Exporting out of recession - Business, Innovation and Skills Committee Contents


Memorandum submitted by Midlands World Trade Forum

  

  The Midlands World Trade Forum (MWTF) is the largest international trade organisation in the West Midlands representing the voice of more than 750 SME's. For the last six months we have been asking our members to voice their concerns about the issues affecting their businesses during the current economic climate and so are well placed to submit comments to the BERR Select Committee Enquiry on "Exporting out of the Recession".

  

EXPORT PROBLEMS

  Members have cited a wide range of problems including currency fluctuation, pressure from customers to extend payment terms/provide more favourable delivery terms, the global economic slowdown affecting existing export markets and the lack of credit insurance. The latter in particular occupies the concerns of many of the companies surveyed and has prompted comments such as those detailed below:

  

    "The problem is escalating in so far as the longer we go without the insurance the higher the value of the uninsured debtors becomes. So far we have taken the view that we will try and manage the risk on debts due from our long-standing customers and try to get some sort of advance payment or LC cover from new customers. The risk to us and to UK exporters in general is that companies that are otherwise sound and profitable may be put at risk by factors that are essentially beyond their control."

  

    "We opted some time ago to have a tracker account into which we would put regular deposits and keep this to cover bad debt. We have depleted our savings to fund a shortfall in working capital during a particularly expensive period and we now need to build this fund back up again. We chose to do this because of the high cost of insurance and the fact insurers are not prepared to cover all customers. We hear from suppliers and others in our sectors that insurance companies are being ever more selective in the companies they will cover and premiums are continuing to rise for a lower level of cover".

GOVERNMENT HELP

  Whilst much has been written about increased help for exporters and help in general most companies are still unsure of what is available in terms of additional funding or credit for investment. They are unsure whom to approach in order to find out and the whole area is too complicated and lacking in resource. If a source of help is identified the bureaucracy involved in applying for funding makes any gain worthless.

  

  Suggestions on how the government could help include:

  

    — Provide underwriting to established credit insurers to enable risk to be shared.

  

    — Re-introduction of financial help to assist participation at overseas trade shows.

  

    — A tax reduction on any profits generated from overseas business in order to actively encourage companies to export.

  

    — Provide a linked network of fully translated, internationalised websites for individual sectors, perhaps based on regional Cluster Groups.

  

    — Provide cheaper access to an online overseas credit checking service.

HELP IN ACCESSING NEW MARKETS

  Members feel that the focus on new and emerging markets is to the detriment of strong and potentially safer more lucrative markets such as Europe and the USA. Consideration should be given to re-targeting the initiatives in this area. The structure of OMIS, one of UKTI's key services promoted by International Trade Teams, should be reviewed—its upfront payment without guaranteed return makes it an unattractive commercial proposition to many companies.

  

8 April 2009

  





 
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