Not Much Fun
By STANLEY HYMAN
THE Government's current campaign to stimu- late exports is based on the assumption that a large number of small firms in this country are capable of trading successfully overseas— the implication being that only laziness and in- efficiency hinder our conquering the trade df the world.
The Economist has decided that the objective of official exhortation must be 'to recapture the dynamic of a brash and brassy salesmanship that always seems to the British to be rather crude, making television jingles about British products ring in every market of the world.' But there is no evidence that this method of salesmanship is used by our competitors, who are always assumed to be so much more successful in selling. Nor is there any evidence that we don't already do our fair share of brash, brassy, crude and jingly salesmanship—which may, in fact, be one of the obstacles to increasing our trade, at least with the Communist third of the world.
In an attempt to progress a little beyond this economic witch-doctoring, an inquiry was re- cently made from a dozen firms in South Lon- don about exporting problems. Open interviews were held with firms of many sizes and different industries. No statistical analysis is possible, and even if it were, so small a sample could provide no definite conclusions; but the inquiry can be considered as a pilot probe which may be help- ful in planning a more complex investigation. And it clearly shows that the small firm has a number of real exporting problems (not always apparent to management) which will not dis- appear through exhortation and enthusiasm.
The two major difficulties of the small firm, particularly the smallest with under a hundred employees, is the lack of time and money needed for the development of overseas sales. With only one or two senior executives, it is impossible for the small firm to undertake detailed investiga- tions of each market, which are required to, say, consider modifications to its products to meet particular needs. And if overseas sales begin, they face the manager of the small firm with an increasing number of problems. An overseas buyer visiting this country who likes his product will want to meet his faceless supplier. Apart from lack of time, the important visitor just cannot be received in the small, noisy office amidst the customary ceaseless flow of inter- ruptions. So either he is not invited, and feels rebuffed; or he is given expensive entertainment, which increases the real costs of the transactions. And the problem of visits overseas increases with every success in foreign markets. At some stage, of course, a full-time export executive will have to be appointed, but the `take-off' period before exports justify such expenditure may last for years. And few firms, large or small, can look forward to a time when overseas sales are so well established that they can form a constant element in a production programme.
In addition, there are all the customary export problems of documentation, credit, selecting and controlling agents, market research, and domestic and foreign competition, presenting intolerable burdens to the tiny firm. If there is a buoyant home market, no sensible manage- ment is going to seek these additional hardships by exporting. And if home demand is reduced, spontaneously or through government policies, there is little evidence that the small firm can easily switch to intermittent exporting—or, if it does make the attempt, that it will be successful.
There are, of course, numerous sources of help available to the exporter, whatever his size. The Board of Trade, the Export Credits Guaran- tee Department, trade associations, management consultants, insurance companies, advertising agencies, the banks, the export trade press—all are available with valuable guidance and sup- port. Possibly their existence is one of the rea- sons why small firms are able to export at all. But each is imperfect from the viewpoint of the individual firm. Even the export merchants, the buyers for overseas markets, the shippers and the packers, with all their immensely valuable ser- vices, still leave the crucial problem to the small firm—the finding and maintaining of a stable overseas demand for the firm's products.
The root problem of all firms is marketing, and exporting is the most difficult of all market- ing responsibilities. The assumption of official and academic opinion that marketing products is relatively easy and that all firms are capable of doing it successfully if they will exert them- selves sufficiently is unjustified. The small firm is primarily a manufacturing unit and not a marketing unit. The challenge, then, is to find a way in which the independence of the small firm can be preserved without the disadvan- tages of marketing and exporting inefficiencies.
The answer lies in some form of marketing organisation that can buy goods from the small manufacturer and sell them to overseas custo- mers. If it operates on a large enough scale, tt should be able in time to place long-term coil' tracts with small manufacturers, who can thee integrate overseas orders into their regular pr0' duction programmes and concentrate on ill. creasing efficiency.
This marketing service might be simplY joint venture by a small group of firms, a dc. velopment of the system of employing one over• seas representative to serve a group of ors competing manufacturers in a particular market. It might grow into a federation of such local joint ventures. It might be established on a large scale initially by a consortium of banks and a port merchants. Or it might be entirely and°;tr government control or at least sponsorship. Or could be a combination of some or all of these possibilities. Whatever its structure, it must boti large enough to employ the full-time services the finest qualified marketing experts available' The organisation must also be large enough t° work on principles of insurance so that the te. certainties of exporting can be minions" through mutual protection.
If the problem of increasing British exportsu serious, then a scheme on these lines mist 7, considered. It is not enough to dub it 'Ste," trading': it need not be a State organisation arl", almost certainly would not be. The Governruelt should undertake a full investigation of the e't port problems of the small firm; and the 0,1' come will probably be a combination of PlIbij`, and private enterprise now found in so areas of our national life.
Previous page
