Despite strong demand from international markets, just one in five small businesses in London are planning to do business overseas in the next year. New research, released today by Alibaba Group, highlights that businesses risk missing out on the potential of export to support their growth and recovery through the Covid-19 pandemic, due to common misconceptions related to cost, complexity, and even cultural barriers.
Too small to export
One of the most significant concerns among London small businesses is that they are ‘too small’ to succeed beyond British borders, with nearly a quarter (24%) saying their size puts them off exporting. Meanwhile, 18% fear there isn’t strong enough demand for their products overseas, while 13% say it’s simply too confusing, and they wouldn’t know where to begin exploring international market opportunities.
Europe tops the list as the most popular target market for businesses that are planning to export, with more than half (57%) saying that is where they’ll be looking to sell their product next. This is underpinned by a strong feeling among UK small businesses that it is easier to export within Europe than to markets further afield. This is attributed to demand primarily, with 74% saying that they believe there is demand for their product in Europe, while a third (30%) put it down to cultural familiarity.
Just 7% of small businesses in London, with global ambitions, are looking to the Middle East, while none are looking to China.
A missed China opportunity
According to the IMF, China’s retail market had already rebounded to pre-pandemic levels in August, and accelerated in September, demonstrating the resilient spending power of Chinese consumers. This was evidenced by Alibaba’s recent record breaking 11.11 Global Shopping Festival, where $494 million dollars’ worth of UK goods were sold during an 11-day period.
Despite these figures, many UK small businesses are overlooking the opportunity due to a perceived lack of demand. A quarter (25%) give this as the reason for not considering China as part of their growth strategy. This perception could cost British businesses dearly, given the strong and growing demand among Chinese consumers for international goods.
From luxury goods to health and beauty and nutrition, Chinese consumers hold ‘Brand Britain’ in extremely high regard for its quality and heritage. This demand has remained resilient over the course of this year, and through the pandemic. Alibaba’s annual 11.11 Global Shopping Festival this year shows this in action. The UK was once more among the top ten markets for brands selling into China, selling around half a billion dollars’ worth of goods to Chinese consumers though Alibaba’s platforms.
David Lloyd, General Manager of UK, Nordics & The Netherlands, Alibaba Group said, “Large companies have always been good at exporting their products around the world. Now, technology is making it just as easy for small businesses – who may not be recognised brand names in their home market – to tap into demand for British products from overseas and to shine on a global stage.
“We helped British brands sell an incredible $494 million dollars’ worth of products in just eleven days during our 11.11 Global Shopping Festival this year.
“As consumption increasingly shifts online, businesses of all sizes need a digital strategy, to allow them to tap into and maximise growth potential in new markets. As small businesses build their growth plans for 2021 and beyond, I would strongly encourage them to explore the role and potential of export within this, and consider how they can take advantage of strong economies in less familiar markets. The opportunity is there: it’s easier than you think and it’s too big to ignore.”