It is no secret that Australia is a nation of small and medium-sized enterprises (SMEs). SMEs contribute 57 per cent of our nation’s GDP and account for 67 per cent of total employment. The business landscape is changing for the benefit of SMEs, from policy recommendations that improve cashflow for SMEs, to free-trade agreements for the benefit of bilateral trade on all scales.
SMEs are aware of the opportunities and have a sunny outlook when it comes to business growth and cross-border trade. Recent research has shown that nine in 10 SMEs are confident that their imports or exports will either stay the same or increase over the next 12 months. In fact, cross-border trade contributes to business success, with half of the respondents stating that it accounts for over half of their businesses’ annual turnover.
While cross-border trade has a strong positive impact to business revenue, there is clear opportunity for SMEs to increase their export potential, with 91 per cent of businesses’ importing goods, while only 75 per cent are currently exporting goods.
Diversification opening new opportunities for SME trade
Australians SMEs remain optimistic about their business outlook. About five in six (84 per cent) SMEs surveyed believe that their business will grow significantly over next 12 months. So where is this optimism stemming from?
One compelling answer is that Australian SME export markets are highly diversified, reducing dependence on any one export region or market. While the current top three markets are New Zealand (34 per cent), China (28 per cent) and the United States (24 per cent), Australian SMEs are looking at new markets such as India and Germany (15 per cent respectively) and numerous markets within North Asia and South East Asia, such as Singapore (18 per cent), South Korea (17 per cent), Indonesia (14 per cent) and Hong Kong (12 per cent).
Recognising the opportunities available in different and new markets, and adjusting export levels to suit demand internationally ensures that SMEs are consistently maintaining a strong and stable revenue stream. This is further bolstered by continued positive perception of Australian products.
Brand Australia remains key
Australian products remain in high demand overseas, with almost half (49 per cen)t of respondents citing the perception of quality as one of key reasons, followed by good value of money (36 per cent). Australian-made goods have built a strong reputation, and SMEs tap into this point of differentiation to gain cut-through in a crowded marketplace. In fact, 93 per cent of respondents believe that Brand Australia matters for the economic success of our country. This conviction in Brand Australia is encouraging, and can only mean that both Australia as a country and our SMEs stand to gain as everyone contributes to the development of our nation’s brand and overall standing internationally. Whether it’s purchasing a vial of lavender essential oil, enjoying a bottle of Barossa Valley shiraz, or watching a large-scale Tourism Australia ad campaign, each interaction with an Australian experience or product will continue to create affinity for Australian goods with international markets.
Industry 4.0 for SMEs
Technology has made international trade easier, and the world a more accessible place for all. Beyond online marketplaces and social commerce, new technologies are constantly introduced to assist with the ease of doing business.
Three in four (76 per cent) Australian SMEs have adopted new technologies in the last two years, and half (48 per cent) are expected to increase usage over the next 12 months, with the belief that it will reduce costs (41 per cent), speed up distribution (38 per cent) and give access to new markets (35 per cent).
Not surprisingly, mobile payments (42 per cent) is the most widely adopted technology by SMEs, while over a quarter (28 per cent) use automation and another 22 per cent use big data and analytics to support business opportunities. As SMEs continue to better understand the benefits technology can bring to their business, there is no doubt adoption will continue to increase.
Where certain technology might be too onerous for an SME to tackle, partners and suppliers can step in and deliver. For instance, blockchain is being investigated by the logistics trade to further assist in traceability and other potential efficiencies, which will benefit all cross-border businesses, small and large.
Old Challenges and New
With technology, the traditional challenges that Australian SMEs faced in doing business internationally, such as the lack of physical presence in export markets and language barriers, are today the least of their concerns.
Yet important challenges remain. 60 per cent of Australian SMEs worry over regulatory and compliance matters, followed by time resources and cash flow (60 per cent) and understanding international trade documents (59 per cent). Completely seamless and borderless international trade for SMEs remains some way off, but Australian SMEs clearly have the appetite and, increasingly, the tools to take on the world.