Complete the DHL Export Barometer and enter the draw to win an Apple IPad2!

We would like to invite you to take part in the DHL Export Barometer. Complete the survey and we'll put you in the draw to WIN an Apple iPad 2*!

The DHL Barometer surveys exporters around Australia each year about their views on the exchange rate, share market, skill shortages and other important issues that impact on their global business prospects.

The DHL Export Barometer is used by the Reserve Bank of Australia, other economic policy institutions and reported widely throughout the Australian media.
Your views as a current exporter would be highly appreciated and will help DHL to provide a more accurate snapshot of the experience and views of Australian exporters in the current global economic environment.

To complete the survey and put yourself in the draw for an iPad 2*, please CLICK HERE
 
The online multiple-choice survey takes less than 10 minutes to complete and you will be responding directly to DHL.

Should you decide to participate, a copy of the DHL Export Barometer executive summary will be emailed to you in late July 2012, giving you a head start on identifying key international business trends and planning your export strategies for the coming year.

Indonesia: Opportunities for Australian exporters

In the last couple of years, Southeast Asia’s largest economy, Indonesia, has significantly lifted its global economic profile by increasing the annual growth (export.gov 2012).  A few months ago Bank Indonesia predicted a forecast of 6.4% GDP growth in the country by the end of 2012 (dfat.gov.au,  2012).

Not only did Indonesia manage to sidestep the world’s recent financial crisis, but it also outperformed many of its export-oriented peers in the region (Austrade, 2012). The Indonesian consumer market continues to rise, along with possibilities for international trade.  Indeed, today Indonesia can be considered as Australia’s most ambitious trade deal.  

On January 12 2012, the ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA) entered into force for Indonesia (Austrade, 2012). This event was marked as particularly important for international exporters (including Australian) doing business in the country as it was promised to deliver a number of commercial benefits to their companies. The Australian exporters will be able to take advantage of the Australia-Indonesia   Development area (AIDA), the policy that has been designed to develop closer economic relations between Australia and the eastern provinces of Indonesia.

Throughout the last decade, the relationship between Australia and Indonesia has become considerably stronger (dfat.gov.au, 2012). The two neighbour countries have been able to sustain a healthy trade and economic relationship with two-way trade (both services and merchandise) which in 2011 was worth of $13.8 billion, and two-way investment which in 2010 was worth of approximately $5.7 billion. Indonesia is currently Australia’s 4^th largest trading partner in ASEAN and 12^thlargest partner overall (dfat.gov.au, 2012). There is big potential in promoting trade and investment links between the two parties, which are currently counted as the two largest in the region. At the moment, Indonesia is continuously encouraged by the Australian government to maintain liberalised trade and investment regimes. The government seeks reductions in tariffs to help Australian exporters open their businesses in Indonesia. Moreover, Australia and its neighbour country are working closely within the Cairns Group of Agricultural Fair Traders (the Cairns Group) with the aim to boost liberalisation in international trade in agricultural products during the current round of WTO negotiations (dfat.gov.au, 2012). Indeed, Indonesia is an important exporter of agricultural goods, and therefore plays a big part in the Cairns Group.

According to Austrade (dfat.gov.au, 2012), more than 400 Australian companies are currently operating in Indonesia. Some of the most successful businesses specialise in sectors of agribusiness, mining, resources, infrastructure, clean energy and environment, consumer goods and many more.

For years Indonesia has been well known for its spices and seafood exports (rsj-international.co.uk, 2010).  In addition, the country has been famous for its artisans who create unique artwork, making handicrafts another important sector for export purposes. Tourism also plays a crucial role in Indonesian economy, which causes a higher demand for improvement in the existing infrastructure for tourists. With the great popularity of tourism, there are opportunities to open up hotels, cafes and restaurants in the country. Similarly, Indonesia is in need of health care services, IT professionals, architects and engineers. The air craft market also favours overseas products (replacement parts and service). At the same time, the expansion of banking provides software and systems opportunities (export.gov, 2012). Training and education, renovation and construction of regional and municipal infrastructure and water systems, military upgrading,  safety and security systems, telecommunications technology and satellites -   all these areas create endless possibilities and are expected to deliver great benefits for Australian companies operating in Indonesia (rsj-international.co.uk, 2010).

However, despite all the above listed business opportunities, it is also important to bear in mind that there are potential problems that Australian export-oriented companies are likely to face when trading with Indonesia. One of these problems is caused by the the rule-of-law issues that still persist in the country. Foreign and local businesses continue to cite corruption, and due to courts being unable to deal with it, complications occur. Business disputes that can potentially be considered administrative in Australia, can count as criminal cases in Indonesia (export.gov, 2012).  Another problem represents the recent depreciation of Indonesian Rupiah (BBC, 2012), which in the nearest future is expected to make Australian exports relatively more expensive.  There is also a fear that the weak Indonesian currency can decrease the purchasing power of local consumers and therefore dent demand. Moreover, it may not be easy for Australian exporters to start their businesses due to high barriers to entry. Although some of the barriers have been eliminated through deregulation (which brought more transparency in trade and investment regimes), the Indonesian bureaucracy remains ponderous (export.gov, 2012). Competition from companies operating in China, Japan, Malaysia and Singapore can be difficult to overcome, and therefore may lead to significant profit losses. 

