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British businesses are bouncing back to global growth
HSBC UK’s second Going Global for Growth report examines the evolving attitudes and progress of UK businesses towards international growth
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Hundreds of thousands of UK businesses are looking to expand internationally in the coming year, a new report has found.
With trade forecast to grow 3.3 per cent in 2024, UK businesses are increasingly confident about grappling with international trade, says Stuart Tait, head of commercial banking, HSBC UK.
The UK’s international trade activity is crucial to the health and growth of its economy, Tait says, pointing out that in the year to October 2023, UK businesses exported goods and services valued at more than £868 billion, bouncing back above pre-pandemic levels.
HSBC UK’s latest research, recently published in its second
Going Global for Growth report, captured insights from 1,360 enterprises across every sector of the UK economy. It found that ambitions to expand and export are running high, both among established and new businesses with ambitions to trade overseas.
The research found that 87 per cent of UK businesses that already trade internationally plan to grow over the next year, with a third of those (33 per cent) aiming for ‘significant’ growth.
Companies in the manufacturing sector are the most likely to look beyond the domestic market, with 79 per cent doing so, and this sector is also most likely to be planning to expand, along with businesses in IT and telecoms.
Buoyed by strong international trade numbers, the number of UK businesses who do not yet currently trade internationally but plan to do so has risen to 10 per cent, a rise of 2 per cent year-on-year.
“International trade growth benefits individual businesses and the UK economy as a whole,” says Tait.
Head of commercial banking, HSBC UK
Stuart Tait
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Get your copy of the full Going Global for Growth report
Our survey certainly suggests growing UK confidence and a strong sense that recent logistical barriers to global trade are starting to recede
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Stuart Tait
Head of commercial banking, HSBC UK
Applied to the UK as a whole, the figures from the research suggest that up to 450,000 businesses could be nurturing ambitions to grow internationally.
The true figure could be even higher: HSBC UK’s research found 13 per cent of businesses that are not currently considering trading internationally would consider doing so if there was more financial support or tax relief available to them.
“I am delighted by the year-on-year increase in international growth intentions, and by the encouraging rise in the number of businesses aiming to take their first steps abroad,” says Tait.
International ambitions are also helping to drive growth among UK firms.
Stephanie Betant, head of global trade and receivables finance at HSBC UK, says that the connection between international trade and growth is a natural one.
Many businesses are aiming to grow within the UK market, but international trading opens up new dimensions of possibility that can enable businesses to grow fast and mitigate risk at home
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”
Stephanie Betant
Head of global trade and receivables finance, HSBC UK
The UK's growing international trade – in numbers
of UK businesses are not currently international but have ambitions to trade overseas, up by 2 per cent from last year
10%
of businesses already trading internationally hope to expand into Europe, with another 46 per cent looking to the US/Canada, 28 per cent to the ASEAN countries and 27 per cent to China
60%
of UK businesses that trade internationally are looking to grow over the next year, with 33 per cent expecting significant growth
87%
79%
of businesses who hope to expand already gain a fifth of their turnover or more from international trade
13%
of those businesses not trading internationally would look to do so if there were more financial support or tax relief
450,000
UK businesses could be nurturing notions of global growth, if the research figures are applied to the UK as a whole
How things have changed since 2022
More international businesses are now seeking significant growth
More domestic businesses are seeking to go international
More growth-focused international businesses are investing in improving their products
Fewer businesses see challenges in skills and costs
Growth in friend-shoring (switching to suppliers in friendly territories) among growth-focused international businesses
Growth in near-shoring (moving to suppliers closer to home) among growth-focused international businesses
Growth in businesses finding it difficult to access capital and financing for international expansion
Growth in use of Free Trade Agreements
2%
2%
13%
9%
8%
5%
5%
7%
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Where are the opportunities for international growth?
Hover over map pins for country names
For UK businesses, Europe remains a key focus, with the popularity of the destination rising 7 per cent year-on-year among veteran international businesses in HSBC UK’s research.
Europe was also the favourite destination for new companies hoping to go international, the research found – although some organisations reported that doing so had become more difficult due to changes in relationships with the bloc.
Better access to Europe would make life a lot easier for us
Tech business leader
Those businesses already operating internationally in HSBC UK’s research are also targeting the US and Canada, with a rise of 9 per cent year-on-year in businesses doing so, and also setting their sights on China, with trade up 11 per cent.
