Europe’s internal turmoil yields external opportunities for Australian exporters

With continued bad press on the ‘Eurozone’ are there still market opportunities?  Of course there are precautions that must be taken when stepping into this high risk market. Several things must be considered to effectively assess possible Eurozone opportunities for Australian exporters. 

An internal analysis of the Eurozone appropriately measures the strengths and weaknesses of the market. Due to consistent financial turmoil there are distinct weaknesses presented throughout the European Union.  The weight of debt on European banks is severe while bank lending is at an all time low. Excessive government debt has developed a strain of uncertainty from a policy perspective and created pressure for improvements on regulation or even a possible Eurozone break up.  Constant chaos in the Eurozone has left business and consumer confidence at an all time low from a domestic standpoint. However, despite the Union’s weaknesses there is a sense of strength within European society. Citizens of the Eurozone are ready for change and quite keen for growth. With consistent disappointment from an internal perspective, society is looking elsewhere for financial stability.  

From an external perspective there are several opportunities that exist within the Eurozone. Because all internal help is currently being focused on the banking system, assistance in other regions of the market must come externally. This is where Australian exporters can potentially step in to take advantage of multiple opportunities. Buyouts, outsourcing, mergers and acquisitions are just a few of the opportunities presented in the Eurozone. High skilled European workers are willing to work for lower salaries due to the poor employment market. Companies on the verge of bankruptcy are willing to sellout at extreme costs. European businesses and consumers are now looking internationally for future growth although this can be a problem when they look towards Australia. 

The question is: Can Australian exporters provide the light at the end of the tunnel for the European debt crisis? Hear more on this topic and discussion of several other opportunities for Australian exporters at this year’s Economic Road show hosted by EFIC and the Export Council of Australia. For further details and registration click here

Join the discussion on Twitter #EconomicRoadshow2012

 Follow: @Aussieexport  & @EFIC_AU 

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

Disclaimer: The subject matter in the article is for information purposes only. Please refer to the terms and conditions outlined on the blog for further details.

Opportunities override risk in the Middle East: exporting to emerging markets

According to economist Jim O’Neil, the next eleven countries to join the top emerging markets of the world [BRICs] include three countries in the Middle East, Iran, Pakistan and Turkey, making the region a potential hot spot for Australian exporters. Though there has been years of instability and conflict throughout the area, the Middle East is already on its way to becoming a global economic growth engine. 

Imports have increased every year since 2009 to the Middle East, according to the World Bank. The activity creating this level of growth in these nations is three-fold. First, there is the young, fast growing population, with high birth rates resulting in an expanding consumer market and increasing demand. Next, the Middle East is home to the most lucrative oil industry in the world causing a heavy production focus on oil and oil products and strong reliance on these exports. Finally, many Middle Eastern governments have budgeted to increase spending on infrastructure projects to boost the economy further. Government and society alike are agreeably developing a more stable and internationally involved economy.

This shift in focus opens up opportunities for Australian exporters. With a growing middle class opportunities lie in the retail sector. Consumers have more disposable income and are keen to spend more on convenience. The young population realizes the importance of education in today’s society presenting opportunities in the education services sector. Due to the heavy focus on the oil industry there is limited local production of horticulture in the Middle East. Australian agribusinesses should seek to supply the 80-90 percent imported food requirements in the region.  A large Muslim population in the Middle East gives Australian meat exporters a chance to provide to the substantial demand for Halal certified meats and animal products. The plan to build infrastructure networks has already created many opportunities for Australian service companies in management, design and construction. However, the various opportunities favorable for Australian exporter’s presents some challenges that must be known in order to achieve success in the Middle East. 

The Middle East is considered a high risk area and precautions must be considered when entering the market. Perhaps the biggest challenge to face when entering the market is the ongoing political risks including the war on terrorism mainly affecting the tourism and hospitality industries. In order to mitigate the risk, safety measures are a must and business managers should avoid political conversation.  Another discretion Australian exporters may face relate to trade barriers such as the requirements for precise regulation. In order to avoid problems, exporters must be well educated on procedures, documentation, rules and regulations in this region. Lastly, Australian exporters will experience strong competition from other nations including China and India. Exporters must understand the circumstances and formulate a general strategy for competitive advantage. 

Overall, the opportunities presented in the Middle Eastern market outweigh the potential challenges. The Export Council of Australian and EFIC will be hosting an Economic Road Show to discuss the potential opportunities in the Middle East and other emerging markets. To find out more or register for the event click here. 

Join the discussion on Twitter #EconomicRoadshow2012

Follow: @Aussieexport & @EFIC_AU

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

Disclaimer: The subject matter in this article is for information purposes only. Please refer to the terms and conditions outlined on the blog for further details.