Overall, opportunities for Australian exporters in Indonesia appear to outweigh the possible challenges. Nevertheless, when engaging in trade business, important factors need to be considered in advance. Australian companies are highly recommended to visit the Indonesian market before they decide to enter it in order to find and choose the right agent or distributor.  Similarly, they should be prepared to invest capital into making their representative in Indonesia the best service provider. It is also crucially important to take into account all hidden costs that are likely to arise in the company once it has been set up.  Starting a business in a foreign country is not an easy step to take and it requires a lot of knowledge, effort and patience. As a result, every single benefit and cost has to be critically examined before action is taken. 

Kristina Kovalenko, Project Manager - Export Council of Australia

References:

1.       Austrade (2012), “Indonesia Profile: Current Business Situation”, Retrieved from: http://www.austrade.gov.au/Indonesia-profile/default.aspx[Accessed 15/05/2012].

2.       Australian Government (2012), “Indonesia country brief”, Australian Government: Department of Foreign Affairs and Trade, Retrieved from: http://www.dfat.gov.au/geo/indonesia/indonesia_brief.html[Accessed 16/05/2012].

3.       BBC( 2012), “Indonesia’s economy grows at a slower pace”, BBC, Retrieved from: http://www.bbc.co.uk/news/business-17980123[Accessed 20/05/2012].

4.       Export.gov (2012), “Doing Business in Indonesia”,  Retrieved from: http://export.gov/indonesia/doingbusinessinindonesia/index.asp[Accessed 17/05/2012].

5.       RSJ International Freight Services- Your Global Logistics Partner (2010), “Trade and Business Opportunities in Indonesia”, Retrieved from: http://www.rsj-international.co.uk/News/2010/Trade-business-opportunities-Indonesia.html[Accessed 16/05/2012].

'Alternate' Channels Provide Significant Opportunities in the US

Last week the Export Council of Australia teamed up with Access USA to present part 2 of its webinar series entitled “Accessing Virtual Channels in the United States.” We were lucky enough to hear from in-market specialists with combined experience of over 50 years in catalog and mail order. Stephen Farell is a senior buyer with catalog heavyweight Hammacher, Schlemmer, and Dale Talbott of Essex Sales and Marketing sells to about 80 catalog accounts in the States. 

The webinar explored opportunities in the catalog and mail-order consumer market, a potentially lucrative alternate channel typically overlooked by Australian companies. As the United States continues to recover from a major recession, it remains home to the largest consumer market in the world.  The United States catalog and mail-order sector brings in over $US 360 billion dollars annually generating purchases from 50% of Americans. Before the internet, mail-order took an estimated 18% of the US dollar spent and many assumed that the rise of e-commerce would lead to its demise. However, in reality the internet has not reduced but increased sales, reason being that most catalog merchants now have websites in addition to ‘hard-copy’ issues.  

Catalogs continue to play a very important role in the US retail sector for the following reasons: 

1. Convenience

Print catalogs are extremely easily accessible, easy to navigate and a trusted source of product information. 

2. Information Rich

All information is provided in an easy to read ‘hard copy’ format allowing consumers to make informed purchasing decisions. Use of QR codes and Augmented Reality now streamline the interface with online content and enhance the sensory experience.

3. Brand Building

Catalogs provide ‘quality time’ with your customer in what is becoming an increasingly time poor society. Strategic use of editorial enhances the customer experience, reinforces brand imagery and strengthens the connection with your product/company thereby increasing brand loyalty.

4. Targeted Distribution

The digital world is also playing a vital role in targeting distribution of catalogs to optimize impact and sales. Online retailing data is used to identify ‘hot’ prospects with specific interest in your product category. QR codes are now being used to help drive the consumers to purchase online via smart phone devices.

5. Sales

A significant number of global brands still regard catalogs as their number 1 sales tool. Effective sales processes and data capture incorporating online, call centre and retail can measure the success of marketing campaigns very quickly and make marketing departments more agile to changing trends. Personalised URLs printed in catalogs can be used to track sales-per-page figures and to optimise the layout of future editions. 

6. Driving E-Commerce

When an order is made online the company will send out the next catalog with other relevant products, acting as a reinforcement of the customer’s purchase. ‘Catalog codes’ placed with descriptions of an item shown in a catalog allow buyers to easily find their product online. Also, when a potential buyer visits the internet it allows the company to show other related products the buyer may be interested in.

Target Catalog Consumers 

The more than 7,000 US mail-order companies target several American consumer segments. Australian exporters can carefully target specific market segments through their choice of catalog.  