The most ambitious businesses (those who aim to grow significantly) are setting their sights on India, now the world’s most populous nation, and with an estimated 423 million people defined as middle class.
Among companies aiming to grow significantly, 27 per cent are focusing efforts on India, compared to 21 per cent overall. India’s strong ties with the UK through institutions, language and technologies makes it an attractive market for UK businesses.
UK exports to India totalled £14.7 billion in the four quarters to the end of the first quarter of 2023, according to the Office for National Statistics (ONS).
A taste for India: businesses with ambitious growth targets are targeting India for their expansion plans | CREDIT: Getty
The same type of ambitious international businesses are now focusing their attention on the 10 Association of Southeast Asian Nations (ASEAN) states – a region of eight billion people with a combined GDP of £2.8 trillion in 2022, equivalent to the fifth largest economy in the world.
The report found one-third of growth businesses were targeting ASEAN countries, compared to 28 per cent overall. One third are already active in China or south-east Asia, 28 per cent are active in India and 63 per cent are active in the US and Canada.
Looking further into the data, these enterprising organisations tended to have already conquered multiple territories, offering them a bigger launchpad to accelerate further growth. These companies are also hoping to take advantage of the UK’s new Free Trade Agreements, with a fifth now using FTAs, according to HSBC UK’s research.
The research found that the number of UK businesses making use of FTAs had jumped 5 per cent this year.
With agreements in place since the spring with Australia and New Zealand, and an agreement in India in the final stages, there are significant opportunities to explore in a variety of sectors
Stephanie Betant
Head of global trade and receivables finance, HSBC UK
Key factors in successful international expansion
1 Technology
2 Improved competitiveness
3 Adaptibility
4 The personal touch
Almost half (44 per cent) of international businesses looking to expand are now using more digital services, and turning to technology such as AI for everything from sales and service delivery, to communication and data analysis.
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Technology is helping businesses to expand internationally, offering useful tools enabling UK businesses to sell, deliver, communicate and analyse data.
Digital transformation is increasingly a stepping stone to succeeding as an international business, businesses told HSBC UK. One retailer said that switching to an online payment service helped to reduce transaction delay, while a legal SME told HSBC UK it had switched to providing services electronically, which had the twin benefits of improving client engagement and reducing overheads.
Meanwhile, a business owner in the IT and telecoms sector told the report’s researchers: “I optimise the use of remote services and engage more workers online as part of the business expansion process.”
Third-party digital tools (for example to enable remote delivery of services, or for online payments) are now seen as highly useful in supporting businesses as they go international.
The most useful of these are tools for sales and delivery, with two-thirds (66 per cent) of growth-focused international businesses depending on these, closely followed by tools for communication and data analysis, used by 63 per cent.
How technology is helping drive global growth
Technologies such as cloud and AI are increasingly important to businesses hoping to operate overseas. Tech helps international businesses with everything from delivering services to security and business protection, businesses told HSBC UK in the research.
Many of the challenges businesses face in operating internationally revolve around accepting payments, moving money and dealing with local regulations, which is why choosing the correct banking partner can help.
Services such as HSBCnet help you gain total visibility of your global finances, trade transactions and FX positions. Other services such as HSBC’s Get Rate allow customers to view and approve foreign exchange rates upfront on payments in 60 currencies, while with HSBC Global Wallet, you can hold multiple currency wallets and pay and receive ‘like a local’ as if you are in the same country as your customer or supplier. This takes advantage of local payment systems to reduce payment costs and means funds can potentially arrive faster.
Among the HSBC UK solutions helping businesses embrace digital transformation and connectivity is HSBC Trade Solutions, a one-stop e-platform, which enables business leaders to manage global transactions, trade loans, and import documentary credit in one place.
Let’s get down to business: key trends and challenges
Competing to win
For businesses looking to expand in international markets, product competitiveness has become a key challenge, with three in 10 internationally minded businesses citing it as a major struggle. In response, almost a third of organisations (28 per cent) are now working on product improvements to succeed overseas, a rise of 13 per cent from last year.
Near-shoring and friend-shoring
With recent availability issues fresh in their minds, many UK businesses are looking to revise their supply chains to ensure ongoing resilience. Trends such as near-shoring and friend-shoring are here to stay, with the number of businesses doing so having doubled in an effort to mitigate risk and drive efficiency.
