Whilst our closest and longest established external markets of Great Britain and the Republic of Ireland account for over 50% of manufacturing sales from Northern Ireland, opportunities in each are, inevitably, being adversely impacted by prevailing economic conditions.... and will continue to be so for some time to come.
Many local companies are finding that competition is now more challenging than ever in these markets, with margins in many industries being intense. So it is clear that companies across Northern Ireland need to seek to diversify their market presence beyond these shores in order to win the business needed to ensure profitable growth.
Last year, almost 200 local companies took their first venture into markets outside Northern Ireland, whilst almost 600 existing exporters diversified into new markets. These made a significant contribution to exceeding the three year targets in our last Corporate Plan period by 21% for early stage exporters and by almost 40% for existing exporters venturing into new markets.
A lot of them, including quite a few on their first foray overseas, have already reported winning firm orders. Collectively, participants on our extensive programme of trade missions and overseas visits have reported a 31% increase in exports from their activities last year, to a total of over £360m, with locally owned businesses accounting for £275m of that.
While there are substantial opportunities in developing markets such as Brazil, Russia, India and China, most early stage exporters should, initially, look more closely at closer European markets, where there are significant opportunities in European markets that are well ahead of us in the recovery league table. Many local companies are already winning good business in Europe. Others could be equally successful.
Among European markets growing strongly are Sweden, which is projecting growth of around five per cent this year, Estonia (3.7%), Finland (3%), Norway and Denmark (both around 2%). Poland is also expecting GDP growth in excess of four per cent this year. Most of these countries also have close business links with the UK. Sweden alone is the UK’s tenth largest export market. Companies here, both large and small and in a very broad range of sectors, need to be looking seriously at the opportunities in these fast recovering markets. Another market in Europe which is offering substantial opportunities is Switzerland which has been the fastest growing export market for Northern Ireland over the last three years.
It is always difficult, particularly for smaller companies, to spend too much time away from the office, particularly in today’s tough environment, but business can be conducted in most European markets in just a couple of days, and there is plenty of support available. The investment in time and other resources really is very worthwhile.
To encourage early stage exporters in particular to explore opportunities in Europe, our trade programme includes short duration missions. In September, for example, we are planning a week-long mission to Estonia and Latvia and, in October, a five-day visit to Denmark, Sweden and Norway. Opportunities to do business in Hungary and Slovenia, two markets in central and eastern Europe which are growing steadily, will also be provided by a mission in September.
Missions are a very cost-effective way to explore a new market. In addition newcomers can benefit from the knowledge and experience of other participating companies currently doing business in a particular export market.
On many missions participating companies have exchanged business leads, and experienced exporters are always ready to provide advice and guidance to the less confident. We have seen many times an experienced exporter going with a newcomer to provide support at meetings with potential customers and to help “seal the deal.”
There’s plenty of evidence too that missions help build confidence among newcomers to exporting. Companies have found that they can compete in even the most exacting and quality conscious markets such as Germany and France.
Our focus on the Netherlands, for instance, has enabled SMEs to develop a presence in Europe and then to branch out into neighbouring markets including Belgium and Denmark.
At some £5.5bn, exports currently account for around 20% of Gross Value Added in the local economy. Whilst that is a substantial amount, there is clearly considerable scope for growth and it will remain an area of priority for Invest NI to embed an export-led growth focus across the widest possible business base.This article appeared in Business Eye magazine, August 2011 edition.