Language – Being able to speak the language of your potential customers can help to establish mutual confidence. Do you need a translator? Or to enrol on a language course?
4. Culture – is the culture of your prospective market suitable for your product, marketing material, company name etc. Any changes that need to be made will have to be factored into your budget. For example, if you are doing business in China, Etiquette is very important.
6. Barriers – whilst a strategy or framework can be put in place for every overseas market, some countries will have Trade Barriers that, whilst not preventing international trade, make things that bit more difficult. Customs Paperwork, Import Duties, special export licenses etc are examples of this.
7. Geography/Logistics – furniture is obviously not an easy product to transport. The easier the logistical pathway, the cheaper your freight costs should be. Information on this can again be obtained from the web including freight and other transportation companies.
8. Current Affairs – keep abreast of current affairs. If a country is experiencing economic difficulties, war, high security alerts, or such circumstances, these may provide difficult trading conditions. For this an ideal source is the BBC.and FCO.
9. Future trends – by looking at the past and current trends it is possible to predict what may happen in the short, medium and long term futures. Do you want to invest significantly in a market that will only last 1-5 years? This information will result from an amalgam of the research you have undertaken, however specialist market reports can be an important resource for gauging future trends.
10. Specific projects – a major sporting, diplomatic or cultural event will provide opportunities for UK furniture manufacturers with hotels, stadiums etc being constructed. Trade associations in the sector and UKTI trade officials will have information relating to these events.
PLEASE UNDERTAKE EXCERCISE 3 & 4
An example: if your aim is to sell furniture to the domestic market in France, is your product right for the market and how could I advertise/sell it? It is worth looking at furniture and retail associations, trade magazines and on-line directories that cover retail and furniture.
Most search engines provide translation facilities. Here are some examples of sites:
The major furniture trade show in France is Maison Objet. You may wish to undertake a scouting trip to the show, talk to the organisers and establish which organisation is the designated funding organisation (ATO) in the UK for gaining financial help towards costs.
This coupled with statistical data available from trade associations and government departments will show emerging, developing and declining markets:
For example on-line information can be found here:
Essentially, for each country that you are targeting as a potential market, free on-line information is generally available. Doing your own research, perhaps alongside commissioned work can only help you to focus on the right market for your products.
Rather than retail your target audience may be Architects and/or Designers – this is just one directory example that is available on-line to support your research.
SECTION 4: INTERNAL INFRASTRUCTURE
Before you commit to exporting you need to honestly assess your export potential - in terms of the readiness of your business, the suitability of your product or service and your aims and objectives. This requires you to undertake an analysis of your company. Much of this is addressed by the FIRST Diagnostic Tools (See link opposite), which while not dedicated to export, looks at developing and restructuring business for competitive gain. The UKTI’s Preparing to Trade (See link opposite) with its 10 key steps to exporting is also a good resource to use. Some of the fundamental questions to consider include:
Is your business ready?
Does your business currently have:
Is your product suitable?
Once you have ascertained that your company is geared up to export, the next criterion is whether or not your current product or service portfolio is suitable.
Consider the following:
Aims and objectives
It is important that your aims and objectives are realistic and tangible and the targets SMART (Specific, Measurable, Achievable, Relevant, Time Specific). An example would be:
Short (1 year) and medium (3-5 years) term aims and objectives should be marked out at this stage.
So the infrastructure to export is in place, your product or service is suitable, a strong market exists for your product that could provide a sound return on your investment and your aims and objectives are in place. The next crucial question is – how to enter the market?
PLEASE UNDERTAKE EXCERCISE 5
SECTION 5: MARKET ENTRY
There are a number of elements you need to consider in order to sell successfully overseas and how you organise your sales presence in export markets is one of the key decisions. Depending on your product, you may be able to sell directly. For example, you might be able to sell over the Internet (see Exporting Online) or by exhibiting at Local Trade Shows.
Many businesses look for a partner who already understands the local market. For example:
In some countries such as Russia and China it generally accepted that you need a presence on the ground in those countries such as an agent or a partnership with local company.
Customs & Goods Classification
You'll need to familiarise yourself with the VAT & other rules administered by HM Revenue & Customs (HMRC) and HMRC Rules.
In most cases, exports will be zero-rated for VAT although there are exceptions. It is essential to check with the HMRC to find out what applies to you.
Take exports within the EU for example you have to record details of any goods sold to EU countries on your VAT Return, fill in a Sales List and If total dispatches are worth more than £250,000 you need to Submit Intrastat Returns
The UK Government provide a good central source of advice - Starting to Export – on what you need to do to comply with export rules including those to non-EU countries where CHIEF System applies. You need to know classifications systems and product codes and there is help available for this. Other useful sources are:
As soon as your goods enter another country they become subject to that country's laws. . See - Transportation of Goods.
Your responsibility for transport depends on your agreement with your customer or supplier. For example, you might be responsible for delivering the goods to a warehouse in the customer's country. Your obligations should be clearly set out in a written contract using Incoterms.
Incoterms are standard trade definitions most commonly used in international sales contracts. Devised and published by the International Chamber of Commerce, they are at the heart of world trade.
Among the best known Incoterms are EXW (Ex works), FOB (Free on Board), CIF (Cost, Insurance and Freight), DDU (Delivered Duty Unpaid), and CPT (Carriage Paid To).
