Why more British companies should export to China

In China, the world’s largest e-commerce and retail market, British brands (including many SMEs) made £367.5m in last month’s 11.11 shopping festival, and that opportunity continues to grow. David Lloyd, General Manager UK, Netherlands & Nordics at Alibaba Group explains how

Alibaba recently surveyed 1,000 small businesses across the UK, finding that only one in five plan to export in the next 12 months. With technology making it easier to sell overseas and strong international demand for British goods, small businesses have a real opportunity to look beyond the UK – and Europe – to fuel their recovery and growth.

Britain’s 5.9 million small businesses have long been considered the foundation of its economy. As of October this year, they employ 48% of the total British workforce and account for more than a third (36.3%) of its private sector turnover.

The Covid-19 pandemic has played the nation’s small businesses a particularly tough hand this year. We’ve seen 80% of them experience a drop in revenue, with two out of three small firms saying they expect trading to get worse still during the months ahead.

We must encourage and empower small businesses to look beyond the borders of the UK – and Europe – for growth

If we’re going to reverse this trend, we must encourage and empower small businesses to look beyond the borders of the UK – and Europe – for growth. China’s retail market has already bounced back to pre-pandemic levels: consumers are spending confidently and shopping even more than they were prior to the pandemic, and China is the only major economy expected to grow this year. Chinese consumption is going to be a serious driver of the global recovery – and UK SMEs can benefit.

Our latest research, conducted in October 2020 amongst 1,000 SMEs across the UK, reveals that many small businesses are unsure about how they can tap into the overseas trading opportunity. More than a quarter are telling themselves they’re ‘too small to export,’ while a fifth think there’s ‘no demand for their products outside Europe.’ In fact, just 21% of the British small businesses we sampled said they are planning to sell their products or services overseas during the next 12 months.

When we look at China in particular, the world’s largest e-commerce market, we find that just 7% of small British businesses with export plans say they will look to China as their next international market, compared to 23% who would consider Africa, 37% North America and 52% who have their sights set on Europe.

Large companies have always been good at getting their products around the world. Now, technology is making it just as easy for small businesses – who may not be recognised brand names in their home market – to tap into this opportunity and to shine on a global stage. The scale, cultural difference, and the simple fact that it’s far away mean that exporting to China can feel like a daunting prospect for a smaller company. But the opportunity is easier than many realise – and too big to ignore.

Demand for products from international brands – particularly from the UK, which was again one of the top ten markets for brands selling into China during this year’s 11.11 Global Shopping Festival – has remained resilient and in fact, grown over the course of this year. From luxury goods to health, beauty and nutrition, Chinese consumers hold ‘Brand Britain’ in extremely high regard for its quality and heritage.

China’s retail market has already bounced back to pre-pandemic levels and Chinese consumption is going to be a serious driver of global recovery

As we move into 2021, I would urge all small businesses to review and consider the role that export can play in their growth plans, looking beyond the UK and beyond familiar markets, to explore the opportunities that lie further afield.

This report will provide an overview of some of our key research findings. It includes opinion from expert partners, first-hand experience and insight from British businesses who have found success in China, and some data and tips to help dispel myths around exporting.

Read the full report here