Britain's exports off target
16th September 2013
New research from RBS group economists has identified attractive untapped markets for UK exporters to get ahead in the global race. Nearly a third of the UK’s economy is made up by exports, and yet most still tend to concentrate their efforts in Europe or America.
RBS studied nearly 50 export markets. Each destination’s attractiveness was determined by compatibility (matching import needs to UK exports), growth, prosperity, and the ease of exporting, in addition to the size of each import market. These countries combined made up less than a quarter of all UK goods exported in 2012.
David Fenton, senior economist at RBS said: ‘It’s clear there are export opportunities which British businesses aren’t fully taking advantage of. While the outlook is currently subdued in key export markets like Europe and the US, success will increasingly rest on less-indebted, faster-growing parts of the world. There's no doubt that emerging markets have entered a more challenging and uneven growth phase. But they will still be the biggest contributor to global growth over the next five years."
“Our research highlights a set of markets which may not be traditional export destinations, but could prove to be very attractive for UK businesses. China, Korea, Brazil, Mexico, Turkey and Taiwan are all up there, offering genuine scale and attractive markets for British exporters, with Mexico, Brazil and Taiwan standing out as missed opportunities for UK plc.
Although Taiwan may seem a less obvious destination with slightly slower growth prospects, it has a massive export market with high income levels, and is one of the easiest places to do businesses with according to our index. Brazil is also a good fit for UK exporters - road vehicles account for 9% of Brazilian imports and 10% of UK exports, so the two countries’ trade structures are closely aligned.
“While regions in East Asia rank highly, our research suggests that we shouldn't overlook Latin America. Individual countries such as Peru, Bolivia and Argentina may be small, but when combined they offer exciting opportunities, especially bearing in mind the close proximity of Brazil and Mexico.
“China deserves its status as the country most people mention when talking about the need to re-orientate the UK’s exports. It's the second-biggest import market in the world, has good growth prospects and a large middle class. However, China’s draw is its sheer size, not ease of exporting or compatibility, for example electrical machinery accounts for 15% of imports, but just 4% of UK exports.
“In fact this research shows that size shouldn’t always be the primary focus when exporting, India isn’t always as attractive as many assume because of high tariffs and taxes, low compatibility, and a relatively low income. Turkey may not be as big a market as India, but it's a much better fit for UK exporters. Three of its biggest imports – petroleum, telecommunications equipment and motor vehicles – are key exports for the UK.