The ‘ABCs’ of exporting are filled out this week. They may be basic, but they’re essential.
Exporting has some basic knowledge essentials. You could call them the ‘ABCs’ of exporting. This week we wrap up the lesson.
According to Austrade and the Australian Bureau of Statistics (ABS) there are over 44,000 exporters in Australia – but they didn’t arrive out of thin air. For many of them, it took a lot of preparation. Accordingly, Austrade set up the New Exporter Development Program (NEDP) to help the rookies get some training through export coaching and workshops on pricing, risk management, freight and logistics.
Opportunity is what exporting is all about. Austrade research shows that 50% of all exporters are “accidental”, that is, they didn’t intend to go global but an opportunity fell their way. Austrade’s international network is bursting with opportunities and its job is to finds some Australian companies who are ready to stand and deliver.
While many exporters say they got into the global game by accident or by chance, once they’re in, it pays to plan. The majority of successful exporters have an export plan that enables them to grow their business and ensure that they develop the capacity to meet future demand. Austrade deals with thousands of export plans and can help a new exporter with their when they are starting out.
Qantas – the flying kangaroo – started out as a small carrier servicing the Australian outback from its rural headquarters in Longreach (hence the name – Queensland and Northern Territory Air Services). It’s now one of the world’s oldest and safest international airlines and has been serving Australian exporters since its early years. Qantas is also a major export earner in its own right as it carries thousands of international tourists, students and business travellers daily to and from Australia. One of the Qantas 747 jumbo jets (named “Wunala dreaming”) was famously painted by Balarinji, an indigenous Australian design company started by John and Ros Moriarty.
With the volatility of global markets and geo-political events, exporting is not a risk free business, especially for small and medium sized enterprises (SMEs). Fortunately, exporters are not alone, and they have many government services at their disposal. The Department of Foreign Affairs and Trade (DFAT) can help with passports, travel warnings and consular help, Austrade can reduce the tome, cost and risk of doing business off shore and the Export Finance Insurance Corporation can provide insurance and other financial products to help minimise risk. As an export credit agency, EFIC operates beyond the limits of the commercial market. It provides the support exporters need when financial, country or industry risks exceed the capacity available in financial markets. EFIC headway is particularly focused on the risk assessment needs of SMEs.
While Australia is a major exporter of commodities in mining and agribusiness – the so-called “rocks and crops” end of the exporter community – services matter too. Services are “everything that you can’t drop on your foot” and comprise everything from ballet dancers to lawyers, architects to hairdressers, teachers to technicians. Many services are also related to mining and agriculture, that’s why you’ll meet West Australian software trainers in Siberia and South Australian viticulture (wine) marketers in South America. Austrade has industry specialists dedicated to services industries with areas such as financial services, sports marketing and arts and entertainment likely to be big players in the future.
Tradestart a network of Austrade offices and associated points of contact in Australia designed to help potential exporters and exporters get a footing in the international marketplace. Tradestart is a partnership between Austrade, the state and territory governments, industry associations and regional development organisations, all of which have access to the Austrade network and services. There are over 50 Tradestart offices in rural and regional Australia from the Top End to Tasmania (see also Kununurra from last week).
The Uruguay Round was the last of the GATT rounds of multilateral negotiations. The negotiations began in Punta del Este, Uruguay in 1986 (hence the name) and were completed in Marrakesh, Morocco in 1994. To help agricultural nations better negotiate in the Uruguay Round, Australia established a “Cairns Group” of agricultural exporters in 1986 to fight trade distorting agricultural subsidies and other forms of protectionism.
The latest ‘Asian Tiger’ to emerge, Vietnam has overcome war and disruption, to become one of the fastest growing economies in South East Asia. Vietnam’s willingness to open its economy has delivered results. Vietnam economic growth rate has averaged 7.5% annually – second only to China in the Asia Pacific region. The reform process – known as doi moi or “renewal” – has delivered improvements in Vietnamese living standards and sharp reductions in poverty. As a result, Vietnam has become a real poster boy for economic development. The World Bank estimates that today around 30% of the Vietnamese population live below the poverty line compared to 60% in the early 1990s. Australian exporters are active in Vietnam in the telecommunications, education, steel, engineering, tourism and financial services sector.
V is also for VECCI (Victorian Employers’ Chamber of Commerce and Industry) which has both an International Trade department and International Business Centre. VECCI can help with securing government funding for export and investment projects, explaining export documentation requirements and providing trade and tariff consultations.
The World Trade Organisation (WTO) is the successor to the GATT and was established in 1995 following the completion of the Uruguay Round. The WTO is responsible for facilitating multilateral negotiations between its member countries, setting a rules framework for engagement in international trade (including dispute settlement) and for helping facilitate the negotiation of regional trade agreements. The WTO has welcomed many developing countries – such as China and Vietnam – into its fold since its inception but has found the negotiation of the Doha Development Round (the successor to the Uruguay Round) slow going due to stumbling blocks such as agriculture and the proliferation of bilateral trade agreements between member states.
Xian, home of the famous Terracotta Warriors and one of Austrade’s 13 points of contact in the People’s Republic of China (See China above).
Y is for yen, the currency of Australia’s long standing trading partner, Japan. While most Australian exporters are paid in either Australian dollars or US dollars, some choose to be paid in yen or euros (the European Union’s currency) or hold an account in yen (see hedging from last week). Japan attracts around nearly 3600 Australian exporters each year although only around 100 Australian businesses have permanent offices in Japan.
Zagreb is where Austrade has its headquarters for Croatia. Since the end of the Cold War, central, southern and eastern Europe have started to rebuild their economies and Australian exporters are returning to these markets – particularly those that have recently joined the European Union. Croatia, which also had to withstand the wars following the break-up of the former Yugoslavia, has attracted some Australian exporters in food, wine, agribusiness, infrastructure and education.
Tim Harcourt is chief economist at Austrade and author of Beyond Our Shores. www.austrade.gov.au/economistscorner
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