The best mode of transport for your goods will depend on the type of goods and how quickly they need to be delivered. You may need more than one mode, for example, sending goods by lorry to a port in the UK and then by ship overseas. The goods will need suitable packaging and labelling for transportation.
Most companies use a specialist freight forwarder to handle transport. Confirm exactly what they will do and whether they can handle all documentation and other procedures. Look for a forwarder who exports regularly to that destination. They can "consolidate" your goods with other consignments in a single container to reduce costs.
Depending on the contract, you may need to arrange insurance. Normally, you are responsible for UK customs procedures and your customer looks after customs in their country. In any case, you must ensure that you have the right paperwork.
By this stage you will have identified potential markets and be confident that there will be a demand for the product or service that you wish to export there. You will also have conducted an ‘audit’ and be satisfied that you have the internal infrastructure in place and you have now identified what sales presence you will have and have knowledge of logistics and customs necessities. The next stage will be consolidating the information that you have so far into a document that will become – the export plan.
VIDEOS - SALES PROCESS & RULES
SECTION 6: THE EXPORT PLAN
It is important to have a strategy in place that embraces the export ethos; therefore an export plan is essential. Having a clearly defined plan or strategy will allow you to monitor the project’s success at every stage and ensure that you stay within both the human and financial resource budgets. There are various factors that you will need to include and procedures to be put in place.
This will include human resource and also time. Even if you do not create a new position, a number of existing job roles and possibly employment contracts will change.
Method of entry:
This will be your initial method of contact with any prospective buyers and may include:
A lack of quality marketing strategy has been identified by overseas buyers as a negative factor for UK furniture manufacturers.
The following questions will need to be answered to ensure that your marketing is positive and influential.
Your marketing material will often be the initial introduction to your prospective customers. It is so very essential to do detailed research in order to produce a marketing strategy that sends the right message that you want to portray.
Another vital part of your export plan is to have an efficient freight network in place. You want your customer to receive what they ordered, on time and in perfect condition.
• Produce a database of freight forwarders both in the UK and in the country you are exporting to. Seek references, establish contacts and define guidelines.
As highlighted earlier, exporting should be a medium-long term project. Therefore a realistic financial budget should be in place and monitored at regular intervals. You will need to include such things as:
It will take time to build up the necessary relationship with overseas buyers. The following will certainly go some way to assisting this:
This is not a definitive list by any stretch of the imagination. The export plan should be unique and personal to your own requirements.
Review the export plan annually together with the business plan. Update or change it when and where necessary but always refer to it whenever you are making an export decision.
Not only will it provide the framework to your exporting success but it can be duplicated and rolled out when looking at new markets to enter.
See the Intellectual Property Office. There are also independent organisations such as ACID (Anti Copying in Design) which offers practical advice and specialist support to help you understand and manage your intellectual property.
PLEASE UNDERTAKE EXCERCISE 7
SECTION 7: EXPORT SUCCESS
By paying close attention and keeping to your export plan, marketing strategy and financial budgets you can export successfully to any market that you choose.
Surround yourself with a support network that you feel comfortable with and that can be with you for the entire project.
Have confidence that you have completed the correct procedures, asked and answered the correct questions and have a strategy in place that can bring you a good return on the investment that you have made. For a number of UK companies exporting has allowed them to flourish and in some cases even continue trading.
The opportunities are there and perceived barriers can be overcome.
SECTION 8: ON-LINE VIDEOS & TOOLS
This section brings together in one place the vidoes featured above.
Managing a global business
AGENTS & DISTRIBUTORS
Agents and Distributors: Managing them effectively and resolving disputes
MARKET ENTRY AND MARKETING
International Internet Marketing: Localising your international website for foreign target markets
Social media marketing – using social media to develop and maintain business relationships
SALES – TRADING REQUIREMENTS
Online training: Selling goods in the EU - HMRC
Online training: Selling goods outside the EU - HMRC
Importing and exporting procedures– HMRC
The Export Process – HMRC
Tax and VAT issues when trading with countries outside the EU - HMRC
Tax and VAT issues when trading with countries in the European Union - HMRC
Tax and VAT issues when trading with other countries using the Internet - HMRC
Understanding and using Incoterms
Exporting outside the European Union: commodity codes and customs procedures
Export documentation: make sure you get the paperwork right
International Trade documentation
Exporting essentials: documentation webinar
Exporting with confidence: trade finance and letters of credit
International finance: managing cash flow, receiving money and foreign exchange
Getting started in China
Getting started in India
SUPPLY CHAIN & LOGISTICS
Introduction to International Trade and Supply Chain Logistics
CULTURE AND LANGUAGE
Video case study: training company Steps Drama pass on their tips for meeting cultural and linguistic challenges
Protecting your rights outside the UK
Registrable intellectual property – patents, designs and trademarks
MATERIAL GENERATED DURING PROJECT - PRESENTATIONS AND BEST PRACTICE STUDIES
Besides the Export Training Module which is one of the principle aspects of the project the following material was also used to show - Best practices transfer for the development of the Furniture sector in International Business Environment through Human Resources Development
BFM Strategic & Operational Activities - Promotion, Competitiveness & Development of British Companies and HR practices Presentation (ppt)
BFM Export Training Module Presentation (ppt)
Best Practice Case Studies- Key Employee Development
Company Questionnaire on Key Employee Development (link)
1. Bed Sector (pdf)
2. Contract Sector (pdf)
3. Upholstery Sector (pdf)
4. Healthcare Sector (pdf)
5. Upholstery & Contract Sector (pdf)