Any advice for a startup export business?
- Understand your marketplace – the world is a very big place and there are different business and political issues in different parts of the world
- your business may be entitled to an export market development grant – these grants are up to 50% of your expenditure capped at a certain level around $150,000 – find out if you are eligible for these type of grants
- Utilize government departments – Austrade usually have an office in each major country and they can assist you with business contacts and country legalities that will be invaluable in your export business
- Find out about your trademark and branding issues – there may be many registration that you will need to attend to protect your product branding – Protect your Brand
- It is not just the cost of the product but also the costs involved in the delivery of the product – fright, landing coats, government charges – makes sure you understand these costs
- Australia is geographically a long way away from many parts of the world – this adds to the difficulty and the expense of operating and export business from Australia
- If you are manufacturing in Australian then the high cost of labour coupled with the high Australian dollar will make your product very expenses and you may not be competitive on the world market – particularly if you are competing with products manufactured in Asia.
“I have had involvement in a business that manufactured heavy engineering machinery and had an excellent reputation for quality products and exported all around the world for decades, however the cost of labour initially crippled the company so they took their assembly of the equipment off shore to negate the costs but then the dollar rose to such a level that their business has shrunk to less than 30% of what it was.
Even though the quality is superior the price has dictated the customers demand for the product, There are many more of these stories form Australian manufacturers,” says Woolcock.
The high dollar has also tested our loyalty, which has turned out not to be as high as we thought. When for instance Bond underwear moved their production overseas, the customer loyalty also moved – downwards.
“People are in general struggling to make ends meet and then it comes down to cost and what we can afford. Customers only have so much loyalty and when brands go overseas, that’s usually when Australians loyalty for a product starts to wain and they may look elsewhere,” suggests Woolcock.
What advice can you give importers?
- Make prognosis, what will happen to your profit if exchange rates move, by 5, 10, 15 per cent? What level is crucial for you?
- Build up cash reserves in the good days
- Also carefully monitor your stock levels, but be careful not to over order in a market that is subject to rapid change (technology, fashion etc)
- Work with your suppliers closely particularly your overseas suppliers, if funds permit make regular trips to negotiate with them in their country – Better deals will come from building better business relationships – understand the cultural issues in the part of the world you are dealing with
- Understand the restrictions that may be placed on the products you are bringing into the country – there are Australian Quality Standards that must be adhered to for most products and in particular food and prescription drugs
People have in all times regarded gold as a safe investment and the increased price of Gold reflected this. Recently we saw the price of gold tumble and this had a roll on effect in the value of the Australian dollar.
This has increased the interest for Bitcoin, which is a digital currency that is not produced by a government or endorsed by a central bank, but used in the digital market.
It is early days yet for digital currencies, so we probably have to live with the uncertainty of dollar exchange rate.
