Small Businesses In Australia Going Offshore

By Peter Langley | August 29, 2018

Recent research shows that 84% of Australian SMEs believe that their businesses will grow significantly over the next 12 months. This article will illustrate the factors and tools that paving the way for them to go global.

It is no secret that Australia is a nation of small and medium-sized enterprises (SMEs). SMEs contribute 57% of our nation’s GDP and account for 67% of total employment. The business landscape is changing to benefit SMEs, from policy recommendations to help improve their cashflow, to free-trade agreements to support bilateral trade on all scales.

SME leaders are aware of the opportunities and have a sunny outlook when it comes to business growth and cross-border trade. Recent research from FedEx 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 that were surveyed in the research stating that it accounts for more than 50% of their businesses’ annual turnover.

While cross-border trade has a strong positive impact on business revenue, there is clear opportunity for SMEs to increase their export potential: 91% of businesses are importing goods, but only 75% are currently exporting goods.

Diversification opening new opportunities for SME trade

Australian SMEs remain optimistic about their business outlook. About five in six 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 the markets Australian SMEs export to are highly diversified, reducing dependence on any one export region or market. The top 3 export markets circle the Pacific rim: New Zealand, China and the United States. But Australian SMEs are also looking at new markets such as India and Germany (both at 15%) and numerous markets within North Asia and South East Asia, such as Singapore (18%), South Korea (17%), Indonesia (14%) and Hong Kong (12%).

Recognizing the opportunities available overseas, and adjusting export levels to meet international demand 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. Almost half of survey respondents cite the perception of quality as one of key reasons underpinning this demand, followed by good value for money. 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% of respondents believe that Brand Australia is important for the economic success of the country.
Australia Flag - Australia are going offshore

This conviction in Brand Australia is encouraging. Both Australia and its SMEs stand to gain, as everyone contributes to the development of the nation’s brand and overall standing internationally. Whether it’s purchasing a vial of lavender essential oil or enjoying a bottle of Barossa Valley shiraz, each interaction with an Australian 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 being introduced to ease the process of doing business.

3 in 4 Australian SMEs have adopted new technologies in the last 2 years, and almost half are expected to increase usage over the next 12 months in the belief that it will reduce costs, speed up distribution and give access to new markets.

Not surprisingly, mobile payment is the most widely adopted technology by SMEs, while over a quarter use automation and another 22% 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.

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 Aussie 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. The majority of SMEs worry over regulatory and compliance matters, followed by time resources and cash flow and understanding international trade documents.

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.
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i The data cited throughout this article is taken from FedEx owned SME research in Asia Pacific

About the Author
the author bio

Peter Langley

Vice President,
Australasia, FedEx Express

Peter Langley is responsible for driving business strategy and operations in Australia, New Zealand and the Pacific Islands.
Peter has over 35 years of experience in logistics and consumer goods and has led various business units in Australia, Indonesia, North Asia and Greater China.
Peter lives in Sydney, Australia.

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