There are times when opportunities are so obvious that you can’t see them. It’s a lament often heard after a business rival of modest comparative product snatches a market. You say, ‘damn, I knew about that’ but dismissed it as out of reach. Overnight, that formerly pedestrian competitor has a worldwide engagement.
Traditionally, even with a pertinent business plan, few who commence trading envisage creating a customer base of staggering proportions beyond the borders of the territory in which they operate. Greater Western Sydney for example takes in a significant swathe of consumers. But with so many vying for their custom, cutting through is tough.
On the other hand, really innovative business owners are never complacent. Their horizons are as wide as the world’s oceans and, so goes the old Sunday school chorus, ‘as high as the heaven’s above’. To these innovators, each consumer populating the continents and every significant Island archipelago can be regarded as a potential source for expansion of a product or a service. Experience has shown that mapping out those bountiful markets has propelled modest back-of-shed enterprises into vibrant international players.
Into this conundrum steps Lisa McAuley, CEO of the Export Council of Australia, (ECA) who wishes to settle the issue for Aussie businesses who have never envisaged exporting their product or service. She is a passionate advocate for diversity in business and maintains that well-planned export diversification can become an exciting progression in a company’s evolution.
Her views are not founded on some anecdotal hunch nor driven by haphazard rhetoric. Rather, to bolster an opinion that not enough locals are opting to expand their trading geographies beyond the national coastline, Lisa offers up the figures on Australian firms and companies competing in international trade as a percentage of total enterprises.
“As of June 2016, there were more than 2.17 million actively trading businesses in Australia, an increase of 2.4 per cent from June 2015. This was primarily driven by growth in small businesses (ie, those with fewer than 20 employees).
Despite this growing number, in 2014-15 fewer than 52,000 businesses were actively engaged in exporting goods and services. There are under 300 businesses that export more than $100m of goods each year.
This elite half-of-one-percent of exporters account for 83% of Australia’s exports. To put this in context, internationally the top 1% of exporters account for only 53% of goods exports,” she says.
The ECA, a not-for-profit advisory and educative body, believes it has a role in assisting businesses to grow their product. Especially encouraging at the outset of our discussion is Lisa’s assessment that areas beyond the ‘safe’ markets such as the United States, the U.K. and New Zealand should be investigated. She mentions Mexico as one country which should be considered as worthy of study as a significant trading opportunity for our goods and services.
The key to this ‘looking outside of the square’ is that businesses trading within our borders are subject to local economic strictures. A downturn on the Gold Coast, as an example, might well be counter-balanced by a boom in Vietnam. Or a lull in some other indigenous region may not necessarily be mirrored in the panoply of overseas markets. In effect, developing a broadly based international clientele can constitute a pragmatic diversification insulating the business from the chills of slack growth or something even worse.
So where do you start if you think there’s a niche that you can fill? Identifying a ‘niche market’ might sound clichéd, yet it is an exceedingly relevant ideal for the business contemplating its overseas options. In considering this issue Lisa is emphatic in stressing the importance of preparation.
“The essential starting point for the creation of any enterprise is having a plan. That is especially true for almost all companies deciding on international expansion and development.”
Are there exceptions to that rule? “Yes,” says Lisa, “but they are rare.”
Sometimes importers/distributors sizing up a commendable enterprise will ‘head-hunt’ local products and/or services.
“Those businesses, we call them the ‘accidental exporters’, are the lucky ones who fall into international trade more or less by good luck rather than design.”
Nonetheless, pitfalls can abound for them too in circumstances where they might sometimes fall prey to unscrupulous international players or shady local operators.
At an early stage of the interview, firmly convinced that Lisa is one hell of a smart young woman, we ask her something of herself. Though born in Sydney, her cultured English accent underlines a childhood spent in London for sixteen years. At eighteen, she voyaged home to take a degree in Economics and social science at SydneyUniversity, majoring in political economy and commercial law.
In relocating to England after graduation, she developed an interest in international trade, finance and investment and worked there for a time in those areas. Back in Oz in 2006, she joined the Export Council. It coincided with a period when a change of name and expanding presence was occurring
“I was very fortunate to be mentored by some great people. Their experience and willingness to impart a profound knowledge of international trade have proved invaluable to me.”
By 2011, she began heading up the Council and decided on a number of strategic decisions. She has now passed a decade in the foreign trading sector and her commitment to the ECA remains indefatigable.
“There are many organisations that can support Australian exporters, the ECA is just one that is part of the ecosystem in Australia to help SME’s.”
Lisa recommends companies take advantage of the range of support services available such as Austrade, Efic, DFAT and local Chambers of Commerce.
It is the only membership body in Australia that is solely focused on the needs of companies involved in international business. Besides New South Wales, it has offices in Victoria, Queensland and Western Australia. One of the key benefits of membership flows from the influence the ECA imparts on account of its ability to agitate policy initiatives.
“A key focus of the ECA’s policy is to advocate for ways in which we can make it simpler and easier for businesses to enter international markets.
This includes both domestic reform and addressing NTB barriers, where Non-Tariff Barriers (NTBs) refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and/or costly,” Lisa adds.
Current trade policy priorities are underpinned by a widespread recognition that International trade and investment is critical to securing Australia’s future economic potential. With more overseas opportunities than ever before, the challenge is to maximise the benefits that trade bequeaths.
