Which Top Markets Should You Consider Exporting to?
These are precarious and uncertain times for SME global exporters.
The global supply chain has faced a series of damaging disruptions in recent years, from the global pandemic to container shortages. There is a mood of anti-globalisation in the air.
However, the post-pandemic consumer ‘splurge' also offers an opportunity for exporting businesses to expand globally.
But which are the best markets to export to in 2022?
This article at a glance
The United States, EU and India are the best markets to export to in 2022. This article covers the pros and cons of each market.
1. Exporting to the United States of America
The United States (US) is the biggest economy in the world. With a population of approximately 329.5 million and a GDP of 20.9 trillion USD in 2020, it’s one of the best markets in the world to export to — if not, the biggest.
- Post-pandemic splurge
- Purchasing power per capita has increased, thanks in part to the rise in promotions and the use of credit. The post-pandemic splurge has set in too. According to the Bureau of Economic Analysis, personal consumption expenditure rose by 1.4% in September 2020.
- Consumers are receptive to omnichannel shopping
- Most consumers in the US are omnichannel shoppers, which makes it easier for digital businesses to spread awareness of their products. US consumers are also receptive to international companies and brands, so it’s a good time to export to the US.
- Political risks
- The US is wrestling with big political fissures right now. While the architecture of Donald Trump’s wide-ranging tariffs is now being mostly dismantled, many tariffs remain — particularly tariffs on goods from China.
- Focus on sustainability
- Exporters may face a problem with their carbon footprint. Increasingly, American consumers are concerned with the environmental impact of products, with 48% of surveyed consumers stating their preference for transparent, sustainable and clean products. This is particularly true among young consumers, who are willing to pay more for environmentally-friendly products.
What are the tariff regulations in the USA?
Duties and taxes come from the Harmonized Tariff System. The US has different regulations for different products, enforced by the. US Customs and Border Protection.
2. Exporting to Europe
Europe has an estimated population of 746.4 million, with 15.3 trillion USD in 2020. In 2020, an estimated £571.7 billion of goods and services were exported to the EU by UK businesses — despite the challenges of Brexit and government-mandated lockdowns.
- Digital adoption on the rise
- Europeans are increasingly flocking to digital offerings in place of high street retail closures. Although European consumers are falling behind US consumers in terms of online growth, their increasing digital presence provides your business with an opportunity.
- Consumers gravitate towards smaller brands
- European consumers are evidence of the ‘Goliath Effect' better than anyone — a gravitational pull towards smaller brands. During the pandemic, European consumers bought more from smaller brands.
- Anxious consumers cutting back where possible
- According to McKinsey, consumers are concerned about spending more on transport, fuel, and food, and have reportedly cut down on non-essential items. Many consumers have also switched to more affordable retailers and brands in recent months, proving that 2022 might be a challenging year to convince consumers to spend more.
What are the tariff regulations in the EU?
Brexit has irreparably changed the customs landscape. If your business is based in the UK, these are the top three things you should know:
- You must complete an export declaration, which typically costs between £15 and £55.
- You are required to send key documents to your freight forwarder, potentially including copies of export licenses, road consignment notes, and your Movement Reference Number from your export declaration
- For customs purposes, your business must be established in the UK. If your business does not fulfill this condition, you can get a third party or an agent to act as an exporter of record
For your UK business to export to the EU, you will have to:
- Obtain an EORI ID
- Complete customs declarations
- Look up commodity codes, VAT and duty rates
- Check if you are eligible to claim a preferential duty rate
3. Exporting to India
India has a population of approximately 1.38 billion, and a GDP of 2.6 trillion USD in 2020. India is predicted to become the third-largest consumer market by 2030. Bear in mind the downsides. Much of India is offline, with advertising conducted on a word-of-mouth basis.
- Consumers' emotional attachments to brands are not exclusive
- Indian consumers aren’t attached to brands, prioritising the added value of the purchase above its reputation. This makes it easier for new brands to penetrate the Indian market.
- Societal changes prompting higher spending
- Consumption patterns are also seeing fundamental changes as Indian family structures reshape, and these new groups tend to spend more.
- Most Indian consumers are offline
- Although India has the second-largest Internet population, only 41% of the are online. E-commerce is still considered new to many Indians, especially in rural areas. This means that you may have difficulty reaching your target audience and convincing them to purchase your products.
- Stiff competition
- Consumers in India tend to purchase from ‘Kirana' stores — departmental stores in Indian localities which act as a centre for groceries and other daily necessities for the local community — instead of modern stores such as supermarkets. With 88% of the retail market being ‘Kirana' stores, it might be difficult to persuade consumers to purchase what they need from you instead of a ‘Kirana' store.
What are the tariff regulations in India?
Taxes are levied by the state governments and the central government in the form of the national Goods and Services Tax (GST). Find out more about the GST rates here.
Additionally, your product labels can either be in Hindi or English. Your imported goods and transport documents must reflect standard units of measurement and weight.
International trade remains ever-changing
In our post-Covid world of global uncertainty, the international trade environment continues to change rapidly. The need for an efficient payment system is one constant.
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