3.4 Maximising impact
The actions in this plan are focused on closing the gap in export performance between Scotland and some other comparable economies, at scale and at pace. Doing this requires us to make choices about where we put the balance of our effort. Whilst we will continue to ensure that support and advice is available to any business in Scotland with the ambition to export, the statistics show that most of the value of exports are driven by a relatively small number of businesses. Therefore, a transformative shift in the value of Scotland’s exports will only come through shifting the performance of our top exporters and those capable of exporting at scale.
The average value of exports from each of the top 100 exporters is £194mn. The average value of exports from each of the next 400 exporters is £19mn. The average value of exports from each of the remaining Scottish exporters is only around £470,000. While there is a quite a lot of variation on the value of exports within these groups, this does show the relative scale of impact from interventions with different types of businesses.
To illustrate this further, increasing the exports of the top 500 exporters by 50% would increase overall exports by £13bn whereas increasing the exports of the other 10,500 by 50% would increase exports by less than £3bn.
Working in the same way with all our exporters, or potential exporters, would not make best use of resources or represent good value for the taxpayer. Many of the top exporting businesses will need little or no support, however, they will be able to provide advice and support to businesses that export less than them and also be able to work with their supply chain to help them internationalise.
Many other businesses have the potential to deliver significant increases to their exports, enough to shift the dial on Scotland’s overall export performance. They will need intensive and holistic support to realise their potential.
To cater for these differing needs in the most resource effective way, whilst maintaining our focus on overall export performance, we will implement a segmentation strategy which provides focused support to different types of businesses depending on their export profile.
Our top 100 performing exporters are typically global businesses that are unlikely to need export support services but may require “economic diplomacy” support in the form of political intelligence, introductions and advice to exploit opportunities in new markets. We will encourage them to mentor other firms and we will seek to understand their requirements, in particular where we can support them to further embed their supply chains in Scotland or to consider further investment.
Our solid performers, which are predominately SMEs, may have limited internal resources and are likely to need a blend of intensive export support services and, where needed, economic diplomacy interventions.
Our sleeping giants are businesses which have a solid performance of selling into the Scottish or rUK markets in sectors where their products are likely to be in demand internationally and are of a scale where they have the management capacity to support export activity. As fledgling exporters, they will need access to business support services to grow their business, innovate their products and, when a strong opportunity arises, access to export support. We will also seek to provide focused mentoring support.
Global by birth are typically small businesses in sectors which, by their nature. are global in outlook, for example, in the technology or creative sectors. These businesses need to be treated differently as they are often internationally focused from the outset. They will often already be on enterprise agency scale-up programmes. Given this, we propose they have access to enterprise agency business support services and export support services as needed.
Potential performers refers to the majority of businesses that are already exporting, or aspire to, but typically at a smaller scale. For these businesses, existing services to support growth are in place, supplemented by export support services (most likely delivered by partners such as Chambers of Commerce) delivered in a ’one to many’ format such as workshops and (self-help) digital services. The Local Export Partnership pilots led by Chambers of Commerce, with regional partners, including local authorities, is undergoing evaluation and the results of that will feed into our development of future export support services for these businesses.
Growing the exporting base
While the main driver of the plan is to grow the value of exports from Scotland, this does not mean that there isn’t an ambition to grow the base of exporters. This is both important for a resilient economy but is also important to the productivity of individual businesses in Scotland – and therefore the productivity of the economy as a whole.
It is important to recognise that there is a wide range of support available to businesses in Scotland that can help them prepare to grow and to move towards exporting or exporting more. More details on the wider business support landscape can be found on the Economic Action Plan website.
There are actions in this plan to increase the exporting base, including the business to business mentoring programme in the First Minister’s Export Challenge, work on finance for exporting, improved market intelligence and work supported by our enterprise agencies, the Scottish Chambers of Commerce and other business networks.
In addition to these business segments, our strong political and economic support for social enterprise in Scotland has created a world-leading ecosystem of support. It has created the conditions where Scottish social enterprises can thrive and has given rise to a growing number of social enterprises with an international outlook and impact.
As well as playing an important role in raising Scotland’s reputation and standing as a good global citizen, research indicates that 7% of Scottish social enterprises are already collaborating with international partners, contributing to the development of international projects, or selling overseas.(9) The Scottish Government is working with Scottish Development International to raise export awareness and ensure access to a tailored suite of support products for social enterprises taking their first steps into international markets.
1. Work with Scotland’s top exporters to offer tailored support according to their level of export maturity.
2. Identify our ‘solid performers’ and provide intensive support, including market access, mentoring and focused support to drive up their export levels.
3. Identify our ‘sleeping giants’ and reach out to them as potential significant exporters of the future, offering them tailored support to expand their international presence.
4. Offer new, early stage or inexperienced businesses focused support – either through the FM Export Challenge or through other appropriate measures.
5. Monitor closely the growth of ‘global by birth’ businesses through existing enterprise agency growth schemes to ensure they internationalise at the rate we expect.
6. Support the wider base of Scottish exporters, and potential exporters, in partnership with SDI, DIT, the Chambers of Commerce network and through other appropriate mechanisms.
(9) CEIS, Social Enterprise and International Trade Research, 2016