Switching to digital
Businesses are increasingly turning to digital ways to learn about new territories and source trade partners, rather than traditional industry events and trade bodies. While 40 per cent of growing international businesses say industry events are still valuable, and 28 per cent value trade bodies, those numbers are significantly down on last year, with a rise in the use of third-party digital tools such as databases to find trade partners.
Learning from the experience of contacts in your sector or supply chain is invaluable, but it’s also well worth tapping in to the expertise and insights of professional partners and stakeholders, including the Department for Business and Trade (DBT) – they can often point you to useful ideas and sources of support,
Stephanie Betant
Head of global trade and receivables finance, HSBC UK
Find out more
Get your copy of the full Going Global for Growth report
The future offers opportunities for established companies used to doing business abroad, as well as a new generation of UK businesses looking to make the international leap.
HSBC UK’s second Going Global for Growth report highlights ambitious SMEs are eyeing territories far beyond Europe and America and aiming for territories such as ASEAN countries, China and beyond.
Technology has been pinpointed as the key to the success of many of these enterprising organisations, enabling companies to communicate, sell and move money more efficiently and get an invaluable overview of their operations as they expand internationally.
Many already established international operators are now poised to expand further abroad, meaning the need for a trusted partner in international banking has never been greater.
HSBC UK is well-established in more than 50 markets around the world, and can offer on-the-ground support to companies of all sizes aiming to grow internationally. Its range of products and digital platforms can help UK businesses to target new markets around the world, with the bank’s global footprint facilitating $800 billion of trade every year.
It can help with everything from foreign exchange to international subsidiary banking, and has a broad portfolio of trade and receivables finance products to release funds from sales, inventory and supply chain. Its raft of digital products help simplify international trade for SMEs and make it more profitable.
With a long-standing relationship with UK Export Finance (UKEF) and the DBT too, HSBC UK is well placed to help every business at every stage of their international journey, opening up a world of opportunity.
Looking to the future
Get your copy of the full Going Global for Growth report
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Canada
United States of America
United Kingdom
Europe
India
China
ASEAN States
(Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam)
Australia
New Zealand
1 Technology
2 Improved competitiveness
3 Adaptibility
4 The personal touch
Many growth-focused international businesses have focused on improving the competitiveness of their offering, with 40 per cent saying this has been key to recent growth.
A third of international traders (36 per cent) say they have changed their business strategy to adapt to other markets, for example making changes to their supply chains in response to challenges.
Advice from colleagues and peers was ranked as the most helpful form of support for businesses, above trade events and digital support.
The right support
Choosing the right banking partner can offer a huge boost. Businesses in HSBC UK’s research had a positive view of their banking organisation, reflecting how important the right banking partner is to businesses intent on expansion. However, the report highlights a significant untapped resource. Only 24 per cent said they had used government-backed organisations to support their international needs.
Hoping for deals
Businesses are keen to see further trade deals around the world to help UK businesses find footholds in new territories. This year saw a leap of 5 per cent in the number of companies using FTAs to do business abroad, and 48 per cent say that improved trade deals would have the biggest potential out of any factor which could improve UK competitiveness.
Hundreds of thousands of UK businesses are looking to expand internationally in the coming year, a new report has found.
With trade forecast to grow 3.3 per cent in 2024, UK businesses are increasingly confident about grappling with international trade, says Stuart Tait, head of commercial banking, HSBC UK.
The UK’s international trade activity is crucial to the health and growth of its economy, Tait says, pointing out that in the year to October 2023, UK businesses exported goods and services valued at more than £868 billion, bouncing back above pre-pandemic level
HSBC UK’s latest research, recently published in its second Going Global for Growth report, captured insights from 1,360 enterprises across every sector of the UK economy. It found that ambitions to expand and export are running high, both among established and new businesses with ambitions to trade overseas.
The research found that 87 per cent of UK businesses that already trade internationally plan to grow over the next year, with a third of those (33 per cent) aiming for ‘significant’ growth.
Companies in the manufacturing sector are the most likely to look beyond the domestic market, with 79 per cent doing so, and this sector is also most likely to be planning to expand, along with businesses in IT and telecoms.
Buoyed by strong international trade numbers, the number of UK businesses who do not yet currently trade internationally but plan to do so has risen to 10 per cent, a rise of 2 per cent year-on-year.
“International trade growth benefits individual businesses and the UK economy as a whole,” says Tait.
Stuart Tait
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