SMEs confident exporting will improve, but hurdles still high

Australian SMEs are feeling confident about export growth in the next 12 months, with 36% expecting overseas sales to rise, new research shows.

The latest figures from the Export Finance and Insurance Corporation also found that 94% of SMEs said they will increase their level of exporting, or keep it at the same level.

The sentiment survey of 853 active SME exporters found that 95% expect their profits from exporting to grow or remain the same.

SMEs viewed regional markets as the key areas of potential growth, with 80% expecting Asia and Oceania to be the most important for their business. Following were China, India and South Korea.

For businesses not predicting growth in exporting over the next year, 58% expect overseas sales to remain the same as the last year, while 65% anticipate no change in the profitability of their international operations.

The falling Australian dollar was earmarked as a key reason why SME exporters thought overseas sales would increase, at 71%. However, currency fluctuations were perceived as an obstacle to export success, along with other obstacles such as market access at 54%, access to finance at 28%, and access to logistics.

EFIC managing director Andrew Hunter said the reported lack of access to finance meant exporters were missing out on opportunities.

“This indicates a key role for external bodies, from both government and industry bodies, including EFIC, Austrade and DFAT to help SMEs access much-needed funding and market access, as well as provide advice and education on overseas expansion,” he said.

Hunter said despite some of the challenges listed, there were some positive signs ahead for SMEs keen to export.

“The fact that world economic growth is accelerating, interest rates remain low, and Asia is continuing to move up the income scale and expanding its demand for resources, food and services – sectors which Australia should be highly competitive in – are all additional reasons SME exporters can look to the future positively.”

Peter Mace from the Export Council of Australia told SmartCompany this morning he agrees there are some positive signs.

“The recent introduction of fair trade agreement with South Korea is a positive sign for exporters,” Mace says.

He says the council hopes to see similar agreements with Japan and China locked in this year, to make it easier for those nations to access Australian goods.

However, Mace reiterated that the capacity of production, such as in the food sector where issues could be efficiency in getting crops out of the ground, can hinder the speed of exporting.

Mace says the costs of producing goods in Australia remains a hurdle for SMEs keen to export, but he says it is vital to “differentiate your product offering” from goods available in your target countries.