Hot Trends in the U.S. Housewares Market- Business Success in the US – Blog #7

Despite the economic downturn, North America remains one of the largest markets for ‘housewares’ in the world. According to the most recent estimates, the US and Canada accounted for 25% of global housewares retail sales totaling US$76.7 billion. So what are the latest trends in the market and what opportunities do these present for Australian exporters?

Dollars for Design
The primary, overarching trend in the U.S. housewares market is the move by the consumer toward high design. Whether this trend is manifested through more intelligent functionality or through more eye-appealing construction, the U.S. consumer has begun to appreciate the value that design adds to any product at any price. From $4,000 automatic coffee machines to cleverly designed baking tools, from ergonomic handles to new cooking methods such as induction or sous vide, from more functional cleaning tools to high-powered kitchen appliances, thoughtful design is being rewarded through increased purchases.

Sustainability
Although not as prominent as in years past, the U.S. consumer has not abandoned concerns for the environment and is voicing those concerns through purchasing behavior. Consumers look at country of origin, the uses of materials and the recyclability of the materials that make up the housewares products they purchase.

Constant Change
Another macro-trend is the move to more casual products for the home, somewhat prompted by the generational shifts underway with the aging of the Baby Boom cohort and the rise of Generation Y and the Millennials, who tend to value convenience and change the look of their living space more frequently. This has led to a much broader use of color in home products, to more unique shapes and sizes of kitchen appliances and eventually to greater replacement frequency of home goods by younger generations.

The Power of Celebrity
Perhaps the greatest change for home goods over the past five to 10 years is the emergence of the influence of professional chefs and home remodelers who have come to dominate the cable channels of U.S. television. Celebrity endorsements have become a major driver of business for cookware, cutlery, appliances, tabletop and other home categories. Guy Fieri, Paula Deen and Australia’s own Curtis Stone are leading the way.

Smart Shopping
The internet and digital technologies are having an increasing influence on the U.S. Housewares market. In a year where international retail markets floundered E-commerce displayed resilient growth, with sales increasing 16.1% to US$194.3 billion (in 2011) according to the US Department of Commerce. An explosion of digital innovations, most notably the emergence and rapid adoption of Smartphone and Tablet technology, has transformed the buyer seller relationship. Instead of getting defensive, some stores and brands are embracing the change by creating new personal touches that feature these new innovations in preference to more sales staff. In the future, QR codes and other innovative social shopping services will provide consumers with unparalleled choice. Retailers and vendors alike need to position themselves to take advantage of the huge growth opportunities this offers. 

All of these trends will be on show at the 2013 International Home + Housewares Show in Chicago, USA to be held 2 through 5 March. 60,000 housewares professionals from more than 100 countries will attend in search of the latest in products for homes around the world. More information is available at www.housewares.org.    


“Change is the only constant. Hanging on is the only sin.”- Denise McCluggage

Author:
Perry Reynolds
Vice President, Marketing & Trade Development
International Housewares Association

For more information on accessing the US housewares market or attending the International Home and Housewares Show please contact Ian Smith, CEO of Access USA on 0417020429 or ian@accessusa.com.au

Entering the emerging market as an exporter: Brazil

To weather tough economic conditions, successful exporters are shifting gears to take advantage of developing markets, like Brazil, rather than dwelling on the global financial crisis.  

Brazil has the world’s sixth largest economy while still developing which is why it may be considered the best of the BRICs. The country’s booming economy is said to be up fifth by the end of 2012 and is home to the second largest industrial sector in the Americas. Brazil is internationally involved in several world economic organizations including the World Trade Organisation, G20 and The Cairns Group. With the consistent efforts of the government to maintain economic stability and a 25.7% total trade increase in 2011, Brazil offers a higher opportunity for Australian exporters to do business. 

The benefits of the expanding economy spill over to anyone involved in business throughout the country. Brazilian businesses realize the favorable circumstances for advancement and are making efforts to expand beyond boarders though trade agreements and foreign investments.  Agriculture production carries much of the economic development; therefore Australian exporters should focus on supplying Brazilian farmer’s high demand of equipment, technology and fuel.  

Domestically contributing to Brazil’s growth is the emergence of a new middle class. The new middle class consists of high spending consumers looking for quality finished goods. These Brazilians have an appetite for name brand products and convenience and are willing to pay for it. Take the U.S. Company Wal-Mart for example, currently the third largest retailer in Brazil. Fed-Ex has benefited from the new consumer class as well, despite the country’s poor infrastructure, and has even bought out one of Brazil’s largest transportation and logistics companies. 

Caution: Under Development

Great opportunity exists within Brazil’s boarders for Australian business; however there are still some issues the country faces as a developing economy. The nation relies heavily on commodity exports, particularly from China. In order to maintain economic growth and achieve overall stability without any backlash, Brazil cannot depend on commodity exports.

