Eastern markets hold promise

With new year forecasts for the UK and European economies to remain in the doldrums at least for 2013 and possibly beyond, perhaps now is the time to start looking at export opportunities in markets further east with more robust and sustainable growth.

There has been a tradition of export from the US for almost 400. However, the downturn in US housings starts in 2007/08 which has continued until the end of 2012 gave fresh impetus to the efforts of US mills and export houses to sell their products abroad.

A key factor which is holding up further sales is a lack of knowledge among buyers of the benefits and characteristics of American softwoods and thus the ability to specify American softwoods with confidence. To change this, a guide entitled 'A Guide to American Softwood species' has recently been published. Because many buyers lack a timber background, the guide deliberately presents basic information on each species covering end uses, distribution and availability, physical and mechanical properties and durability. Some technical information is also included.

The main vehicle for generating sales leads is trade shows. The best show is the Dubai Wood Show which is held in April every year. The Dubai show is attended by buyers from all over the Middle East and beyond and is a must for anyone interested in exploring sales prospects in the region.

Delhiwood which alternates with Indiawood in Bangalore, is the main show for those interested in the Indian market. India can be a frustrating place to sell timber. Buyers tend to be fickle and led by fashion. If several importers start selling a species, many others will try to follow. The result can be severe price erosion and a loss of profitability. Despite these factors, sales of American softwoods topped US$15m in 2011 and are US$10m for the first 11 months of 2012.

Although primarily a show for the furniture industry, Intermob in Istanbul every October is a useful introduction to the Turkish market. Although growth slowed towards the end of 2012, Turkey's economy is still in positive territory and boasts the second largest construction market in the world after China. Like India, it tends to be very price conscious but there are inevitably some market niches which can be profitably developed, particularly for joinery products. Both Delhiwood and Intermob are sparsely attended by UK and European companies.

American Softwoods organised a trade visit to Tunisia in April last year, which revealed a country in transition from the old regime of President Ben Ali to a sort of uneasy democracy kick started by the Arab Spring, which began in Tunisia. Already a good market for Swedish and Finnish producers, Tunisia has in the recent past had a relationship with US softwood exporters and the visit, attended by 10 American companies, has so far yielded modest sales.

One word of warning: the Middle East, and at the moment especially North Africa, is a potentially unstable part of the world. Despite this, opportunities to do business exist but normal rules of business still apply. Check out your customer before doing business either with your bank or via UK Trade and Investment, the government department responsible for giving advice to exporters.

Initially, business should only be done by Letter of Credit (L/C). An L/C guarantees payment by the issuing bank, even if the buyer ultimately fails to pay. Once you're confident of your customer's ability to pay, you can move to cash against documents (CAD) terms. You ship the goods before payment but don't release the documents to transfer ownership and possession of them ('shipping documents') until your overseas buyer has made an irrevocable payment for the goods.

In summary, export is not for everyone. But at a time of negative or sluggish growth at home, it is surely time for more British companies at least to investigate opportunities offered further afield.