Can business trade tomorrow on today’s strategies? Can business trade tomorrow on today’s strategies?

Authors
Sally Jones

EY UK Trade Strategy and Brexit Leader

Trade Strategy Partner. Helping companies and governments enhance trade. Mother of three. Astronomer.

Marc Bunch

EY UK Global Trade Leader

Global Trade Partner. Advises multinational companies on improving their trade effectiveness.

George Riddell

Trade Strategy Director, Ernst & Young LLP

Helping companies and governments enhance their international trade. Passionate about ocean conservation and an avid scuba-diver.

Contributors
4 minute read 28 Jun 2021

New research reveals the confidence and capability of business in addressing international trade concerns.

In brief:

  • What are trade teams being asked to support and how confident do they feel in meeting business needs?
  • To deliver long-term value, what practical steps are needed to move from just the ‘basics’ to best in class?
  • How do UK companies differ from their global peers and how do they define their trade strategy?

That cross-border trade is increasingly complex to navigate is well understood. Supply chain shocks, rising geopolitical tensions, emerging technologies and regulation, the need to make operations sustainable and adapting to post-Brexit trading relationships - all bring uncertainty. What’s not been previously understood is how trade functions should be structured to respond to the issues facing their organisation and how confident trade teams currently are in their ability to meet the challenges.

By surveying over 400 UK and international trade leaders, EY’s International trade capability in 2021 report builds a picture of the typical trade function, its strategies, size, reporting lines, recruitment plans and skills gaps. Only by understanding their current state, considering the capabilities necessary to address tomorrow’s trade issues, can businesses develop the robust and dynamic trade strategy they need.

Assessing current capabilities

How confident do trade teams feel in their ability to address challenges effectively?

  • Businesses recognise that they need to be more focussed in how they engage in international trade. Indeed, 81% agree it is more important than ever before for a business to have an international trade strategy.
  • While the vast majority of businesses have the ‘basics’ of a trade strategy and capabilities in place, there are a number of common gaps in the skills and confidence in key areas.
  • Only half of respondents feel they are skilled in important areas such as intellectual property and digital regulation despite rating them as high priority areas for their business.
  • Businesses lack confidence and feel ill-equipped to engage with government. This leaves them exposed to missing the opportunities that come with having a closer understanding of international trade policies and their decision-making process.

International trade capability in 2021

48%

of businesses do not feel equipped to deal with changes to digital regulation.

Shifting focus from customs and compliance to engaging with policymakers

Trade teams tend to focus on more operational elements such as compliance, as opposed to the more strategic or value-building areas such as identifying new markets and engaging in government policy. By focusing on these areas, trade functions are well-run but lack the impact they need on wider business goals and growth objectives.

Despite 81% of businesses stating that it’s more important than ever to have an international trade strategy, 44% don’t have the skills to engage with government stakeholders on trade issues – a core element of any trade strategy.

Getting the right talent and skillsets

A primary focus should be on consolidating trade expertise that is currently highly fragmented across business functions from customs and legal to government affairs. Often trade skills exist in a company, but key decision makers are unaware of them, and different stakeholders rarely come together to form a coherent picture of trade objectives that can be communicated to the C-suite and external partners or customers.

Difficulty in finding individuals with relevant trade expertise is holding businesses back from expanding their functions, even though they state this is an immediate or short-term priority.

A focus on the UK

As UK businesses overcome Brexit-related disruptions, they have an opportunity to adopt a more proactive trade strategy to maximise their use of new trade agreements, engage with the Government and other stakeholders on trade issues, and become familiar with new trade developments. The research found two main areas where UK companies should focus energies:

  • Create a dedicated trade function: Businesses in the UK are significantly less likely to have staff within a dedicated trade function, with only just over half (54%) saying this as opposed to two thirds (68%) in other markets – something already shown to have a significant impact on business confidence and skillsets in strategic trade areas.
  •  Don’t delay in sourcing talent: It is seen to be even more difficult to hire people with trade experience in the UK with 62% of UK businesses saying they think they will find this difficult, as opposed to 54% in other markets.

International trade capability in 2021

62%

of UK businesses expect difficulties in hiring staff with international trade experience.

Building a better trade function

Continuing to do the basics and tick off operational boxes will not be enough as international trade becomes increasingly important and complex. Businesses need to take a step back and assess their current function and strategies; understand and identify where improvements can be made; and, formulate a plan to implement the improvements. Action plans are likely to include:

  • Appointing a senior officer responsible for your organisation’s trade strategy and work across relevant business functions to reduce fragmentation
  • Researching new market opportunities and quantifying access barriers
  • Working to build understanding of the external trade policy-making process and improve trade literacy across your business

Summary

As the cross-border trade environment becomes harder to navigate, the challenges facing trade functions are rising. In order to succeed, teams must now move beyond the basics, assess gaps in their skillsets and create a resilient trade strategy.

About this article

Authors
Sally Jones

EY UK Trade Strategy and Brexit Leader

Trade Strategy Partner. Helping companies and governments enhance trade. Mother of three. Astronomer.

Marc Bunch

EY UK Global Trade Leader

Global Trade Partner. Advises multinational companies on improving their trade effectiveness.

George Riddell

Trade Strategy Director, Ernst & Young LLP

Helping companies and governments enhance their international trade. Passionate about ocean conservation and an avid scuba-diver.

Contributors