Benefits for UK SMBs Selling to Foreign Governments

Posted on 29 March, 2016 by Editor in Chief

In a recent report by the Confederation of British Industry (CBI), it predicts significant growth in overseas government procurement, which small businesses in the UK could benefit from.

Benefits for UK SMBs selling to foreign governments

The research foresees the value of overseas government procurement in 12 emerging markets including China, Indonesia and Turkey to be worth £452bn by 2030.

What are the risks?

Katja Hall, Chief Policy Director at CBI, commented that “UK companies, face an uphill struggle against the inherently protectionist instincts of many governments, as well as the near-byzantine complexity of differing procurements regulations.”

Guy Watson, Head of international operations at Dulas who has 30 years’ experience of selling to foreign governments in emerging countries and to support agencies, says these deals are still difficult and come with a huge risk of not getting paid for the product.

Watson’s usual procedure in order to minimise the risk, is to always receive a down payment of at least 30-50% or a letter of credit, before starting the manufacturing of the goods. Moreover, goods are only released from the depot to the customer’s freight carrier, once full payment has been received.

How small businesses can become suppliers

You may be wondering how you can become a supplier to these countries in the first place to start getting the order.

The most important factors to look into are which countries could benefit from your product or require your product the most.

One of the useful resources to discover who’s buying what, is to sign up to tender alert services, such as Oppex Tendertiger or Tendersinfo. By using these services, you will be able to filter by region, sector and tender value, this will give you alerts that match your requirements. The UKTI could also prove useful as it publishes a list of export opportunities, which includes government prospects.

If a larger company wins a bid to provide their products to a country, this may be good news for SMBs as big firms utilise smaller suppliers to help them fulfil the order. By following up on the tender to see who wins the contract could put you in a good position to approach the company and become their supplier.

Another way to pursue business is to use a partner on the ground in your target country that will seek out opportunities and deals on your behalf. Watson says: “Your dealmaker needs to be well respected in the business sector, financially well-established and used to running contracts for that government.”

One of the examples was when the international development company, Crown Agents drove the supply chain for the Ebola crisis, and more than half of the supplies were provided by SMBs in the UK. Rae Peters, Crown Agents’ Ebola supply chain manager says: “Through their valiant efforts to supply huge quantities very quickly they now have a good track record as suppliers in an aid context, they are now go-to companies, known to the UK government, known to us. It was a good platform for UK small businesses to show what they can do.”

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