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Research is key for Australian exporters

By Export Council of Australia · April 09, 2014

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Finding out as much as you can about overseas markets is key for successfully operating in them.

I once asked a business colleague why he had gone into export and he said, “simple really, I compared the number of people in Australia against the number of people in the rest of the world and found there were more overseas, so export was the way to go”. Now, this may be fairly rudimentary research but at least there was some thinking behind the decision. I should point out that his company was very successful and he became one of our Australian Export Heroes.

The point here is that research can identify aspects of trade that can form the basis of good decision making, whether it’s by governments or by companies thinking about expanding their business by getting into export. And history tells us that you don’t have to be big to be successful, all you need is the right product or service, courage, money and information that leads to sound decision making.

Having a background in consumer products means I have always been a strong advocate for knowing as much as possible about the dynamics of the business we were in and it makes sense that governments too need sound information when crafting policy. Trade is a perfect example because it contributes about half our GDP and makes a massive contribution to employment, and in particular innovation. It goes without saying that if government has good research upon which to base trade policy, better policy is a much more likely result.

The Export Council of Australia together with Austrade, Export Finance and Insurance Corporation and the University of Sydney recently conducted the first major export study in Australia for more than 15 years. The Australian International Business Survey (AIBS) with  more than 1600 respondents operating in 123 markets across the world, identified a number of things that government and industry need to do to develop good policy and maximise the export opportunity, particularly among the SME sector in Australia.

So what are the exporters telling us?

The good news is that, despite the high dollar and GFC aftermath, Australian exporters are very positive about the future with 74 per cent indicating plans to expand into two or more markets over the next five years. Given over 300 of the respondents came from manufacturing, that's an encouraging outlook.

The myth that opportunity only exists in developing countries is broken, hallelujah, at last, you can hear me say. Not surprisingly China (19 per cent) was deemed the top market opportunity into the future, but what is really surprising is how closely its followed by the United States (15 per cent) and interestingly, the United Kingdom (6 per cent). India and Indonesia sit at 5 per cent followed by Japan, South Korea, Malaysia, New Zealand, and Germany. It's important to acknowledge this outcome because most support in recent times has gone into developing countries often at the expense of countries like the USA which, despite what you may think, is very difficult and costly to gain export access.         

Important to all of us is what I often describe as "understanding the business culture" in markets in which you operate or plan to operate. The research shows that more than half of Australian exporters (59 per cent) state a lack of information on local culture, business practice, and language are all major barriers. This may not be too surprising to people who have worked in foreign markets, but it is one area that I can't say we have failed, but I can say needs to be given greater prominence by government in terms of representation.

The AIBS research provides too much information for me to talk about here although I do believe I need to mention what is highly relevant to SMEs, and that is the financial barriers to exporting. There is no doubt, and there never has been in my opinion, that more companies would export if the financial aspects were made easier. This is an issue for both the banks and for the governments export credit agency EFIC to address.

And finally what needs to happen now that we have some strong data to support our arguments:

  • The government needs to provide more support in developed countries, particularly the USA.
  • The people factors need to be addressed.
  • There needs to be more funds put into teaching current and new exporters about the regulations, business environment and challenges they are likely to encounter in major offshore markets.
  • Critically for SMEs is the need for easier access to financial support for the export of goods and services.

Ian Murray is the executive chairman of the Export Council of Australia

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