Knowledge Gaps And Language Skills Hold Back Exporters
10 June 2013 in Chamber News
A survey of more than 4,500 businesses released today (Monday) by the British Chambers of Commerce shows that the share of Chamber members which export continues to increase. However, the findings also suggest that gaps surrounding the general know-how of how to take a product or service overseas are holding back firms from taking the initial step towards exporting.
In addition to this, there is a major shortfall in foreign language skills within the business community. Rebalancing the economy towards net exports is vital for the success of the UK economy, so the British Chambers of Commerce is calling for more support for firms looking to trade overseas, while encouraging the take-up of foreign languages – both in school and in the workplace.Lacking the ‘know-how’ of taking a product or service to market is holding back potential exporters
• Our findings show that gaps in commercial knowledge, from finance to marketing and sales to negotiating the bureaucracy, continue to hold back businesses looking to export. The difficulties in sourcing market information tend to hold back manufacturers, micro and smaller firms from exporting more than other types of business.
• Perception can act as a barrier. 58% of non-exporters reported that they feel they do not have a suitable product or service to export, and although down on the 76% reported last year, this still indicates that there is a lack of knowledge surrounding the opportunities that the global market can offer to business.
• Manufacturing, IT and media firms cited the largest skills shortages: 17% of non-exporting manufacturers cited a limited knowledge of the commercial aspects of the process of getting the product or service to markets overseas, and 13% of IT and media firms said the same.
The BCC believes that commercial export skills should be placed at the core of business education, so that entrepreneurs of the future will find it easier to understand the unique challenges involved in the end-to-end export process. This could include managing finances, using cross-border supply chains and understanding legal and bureaucratic requirements. Business degrees and further education qualifications must include compulsory modules on international trade and exports, to ensure that business people are ‘export-ready’ when entering the workplace.
Training is crucial, and the Chamber Network plays a leading role by offering an accredited training scheme across the country. However, we believe that the government should do more to encourage companies to take the initial step towards becoming an exporter. This could be offering financial incentives for non-exporting businesses that train up existing staff on how to export, helping firms with their first trade mission or a reduced rate of tax on early exporting profits.
A shortage of language skills undermines UK export performance
• Knowledge of other languages is a critical skill for exporters. 62% of non-exporters that are likely to consider trading internationally in the future see proficiency in foreign languages – or lack thereof – as a barrier to do so.
• Even when business owners claim some language knowledge, very few speak well enough to conduct deals in their buyers’ language, and this is doubly important when conducting business outside the largest cities and administrative centres.
• French remains the most commonly spoken language, with 71% of business owners claiming some knowledge. However, only five per cent are able to converse fluently enough in French to conduct business deals in that language.
• When looking at other trading partners in the eurozone, 57% spoke no German, 65% no Spanish, and 76% no Italian.
• Looking at faster-growing markets outside the eurozone, the problem is even more acute: 95% of business owners have no knowledge whatsoever of either Russian or Chinese, despite these two economies forecast by the IMF to grow by 3.4% and 7.75% respectively. Less than one per cent feel that they can converse fluently in either language.
The BCC is calling for a fundamental change in approach to the importance of language learning, to ensure that the next generation of business owners are ‘born global’. The government should revise the national curriculum so that studying a foreign language is compulsory until AS Level. Incentivising language training for SMEs through financial incentives will also ensure a tailored approach for businesses, so that staff can learn the relevant languages they need for conducting business abroad.
Commenting on the findings of the survey, John Longworth, Director General of the British Chambers of Commerce (BCC) said:
“We know that exporting is crucial for the success of the UK economy, so it is encouraging to see that the percentage of exporting businesses within our membership has increased. However more can and should be done to help businesses take the first step towards exporting their goods and services. The overseas market may seem daunting to a non-exporter, but the rewards that these companies get in return can be outstanding, as I see first-hand from the successful businesses that I meet every day. Our message is always ‘have a go’, but we do believe there is more that the government can do to help get more businesses thinking globally - a crucial requirement of the 21st century age we live in.
“It is critical that firms understand the challenges and opportunities attached to the export market. Helping companies forge new connections, through trade promotions and incentives, will help companies to think internationally. Furthermore, a renewed focus on language skills at school and in the workplace will ensure that we continue to export the finest goods and services that Britain has to offer.
“To really secure Britain’s future as a leading global exporter, we need to do all we can to encourage companies to take advantage of new markets. Giving businesses the opportunity to foster links with international firms, training employees, and educating the workforce of tomorrow will boost our export activity in both the short and long term, and help the UK win the ‘economic war’ that the Prime Minister has frequently spoken of.”