For the first time since the ITM was established, the number of SMEs who listed Europe as one of their primary import markets fell below 50 per cent. Just three years ago, 78 per cent of SMEs listed Europe as their primary import market, so this is a significant shift in the way that British businesses are trading.
Meanwhile British businesses are increasingly trading more with Asia, both importing and exporting. Almost half of SMEs now list China as a primary import market up from just 30 per cent last year and for almost a quarter, it is also a key export market. Similarly, nearly one in five list India as a key import market, almost double the number that did in 2012. However, export levels remain unchanged at 10 per cent. This reflects the growing strength of Asian manufacturers and increased confidence in trading with Asia.
There has been a small increase in trade with North America. Over a third of SMEs list the USA and Canada as key import markets, up from 26 per cent in 2014. In addition, almost a quarter export to North America, which is consistent with 2014 levels. This is part of a wider trend for SMEs to look beyond Europe and take advantage of the benefits of trading internationally. It also demonstrates how British SMEs are adopting the mind-set of their corporate counterparts to reap the benefits of the global market.
Trading outside the Euro-zone brings its own unique challenges, not least having to manage cashflow in multiple currencies. Currency markets have been volatile in recent months leaving many SMEs unsure how much they have paid suppliers until the payment date. Yet the number who do not know the exact invoice amount until it is paid is falling, with just a quarter unaware, down from 29 per cent in September last year.
Tony Crivelli, UK Managing Director of Western Union Business Solutions, believes the asian and north american markets can be the key for SME’s.
“The European economy has been incredibly volatile in recent months as the possibility of a Gr-exit and even a Br-exit dominate the headlines. Meanwhile Asia and North America have continued to grow as key trading partners and they are quickly catching up to their European counterpart.
“Despite this volatility, the ITM shows that British SMEs are optimistic about the economy and many are forecasting growth in international markets this year. In fact, the outlook is very positive for the second half of 2015.
“As British business looks beyond Europe for trading, foreign exchange hedging and risk management will become vitally important. Managing cashflow in multiple currencies is challenging even for the largest organisations, and SMEs need to have the right tools in place to ensure they can manage exchange rate volatility.”