Chapter 5: Boosting Scotland's Export Performance
Context and key challenges
As outlined in Chapter 2, boosting Scotland’s export performance will make a significant contribution to the twin goals of Scotland’s Economic Strategy – improving competitiveness and reducing inequality – and is critical to creating a more productive, balanced and resilient economy.
Detailed information on Scotland’s export performance is provided in our Economic Evidence Discussion Paper  and the most recent (Jan. 2016) Scottish Export Statistics  . In 2013-14, exports to the rest of the UK increased by £1.5bn (3.2%) but challenging global economic conditions, especially in the Eurozone, resulted in a £0.9bn (3.2%) fall in international exports, from £28.4 bn in 2013 to £27.5bn in 2014  . However, over the last five years the total value of international exports from Scotland increased by £4.1bn (17.3%), from £23.4bn in 2010 to £27.5bn in 2014. Meanwhile. exports to the rest of the UK increased by £4.2bn (9.5%), from £44.3bn in 2010 to £48.5bn in 2014  .
This has been achieved through the hard work, creativity and expertise of businesses across Scotland realising market opportunities for their goods and services across the globe. It reflects traditional strengths in sectors such as financial and business services, engineering, chemicals, energy, whisky, tourism and textiles but also added impetus in sectors such as food and drink, digital and higher education. It also reflects the contribution of a wide range of public and private organisations such as Chambers of Commerce, local authorities and SCDI, as well as trade bodies and associations; and banks and professional service providers.
Until 2014 Scotland was broadly on track to meet the Government’s target of a 50% increase in the nominal value of international exports over the period 2010 to 2017. However, the dip in international exports in 2013-14, and continued global economic uncertainty, emphasises the need for a renewed and more wide-ranging approach to boosting Scotland’s export performance. This approach must maintain focus on increasing the total value of exports from Scotland but must also address the key underlying challenges critical to Scotland’s long term trade performance. In particular, there is a need to address the relatively low proportion of SMEs exporting and the concentration of international exports among relatively few companies. In fact, just 15 businesses account for 30% of all international exports, 70 – 50% and 130 – 60%  .
Given this, Scotland’s export base needs to be broader – with more SMEs exporting . Furthermore, whilst growth in Scotland’s exports has primarily been driven by increased exports to the rest of the UK, the EU and the U.S, there has been relatively slow growth in exports to China, India and the Middle East, especially in comparison to rates of GDP growth in these markets and the relative success of some comparator countries in exporting to these markets. Scotland therefore needs to grow its exports beyond traditional markets .
Addressing these challenges requires a clear focus on raising the international ambitions of businesses and enabling and supporting them to overcome the barriers they face to selling their products and services beyond Scotland. As highlighted by the Scottish Parliament’s inquiry into Internationalising Scottish Business  and Export Statistics Scotland’s recent (Jan. 2016) analysis of such barriers  , action is required across public and private partners to:
- Make it easy for potential and existing exporters to access information, advice and support from SDI, UKTI and other providers;
- Introduce businesses to overseas customers - 42% of non-exporting businesses and 48% of exporting businesses say this will help them improve their international performance;
- Help businesses realise the export-potential of existing products and services and/or innovate to create such potential - 60% of non-exporters report that their products or services are unsuitable for export;
- Help businesses, especially SMEs, reduce their transport costs - 31% of businesses say that transport costs are a barrier to exporting; and
- Mitigate businesses concerns about currency/exchange rates - 42% of exporting companies report that currency/exchange rates were a barrier to future international business development.
Given the above, our ambition for Scotland is a follows:
Achieving this ambition will support economic growth; help the Scottish economy withstand economic downturns in particular geographies and sectors; and, as small and medium sized businesses across Scotland grow through exporting and larger companies expand their export base, support inclusive growth.
Delivering our ambition
Although the existing work of SDI and a wide range of other organisations provides a strong foundation for achieving this ambition, a sharper focus on increasing the proportion of businesses exporting; on tackling specific barriers; and on realising opportunities in new markets is required.
