When it comes to trade, a special relationship does exist between the UK and the US, one that bring great rewards to many British firms. UK-US trade is worth more than £130bn ($200bn) a year and the US, the world’s largest economy, is the UK’s “top export destination” and “the fourth easiest country to do business with” (according to government website Gov.uk).
“The trading and investment relationship between the two nations is one of the largest and most important in the world, with almost one trillion dollars invested in each other’s economies,” says Sukhdeep Dhillon, British Chambers of Commerce global economist.
“The US is a land of unparalleled opportunity for UK businesses. They’re attracted to the size of the market, while the common language, similar legal systems and culture make it easy for Brits and Americans to do business with each other.”
Paul Marks, director of sales, UPS, notes that according to recent UPS research, the US is the top destination outside Europe for exporting UK SMEs. Marks says: “Despite a wealth of opportunity in the US market, perceptions around cost and complex regulations mean that many businesses are losing out on potentially very fruitful growth opportunities.
“Whilst the paperwork can seem daunting, there are many resources to help navigate seemingly complex customs forms, including UPS’s own Export Toolkit. Once in market, it’s about finding the right logistics partner to ensure that the transition is a smooth and seamless one for your customers”.
Economic outlook
But is it a good time for UK firms to start selling Stateside? Dhillon says: “The US economy went on a rollercoaster ride in the first half of 2014, with real GDP contracting 2.1% in Q1 before rebounding 4.2% in Q2, but the US will remain the world’s largest consumer market and US manufacturers often source components overseas. UK goods enjoy a good reputation and key opportunities in particular lie in advanced engineering, clean technology, creative and media, energy and power and financial and professional services.”
Several key challenges face UK firms wishing to start exporting to the US, he says. “It’s a vast market, with regional differences between the 50 states and there’s a significant time difference with the UK. But negotiations between the US and EU for the Transatlantic Trade Investment Partnership should generate even more opportunities for the UK, because it will further remove trade barriers by lowering tariffs and making regulations similar.”
Market research
Sue Marsden Gilpin is head of trade services at the British Consulate-General in New York. She recommends thorough market research as the first step to exporting to the US. “Some UK businesses try to run before they can walk. They book flights and hotels for multi-city visits and try to arrange meetings before gaining a basic understanding of where they may – or may not – fit into the US market.
“The US is the world’s largest, most competitive and technologically advanced economy, so you must find out about your competitors, target customers, routes to market, regulations, tax, etc. Contact your local UK Trade & Investment (UKTI) international trade adviser (ITA) for information about the export marketing research scheme. It offers free advice and grants for businesses seeking to research markets overseas.”
She believes that visiting US trade shows can bea great way to better understand the market and make good contacts. “But do some research to determine which shows are worth the effort and expense. UKTI’s tradeshow access programme provides grants for qualifying businesses to attend overseas events. Your local ITA will know of relevant export events here in the UK, although UKTI’s events portal also details a comprehensive calendar of events and trade missions.”
Routes to market
In addition to establishing your own corporation in the US and setting up a physical presence, there are various options for UK firms wanting to sell their products in the US. “Some UK firms need a US manufacturers’ representative rather than a distributor, for others, a joint venture or manufacture under licence agreement will make better commercial sense,” adds Marsden Gilpin. “Your research should tell you your best route to market, but you should understand the full financial implications of the different options. UKTI may help you to find an overseas partner via its overseas market introduction service.”
Some UKfirms start off selling their products online to US customers, Marsden Gilpin adds. “It can be a good way to test demand before committing to other options.”
Key considerations
“If you decide to export to the US, you must find ways to differentiate your brand, product or service from those already available,” stresses Marsden Gilpin. “Your website, marketing materials and packaging must be US-ready too – including US spellings and prices. You must protect your intellectual property, consider legal and tax obligations, seek insurance, consider the cashflow implications for your business – and look into the logistics of actually getting your products to the USA. It’s not something you can rush into.”
• Open to Export is a free online business community designed to provide UK businesses with best-practice knowledge, a forum for peer-to-peer discussion, bespoke advice and wide-ranging support to enter the US and other overseas markets. UKTI has also published a guide called Exporting to the USA.
Content on this page is paid for and produced to a brief agreed with UPS sponsor of our Exporting to New Markets hub
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