Why Australian businesses need to embrace Chinese export opportunities
Many small to medium sized business owners are under the impression that exporting overseas is only possible for large organisations.
However, what many don’t seem to realise is that new developments such as the China-Australia free trade agreement and China’s decision to reduce tariffs across a range of products to encourage greater access for Chinese consumers to overseas goods has created a raft of export opportunities that Australian SMEs would be extremely foolish to not take advantage of.
China is the second largest economy in the world; on top of that they are Australia’s top trading partner. 25% of everything we export from Australia lands in China. There are more than 300mn Chinese middle-class, with an annual disposable income of about $20,000.
More and more of them are using social media and technology to transact. In addition, despite some of the changes President Trump seems to be making to the United State’s import policies, American consumers are still avid buyers of Australia’s products online and this trend is increasing.
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Australian SME business leaders need to start focusing on the huge range of export opportunities available to them and how to prepare their businesses to get involved. With so many countries now online shopping savvy, the market has really evolved into one big market. Much of what I do involves working with SMEs to help them understand how to incorporate overseas markets into their sales and distribution model and shift their business into export mode.
Research indicates that that more than half of Australian exporting SMEs believe they are in a better financial position than they were 12 months ago, with a further 57% confident they will be in a better financial position in the next 12 months.
Much of those who found they were not in a better position owed it primarily to a lack of preparation leading up to such a fundamental change in their business model. However, research has also shown that 20% of those currently exporting didn’t change their model because they were expecting access to export finance to be unobtainable.
Clearly there are huge opportunities available to Australian SMEs overseas but a lack of understanding by owners and management is hindering their ability to embrace the potential export activity has to offer.
Let’s return to the example of exporting to China. Doing so is no small feat, it is something that SMEs need to prepare for, with the right strategic business plan Australian SMEs can successfully harness the opportunities and manage the risks and challenges that China holds. Part of this is understanding how to reach Chinese consumers online and developing business engagement with Chinese importers.
However, with such profound differences in culture it is important for business owners to understand that they must master the Chinese way of networking. This is where many SMEs fall short, without this they cannot establish meaningful relationships with potential clients. China’s business culture is one in which deals live or die based on its network.
Technology has allowed for the two aforementioned necessities to be easily accessed. In working with SMEs to help them shift from being domestic market focused to incorporating overseas markets, I first look at their business model and online systems and capabilities. Exporting overseas online requires a good solid online platform for marketing, sales and communications, reliable shipping arrangements and well-oiled operations.
Expert use of tools such as social media and various other websites can make communication simple, provided good systems are in place and people are well trained. The reality of online based exporting is that you can communicate with and obtain new clients without leaving your desk and have your products sent to them without ever leaving your suburb.
The point I’m trying to make here is that business owners and managers need to expand their knowledge base when it comes to technology. It is no longer just an assisting tool, everything relating to overseas export can be diligently run with technology which doesn’t have to be expensive. The key is embracing technology to enable overseas sales.
Though China is the biggest and fastest growing overseas market for Australian SMEs, it is far from being the only one. The United states, New Zealand as well as many other Asian regions have untapped potential. Despite this, not even ten percent of Australian SMEs are taking advantage of overseas exportation.
As mentioned earlier, this falls down to lack of knowledge of overseas markets as well as lack of professional ability. Many small to medium Australian-based companies have built success offshore but it’s hard to hear about them, more often than not it’s the big players who occupy the headlines. This lack of media coverage tends to keep this knowledge away from those looking to expand. It’s no wonder that such a small portion of SMEs are electing to capitalise on the overseas market.
Interest rates have played a fundamental role in the creation of these opportunities, in recent times they have been at an all-time low, combined with the low Australian dollar you have an ideal set of factors for overseas business dealings. Alongside the international demand for Australian products, for example beer, wine, health, beauty and fresh produce, Australian businesses are in an ideal position to embrace growing international demand for unique quality products.
These types of products have become a priority for many countries with rapidly expanding cashed up populations. The demand is rapidly overtaking the local supply and our geographical position makes us ideal for picking up the slack. This combined with the use of the internet as a key purchasing tool, means Australia’s export market has become a key market for businesses. It really is just an extension of our own backyard. The internet enables SMEs to export with ease and communicate with buyers real time. There is no need for expensive overseas set up costs, no need to travel to other countries.
Australia’s trade agreements with many of our country’s trading partners is nothing new, we have been dealing with Europe, the United States and a good portion of Asia for years now. But it’s only now people are starting to realise what kinds of opportunities for success are available to those who aren’t bringing in tens of millions locally. We have a great deal of products the rest of the world wants and even more that they need.
Businesses owners and managers need to start becoming export oriented to help their businesses get involved in the export market. This involves fully understanding and scaling up in the areas of technology to embrace the export opportunities on offer. Commencing down the pathway of exporting can be an intimidating process, particularly when many export markets aren’t native English speakers.
However, if research is done effectively and a clear and effective business plan is established SMEs are more than likely to succeed in the overseas market and achieve unprecedented success. Many of the SMEs I work with, are surprised by how easy it is to get their businesses ready and to start exporting. In fact, they wish they had done it sooner. I suppose sometimes all it takes is someone who can come into your business and work with you to make things happen. This is why I love what I do. I really enjoy watching businesses flourish and prosper.
By Darleen Barton, business coach, corporate therapist, success mentor and best-selling author - www.dipac.com.au
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