Driven by our Strategic Response to Global Change ( Chapter 3), we will therefore take a One Scotland approach - working across the public and private sectors, in Scotland and across the globe - to inspire, enable and support businesses to:
- Access the information, advice and support they need. SDI will promote global market opportunities and the business benefits of trade, and support businesses with advice and mentoring from existing exporters and trade specialists;
- Make connections with potential customers. The SDI-led Community of Practice partnership will develop and deliver a rolling programme of targeted market awareness visits, trade missions/shows and meet-the-buyer events;
- Realise the export potential of existing products and services and/or create new products or services with such potential. SE and HIE will develop sector-specific programmes to help companies adapt their products and services to meet the needs of international markets. For instance, a more intense Export Bootcamp service will be introduced to accelerate companies’ learning and the speed and efficiency at which they prepare for their first overseas sales;
- Provide greater support for growth businesses to internationalise as part of SE and HIE’s account management approach. This includes support to businesses through SDI to access new markets and take products to market for the first time, but will also encourage firms to think more broadly about wider aspects of internationalisation, such as employing and attracting talent from overseas;
- Address key financial barriers to exporting. For instance, SDI will work with the Scottish Investment Bank, UK Export Finance and specialist export finance providers to raise awareness of their services and improve uptake of relevant support;
- Realise opportunities in new markets such as China, Middle East and India through SDI’s High Growth Markets Unit;
- Address transport challenges associated with trading internationally.
The Delivery Plan at Annex A sets out the specific actions SDI will take through a One Scotland approach to achieve this. This will include encouraging and supporting collaboration within and across sectors where there is potential to learn from and add value to each other’s strengths and to work together on, for example, shared market research; access to technical or specialist advice; common transport issues; and joint promotional activity in international markets. The ‘Collaborative Export Programme’ which has supported businesses in the food and drink sector to work together to realise shared trade ambitions and the recently announced Export Collaboration Charter between the Scottish Whisky Association and Scotland Food and Drink, supported by SDI, are good examples of this.
The Delivery Plan will be underpinned by a Digital First approach aimed at delivering a step change in the number of businesses able to access information, advice and support they need to help them export and ensuring that access is simple and straightforward. At the heart of this approach, the ‘mygov.scot’ website will provide a single point of access to trade support services across SDI, UKTI and other partners. This will include digital content, resources and tools such as a web-enabled information and research service and a webinar programme, comprising one-to-one trade surgeries and ask the expert sessions. It also includes diagnostic tools to help companies assess and improve their export readiness and planning tools to help companies prepare business proposals and project plans. These diagnostic and planning tools will provide companies with easy access to export advisors. This will bring a new ease, transparency and efficiency to how companies are supported in their efforts to start and grow their exports. Companies will see continuous enhancements, some small, some larger, to their experience of accessing services online and managing their digital relationship with providers. In delivering more of its support digitally, SDI is committed to service improvements as it constantly learns from the experiences of companies accessing and using trade support services.
Over the long-term, our aim is to extend this Digital First approach so that individuals and businesses can provide mutual support to, and collaborate with, each other and so that businesses can seek advice from GlobalScots and other networks.
This Digital First approach will complement and add value to existing telephone and face to face programmes and services for businesses such as market awareness events; customised market research; peer learning; training and support with international sales strategies and action plans; practical advice on establishing market presence overseas; and advice on technical issues such as customs and excise, trade credit and insurance, logistics and distribution, agents, labelling, legislation.
Similar to countries such as Ireland and Sweden, a Ministerial-led Trade Board will bring business interests and expertise and key trade support delivery partners together to provide leadership and ensure implementation of the Delivery Plan. In its first 12-18 months it will focus especially on action to boost the number of exporters; on joining-up services and support across providers and increasing exports to new priority markets.
Email: Jamie McGarvey, email@example.com