On 25th September we hosted our latest METALL event for manufacturing, engineering and technology businesses. Nick Charles, International Trade Adviser at the Department of Business and Trade provided valuable information for businesses expanding internationally. Here we provide a summary of the key points covered.
Why consider international expansion?
Entering international markets offers numerous benefits, such as:
- Access to larger markets and opportunities for business growth.
- Exposure to new ideas and business practices.
- Opportunities to attract talent interested in working for a global business.
- Strengthened business resilience through diversification.
Be prepared to invest time and resources when exploring new markets. This might include market research, visiting countries of interest, and attending trade shows to gain first-hand experience.
Overview of the Department of Business and Trade (DBT)
The DBT, formerly known as the Department of International Trade, offers a wide range of support to UK businesses looking to expand their operations globally. Some of the online tools and resources available include:
- Great.gov.uk: A platform with a wealth of information on international trade, market guides, and tools to help identify potential markets.
- UK Export Academy: A series of webinars ranging from broad topics to highly specific issues, such as entering particular markets.
- Market Guides: Free guides for multiple countries providing valuable insights into different market landscapes.
- Digital Exporting Programme: Advice on digital marketing strategies, including SEO, social media, and selecting the right e-commerce platforms.
Through the DBT, businesses also have access to International Trade Advisers (ITA). ITAs are experienced professionals who work closely with businesses to offer tailored advice on expanding internationally. They can:
- Help identify the right markets to target.
- Provide insights into local market conditions and business practices.
- Connect you with in-country specialists who have knowledge of the local business environment.
Additionally, the DBT has representatives in embassies and consulates around the world who can assist with:
- Finding local partners, distributors, or resellers.
- Providing legal and regulatory guidance.
- Offering support with trade missions and other market entry strategies.
Panel session
Following the presentation, we held a panel session with experts from the METALL sponsors: Debbie Venn of DMH Stallard, Thomas Mobee of Carpenter Box and Kaajal Kanbi of NatWest. They considered some legal, financial, and commercial implications of doing business overseas. Key takeaways from this session included:
Intellectual property and contracts (DMH Stallard)
Secure your intellectual property rights before making any key disclosures to any third parties or the market more widely in a different jurisdiction. IP rights are territorial in nature and therefore it will be important to check the local IP registers to ensure there will be no problem in your exporting and selling in that country and securing your IP where relevant by making the relevant registrations.
Make sure that you have appropriate contracts in place with those third parties that you might be working with in other countries, to govern your relationship with them. This might be initial NDAs, through to manufacturing or supply agreements, distribution, agency or other representation agreements for your trading arrangements. If you are selling to customers directly, you will need to make sure your terms and conditions of sale to customers reflect the applicable laws in those countries, particularly if the customers are end consumers.
VAT and Duty (Carpenter Box)
International VAT and indirect tax rules are extremely complex. Managing the VAT and Duty elements of transactions across different jurisdictions can be very difficult. How companies arrange a transaction, where goods move from and to, can all have an impact on the VAT and Duty that needs to be reported and where it needs to be reported, not to mention where a company needs to be VAT registered.
VAT and Duty advice, and indeed tax advice in general, should always be sought prior to entering into new markets, as oftentimes, this can have a huge impact on how the transactions are structured.
Banking and finance (NatWest)
Businesses should engage with their bank early in the process, as this allows ample time to navigate the necessary policies and formalities and to get the right protections in place covering the debt and the foreign exchange risk.
UK Export Finance (UKEF) serves as the UK’s Export Credit Agency, providing commercial guarantees to lenders like NatWest to support viable businesses in securing finance. It acts as a guarantee for a specific sum, which helps strengthen the lender’s credit appetite. The maximum guarantee UKEF can offer is 80%, but not all transactions require this level, depending on the bank’s risk appetite. Where this is required, the bank will need to approve the transaction before UKEF can provide support.
Summary
Expanding internationally is a significant strategic decision that requires careful planning, research, and investment. The Department of Business and Trade offers comprehensive support to businesses at every stage of their international journey. For more information, you can explore their resources on Great.gov.uk or get in touch with an International Trade Adviser.
This content was written by Carpenter Box, one of the METALL sponsors.