How to find an export market

The main topic of this story on the BBC website is a new report by the British Chambers of Commerce, which says that while the UK’s service sector is suffering domestically, many manufacturers are enjoying an export-led boom. It gives a great example of clockmakers Smiths of Derby, who were suffering from a lack of domestic demand in the recession for their expertise in renovating and maintaining clocks around the UK from St Paul’s Cathedral to Arsenal’s Emirates stadium.

So, in need a new strategy, they looked for export markets which might be in an economic upturn instead, and found out where in the world the concentration of construction cranes was highest, and focused their efforts there. As a result, they have found that buyers in emerging markets like China, India and Russia greatly value the ‘Made in Britain’ label, and it now sees 90% of its business in new clocks coming from outside the UK, pushing profits up by 30% in the past three years. in line with Porter’s generic strategies for analysing market strategies, they have avoided competing with local low-cost producers in those markets, aiming for differentiation instead by emphasising manufacturing excellence for the luxury goods niche markets.

Their success is in stark contrast to service sector businesses also in Derby, which rely on a buoyant local market and cannot change their market easily. A long-established family clothing retail business is in the process of closing down, as they cannot survive in the face of lower consumer spending and the prevalence of low-cost high street clothing chains. The growth of the service sector has relied on the consumer spending boom from the mid-90’s to 2007, but is now really struggling to deal with the prospect of a much smaller market for their services.

A link to the British Chamber of Commerce press release with a summary of their report is here, including their estimate that GDP growth is being held back by the service sector, and that most businesses are expecting to be forced to raise prices in 2011.