Catalogs are perfect for Australian exporters looking to target a niche market. Webinar presenter Stephen Farell’s own company, Hammacher, Schlemmer is considered an upscale catalog with most products priced from $US 50 dollars to over $US 1,000 dollars.  Mr. Farell explained a successful product of around $US 99 dollars would run for a full year selling about 5,000 units per year. One product featured in the catalog that has sustained popularity is the innovative Australian designed Sand Mat. This beach accessory allows sand to fall through surface of the mat. Mr. Farell explains the high end product would not sell in a retail store because a customer would simply see it as an overpriced beach mat. Customers purchasing from the high end catalog Hammacher, Schlemmer, however, identify with the product’s demonstrable value.  

Catalogs are also great for Australian companies looking to export specialized products, for example Swiss Colony, a mail-order company specializing in an extensive line of meat, cheese and other gourmet snacks.  Specific demographics can also be targeted through catalogs like the upscale women’s clothing line Victoria’s Secret.  Australian exporters looking to introduce a product to the US market should consider the catalog as a way to establish a product on a national basis relatively quickly. 

The US catalog and mail-order market is just one of the alternative channels Australian companies should consider when looking to export to the US market. 

For further exporting opportunities, tune in to Part 3 of the Export Council’s webinar series, “Accessing Virtual Channels in the United States” which will explore opportunities in the largest and most sophisticated e-commerce market in the world.  We will have a senior Amazon executive joining us all the way from Amazon headquarters in Seattle. 

Date: Thursday, 28 June 2012
Time:  9.00am (AEST)
Speakers: Jeff Gray, DC Marketing & Pablo Celi, Divisional Merchandise Manager - Amazon.com Inc

If you would like to participate please e-mail Lisa McAuley at lisamcauley@export.org.auwith full contact details including your membership status. Invoices will be issued for non-members upon registration.

-Meilssa Baker, International Project Co-Coordinator, Export Council of Australia 

A Level playing field is great but not when you are the only one playing on it!!

I find it very easy for people to talk the talk when it comes to Australia’s position on being internationally competitive however I can’t see a lot happening to improve the situation or make life a bit easier for our exporters, many of whom remain under pressure from a whole host of issues not to mention the dollar. The fact is, and it’s quite sad really, that it’s the Governments across Australia that by and large are the major culprits. They are pushing up cost through inflicting yet more and more regulation and believing  the world of trade is a ‘level playing field’ and therefore market forces will be the only factor in sorting things out in this very complex situation. I really wish it was that easy.

Let me reference three pieces of data that I recently read. The first is the World Bank’s annual “Doing Business” review for 2012 which looks at the rules and regulations that affect companies in 183 economies. When measuring ‘Ease of doing Business’, Australia’s ranking has fallen from 11 in 2011 to 15, the largest fall among any of the major economies. More importantly in terms of ‘Trading across Borders’ Australia ranks 30, behind Singapore number 1, Korea 4, and Finland 6. With the USA, New Zealand and the UK all ranking ahead of Australia.

The fall of, course is one thing and perhaps the high dollar has influenced that to some extent, but ranking 30 in terms of ease of trading across borders is not something to be proud of. If memory serves me correct that’s not much improvement on where we were three years ago.

The second report I would like to reference is the IMD 2012 World Competitiveness Rankings which ranks Australia’s international competitiveness at 15, compared to 9 in 2011 and 5 two years ago. Hong Kong, USA, Sweden, Norway, Germany, and Canada are all ahead of Australia. Why? The simple truth is these countries do it better and cheaper than we do and while again the dollar has had an impact we cannot blame that alone for a fall in rankings like that.

The third is the Productivity Commission draft report on Export Credit Arrangements which was released in May. Those of us in export were astonished and the number of submissions sent in after the draft was released would support this view. Here we are facing really difficult trade conditions and the commission recommends shutting down the assistance given by the Export Finance & Insurance Corporation for major projects and recommending that they focus all their attention on companies at the smaller end of the SME sector for a limited number of export transactions. Quite unbelievable I know. First, it can be quite strongly argued that the banks will not service these major projects that EFIC supports, so who in the world is? Second, if EFIC is confined to a limited number of transactions among smaller SME’s, how, may I ask, can EFIC survive? Is this recommendation going to make Australia more competitive? Not really.   

I have to admit that I agree fully with the Hon Stephen Martin the CEO of CEDA who was quoted recently in the Australian Financial Review, “Australian exports” he said “are being strangled by the high cost of labour, red tape upon red tape, duplication of Government regulation, the GFC and of course the Aussie dollar.”

There are obviously a significant number of things that need to done.  I agree with Professor Martin that Government needs to promote skills development particularly in sciences, research and technology, but I would add that it’s equally a business responsibility. At the same time Government must go all out in attacking unnecessary regulation and cost and bureaucratic impasses which serve no other purpose than creating non productive jobs. Government too needs to look at the levels of support provided by other Governments, including finance support, around the world and focus on programs that will build our potential rather than assisting only when market failure, in someone’s opinion, may result.

Being internationally competitive should be a major priority for all of us. A level playing field is great but not when you are the only one playing on it.  Come on Australia, let’s get aggressive!!!

On 24th August 2012 the Export Council of Australia and Shipping Australia are holding a seminar in Sydney on International Competitiveness. Look out for the announcement on our website: www.export.org.au

Ian Murray is the Executive Director of the Export Council of Australia