Brexit will change the exporting landscape.
Now Article 50 has been triggered, the divorce proceedings from the EU, are due to start this Summer and a deal must be wrapped up in 24 months or the government has threatened to walk away. For business that is two financial years! April 2019 does not give much time to plan and gear up for new markets!
We do not know what non-EU bilateral trade deals the UK will secure but it is more than likely that many exporters will need to spread their wings into unfamiliar countries where the risk of corruption is higher.
Bribing to win overseas orders is often quoted as a “business and cultural” norm; not “what you know” – but “who you know” and how to leverage the deal. But in the last decade many countries have recognised the economic costs of corruption and introduced stronger anti-bribery and corruption laws. Added to this, smartphones more readily facilitate the reporting of corruption be that by a whistle-blower or competitor.
Whilst some overseas judicial regimes may be weak, the UK Bribery Act (and its Guidance for companies) and the US Foreign and Corrupt Practices Act are not; they have overseas reach and successful prosecutions are escalating. In the UK that includes Rolls-Royce plc, Sweett Group, Brand Rex and others and that’s before individuals! Developing sustainable new export markets takes time, planning and resources.
Therefore, now is the time to sharpen up anti-bribery policies, procedures and the training of key staff. This must extend into supply chains and intermediaries such as overseas sales agents, where more than 80% of bribery cases occur.
So – ten easy tips to export successfully and safely:
Before stepping out – do the marketing homework and ensure that you have export experienced people and the business processes in place to handle these new opportunities. Find out whether export finance is available.
2. Sales networks
Desk research those potential new markets and map out your new overseas networks for sales.
3. UK export controls
Understand your role: if the goods or services you are supplying are all UK technology, you may be subject to UK export obligations.
4. Re-export of supply
By including any controlled technology from another country (e.g. the US) you will inherit legally binding re-export obligations as well as the UK export obligations. Be certain where your products might end up, especially if subject to any form of export licensing. You will need to identify the end use of exported items and the potential for dual-use.
5. Re-export by customer
Consider the possibility of your products being illicitly re-exported by your Customer/Distributor into other markets especially where that other country is subject to sanctions.
6. In-country representatives (e.g. agents etc)
Carefully assess the need for in-country representatives; the levels of risk and whether your company could sell direct or set up its own operations. Ensure the potential partner will comply with relevant anti-bribery legislation and sign up to your own anti-bribery policies.
7. Know your partner / representative
If more than a low risk, conduct due diligence, to really know with whom you are doing business; not just the “front man” but the ultimate beneficial owners of the business; is this business a front for an illicit activity – are the principals on a watch-list? Remember those acting on your behalf are “associated persons” in the context of the Bribery Act.
8. Commercial risk
Ensure safe payment terms. Chasing money from the other side of the world is tough!
9. Anti-money laundering
Brief your bank to ensure their support for areas such as export credit insurance; that funds may come into your account from unusual overseas banks – to avoid your being sanctioned over concerns of money laundering and other crimes, less common in UK/EU trade.
10. Supply chain governance
Be just as diligent in building a new overseas supply chain(s); be mindful of the UK Modern Slavery Act. Clothing and consumer goods manufactured in low wage countries are a risk and can damage your brand reputation and shareholder value.
NOTE: The endnote references are advisory only as there are many resources to assist exporters.