Ian Murray, executive director of the Australian Institute of Export, says there is no way to sugar coat it – this is not an easy time to be an exporter. The dollar is high, many of our biggest trading partners are shaky and expansion is the last thing on the minds of many entrepreneurs.
But smart exporters have not given up and they are being rewarded for their effort. While times are tough in Australia, they are even worse in Europe and North America and export markets are opening up as competitors from the Northern Hemisphere pull back from exporting.
“We have to be honest with people – it’s probably as tough as it’s ever been,” Murray says.
“Australian companies can capitalise on the fact that European and North American companies are pulling back on export business because they face even bigger hurdles than we face here.”
Tim Harcourt, chief economist at the Government’s trade agency Austrade, agrees. “The competition is a bit spooked right now. While Australia has avoided a technical recession it is one of the strongest economies in the world.”
Lynda Slavinskis, principal of law firm LSLC, which specialises in helping exporters, says that while numbers of new exporters are down on recent years, those companies which are still selling offshore are doing well.
“A lot of my work is repeat business from existing clients who are just growing and growing,” she says. They are companies that have plans for a long time, have a very successful local business and have really enjoyed some longevity.”
Harcourt says companies prepared to export when times are tough will be best placed to profit when overseas markets turn. Foreign trading partners are also likely to remember those companies that stuck in there through thick and thin.
“I think that came through in the Asian financial crisis – it’s all about relationships,” he says. “If you remain in there, you will probably be rewarded by your business partners because you stuck around when times were tough.”
Here are some of the top export opportunities for Australian companies.
The strong Australian dollar isn’t exactly helping Australian exports at present, but there is one advantage – it increases the buying power of Australian companies looking to establish a foothold overseas by making an acquisition.
Indeed, in many ways it’s a perfect time to do this, particularly in North America, Britain or Europe, where business valuations have fallen sharply, leases are cheap and many markets are starting to show some faint signs of recovery.
“This is a genuine opportunity,” Murray says. “The local companies that have been well managed in the last four or five years are relatively cashed up. What they weren’t able to acquire five years ago because it was too expensive, they are now able to buy. This is an opportunity that won’t be repeated for some time.”
Agricultural chemicals company Nufarm and health industry players iSoft and Sonic Healthcare have all made acquisitions in the US in recent weeks.
Australia’s proximity to the still-booming Chinese economy has insulated it from the worst of the global recession, and the dragon economy remains our most attractive export target. With economic growth running at around 8.5% (Westpac is tipping 9.4% in 2010) and retail sales growth running at about 18%, there are opportunities for SMEs from a range of sectors to find a profitable niche.
While commodities remain Australia’s biggest export to China, Lynda Slavinskis says the rapidly changing tastes and bank balances of Chinese households is supporting Australia exports of fresh food, wine and what she calls luxury goods, including beauty and health products.
“There’s a lot of disposable income to be spent on that sort of stuff in China at the minute and I think there’s opportunity there in terms of what we would call luxury goods.”
Harcourt says property, construction and infrastructure firms will also do well as the second and third tier Chinese cities are developed.
While Australia might be having a tough time sorting out its carbon reduction model, the development of the renewable sector around the world continues at full pace. Governments around the globe are pouring money into this sector – around $US15 billion last year, according to Austrade – and opportunities for Australian exporters abound.
“In all the heat of the climate change debate, we often overlook the export side of the equation in a lower emission global economy,” Harcourt says. “As Professor Nicholas Stern says in his seminal Stern report, Australia has great capability in environment technology and will be able to assist the emerging economies like China and India to reduce emissions and put their economies on a more sustainable footing.”
Countries around the world are looking for solutions in areas such as solar power, wave power and geothermal power and Australian companies such as Ausra (solar power) Oceanlinx (wave) and Geodynamics (geothermal) are all pushing into offshore markets, particularly in North America and Europe.
Asia is also likely to be a target market. In July, Australia’s Clean Energy Council signed a memorandum of understanding with the Sustainable Energy Association of Singapore to collaborate on education, networking and information exchange around renewable and sustainable energy.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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