Lisa endorses the view that Australia needs more trade and investment-capable companies to engage with these opportunities. Garnering the benefits of international trade and investment is the shared responsibility of all levels of government, the businesses directly involved in import and export and the businesses that support them. Building this 'trade ecosystem' requires commitment and dedication from all parties.
Each year, the ECA releases annual Trade Policy Recommendations for the Australian Government. They are developed in consultation with members, industry, and the ECA’s network of trade policy experts.
This year, as an example of formulating trade promotion and direction, the ECA has developed Trade Policy Recommendations designed to:
- Improve government support for Australian businesses by developing a national strategy for trade
- Invest in programs to communicate the importance of trade and investment to Australian jobs and long-term economic prosperity
- Adequately fund the Export Development Market Grant
- Develop a cohesive national brand that benefits a wide range of sectors
- Push trade liberalisation, including by reducing non-tariff impediments to trade, negotiating new trade agreements and simplifying rules of origin
- Invest in initiatives that support the development of Australian services exports
- Deliver a single window for trade that supports digital trade
- Improve access to finance for Australian companies conducting international business, and
- Continue to support investment into the Aid for Trade initiative
Five years ago, the ECA, the Australian Trade and Investment Commission (Austrade), and the Export Finance and Insurance Corporation recognised that Australian businesses, industry and government would benefit from in-depth longitudinal research into the behaviours and patterns of Australian exporters. Consequently, it launched Australia’s International Business Survey (AIBS). Entering its fourth year, AIBS has become the largest survey of its kind into the international behaviour of Australian companies.
The ECA believes that recognising success is critical to building an export culture in Australia and this is why the ECA is involved in the delivery of Export Awards programs in NSW, QLD and WA as well as our annual Australian Export Heroes Awards Program.
The Awards measure businesses against their peers based on the strength of their international growth, marketing and financial strategies. They operate as a two-tier process. First, exporters achieve distinction through their local State and Territory export award program. They then progress as national finalists and are benchmarked against their peers across the country, with winners receiving national recognition for their international success.
The Australian Trade Commission (Austrade), the Australian Chamber of Commerce and Industry (ACCI), and CPA Australia partner to present the national export awards program. It is now one of the longest running business awards programs in Australia.
In fostering this outreach and by no means irrelevant to its unique position of policy influence and development is the ECA’s longevity. It spans over sixty years as an international trading facilitator. Apart from its many studies and reports, the ECA has a range of resources available for companies to access, including the Australian Export Handbook.
“We have published the Australian Exporting Handbook which is considered the ‘export bible’,” says Lisa.
Now in its 21st edition and standing at 660 pages, the work is the ‘A to Z of how-to-trade’. It is essentially a reference book covering every conceivable trading issue simple or complex.
In the labyrinthine workings of international trade, the common question Lisa encounters is where to start looking. There is a natural attraction for a market that has similar mercantile laws, a stable political landscape and a common language. Many people starting out are assisted by having relatives living in their posited ‘ideal’ place for operations. Of course, unless a product or service is unique, competition is likely to be tougher. All these considerations are relevant in forming decisions but there’s much more to analyse.
So what should sanguine players bear in mind when contemplating an international trading venture? First of all they should recognise that there are many opportunities in the technological and service field. Being a business registered in Australia carries immediate reputational respectability.
Strategic planning is the fundamental starting point.
“The following checklist will help you to decide whether you should consider expanding internationally.
¨ Management commitment and resources.
Expanding or investing overseas takes a lot of work and time spent within the market itself. Do you have the right senior team in place to drive and support everything that is needed to make it work?
¨ Financial resources.
Setting up export operations in a new market and dealing with overseas buyers will take a toll on finances. Have you considered how you will finance your business growth?
¨ Market entry.
Knowing demand exists is only the first step. Have you assessed your market entry options and requirements to set up operations in a new country?
¨ Export experience.
The ability to draw on the export learnings of others is invaluable. Do you have staff or a network of contacts with export experience you can tap into for insights?
¨ Market demand.
A solid customer base in a new market is critical. Are you confident demand is strong?”
Lisa sums up by again emphasising that the ECA is Australia’s only organisation focused entirely on the needs of Australia’s international businesses.
“Our team can work with you to support the international success of your business. We have been supporting companies to grow internationally for over 60 years. This means we know:
The capabilities and skills your business needs for international success
How to help solve your international business problems
What you need from government and how to get it
Where you can find specialist advice.”
While all these issues can raise thoughts that overseas markets seem simply too daunting a prospect to tackle, Lisa encourages businesses and firms to remain undeterred for the rewards can be great.
“Investing up front and being armed with all the tools, like knowing the market, its people, its culture—doing the homework in other words, will ensure that you will be ready and competitive.”
She cites the use that can be made of foreign nationals residing in this country temporarily.
“Potential exporters often overlook the resources and intelligence that students from many countries studying here can provide. They speak the language, can inform of the culture and provide unique insight into the intended target.”
She urges the would-be international players to be prepared to put in the time. “The ECA will help any business member on that journey. But ultimately, it is for the entity itself to make the choice as to what market in whatever country it wishes to venture upon.”
Lisa says that the only way to really understand and gauge the subject market is by doing the practical on-the-ground research.
“As I keep saying, that will consume much time but in the end it will prevent you from making an unwise decision. There is no substitute for getting on a plane, immersing yourself into the target country and trading environment. You will be amazed at how it can pay off.”