Perhaps the biggest problem existing in Brazil is the poor infrastructure system. Multinationals have steered away from doing business due to this ongoing issue. Australian exporters have faced logistical and distribution problems due to backed up airports and clogged road ways. With plans to host the 2014 World Cup and 2016 Olympics, there is hope that provided funding for infrastructure projects will resolve this setback and equally create ease for exporting.

Inefficiency is another major issue when dealing with Brazilian business. Poor infrastructure contributes to the problem but business in Brazil is slow in general. It takes over 100 days to start up a business and costs can be outrageous. 

Heavy government involvement has resulted in high taxes and tariffs for trade through Brazil. Duties and taxes on imports could add up to 100% to the price of goods. High tariffs and consumer sales tax on imported goods not only hurts the exporter, but the consumer as well.

Government regulation has also placed strict laws on labor, manufacturing, intellectual property and competition in Brazil. In order to begin business without getting slammed by fines and penalties, it is necessary to require a strong knowledge base in Brazilian law and business practices alike. The best way to this is by building a relationship with a Brazilian partner who has expertise on the stern regulations. 

Target practice

Several strategic choices should be considered when entering the Brazilian market. Targeting key demographic factors are critical to success. The first demographic, as stated above, is the emerging high spending middle class. According to a report from the Getúlio Vargas Foundation, Brazil's middle class has grown to 55% of Brazil's 191million citizens in 2011, up from 38% of the population in 2003. 

The next area to target is Brazil’s average age group. With its economy on the rise, the population is keeping up steadily making Brazil a young country.  According to the Central Intelligence Agency, the median age of Brazil is 30 years compared to average 37 years in Australia. In order to target this segment, businesses should consider popular social media channels for advertising as well as advanced technology for consumer goods. 

Another demographic factor to target is Brazil’s variety of culture. Although it is one country, there is a significant degree of cultural diversity throughout the various states and cities of Brazil. Despite the high diversity throughout the nation, one cultural aspect that is very important in any part of Brazil is making, committing and maintaining relationships. Personal interaction and individual relationships are essential to provide exceptional business performance in the country. 

There are multiple strategies to hedge financial risk as well.  The best way to enter into an unfamiliar foreign market is by partnering with someone who is knowledgeable. A joint venture is a great way to reduce the risk of the unknown and learn from someone who has experience in the country. A partnership with a Brazilian native is another strategy to get to know people and companies you will be dealing with.

All things considered, starting up a business practice can feel like a hassle but once involved in Brazil’s power house economy, the hard work pays off in profit.

Top Tips: Key considerations when exporting to Brazil 

• Country analysis and research
• Who is your competition and what are the competition laws
• Logistics planning, packaging and labeling requirements, payment procedures
• Trade barriers
• Employment laws
• Areas of opportunity: mining and minerals, sports infrastructure, sportswear (textile, clothing and footwear)
• Secure relationships with native Brazilian businesses

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

Despite all of the doom and gloom, you might be surprised to learn that there is one consumer channel in the United States that has experienced double digit growth right through the recession. The US is home to the largest and most sophisticated e-commerce market in the world that presents a plethora of opportunities for Australian companies. According to the US Department of Commerce online sales totaled US$194.3 billion in 2011, up 16.1% from US$167.3 billion in 2010.

Even before the internet gained popularity, the US (unlike Australia) had a very strong home shopping culture. Today more than 70% of households regularly purchase items online or by other virtual means and e-commerce accounts for well over 5% of US retail sales. The advent of the smartphone has only served to increase consumer appetite. According to a new study by Click IQ, 29% of consumers who use a smartphone to research a product while in a retail store end up purchasing the item online.

Amazon.com
Amazon.com is the largest online retailer in the world with over 140 million active customers across the globe. Net sales increased 41% in the 2011 calendar year to US$48 billion, compared with US$34 billion in 2010. North American net sales totaled US$26.7 billion, up 42.8% from US$18.7 billion in 2010. The site has over 65 million unique visitors per month which is more than Walmart.com and Target.com combined. Amazon has built its business on selection, personalisation & customer service and is now ranked as the number 1 brand in the States.

Products of Interest
Amazon provides the largest selection of products in the world with over 40 product categories. Some of the top categories on Amazon include:

• Books   
• Electronics
• Toys               
• Sports & Outdoors
• Home & Kitchen       
• Jewelry
• Beauty               
• Health & Personal Care
• Tools & DIY           
• Lawn and Garden
• Automotive           
• Baby
• Gourmet Food

Secrets of Success
There is a very big difference between just selling on Amazon.com and selling successfully on Amazon.com (or any other website for that matter). Some of the secrets to maximizing exposure and revenue include:

1. Representation: Specialist Manufacturers’ Representatives have established relationships with key buyers at Amazon to get you in the door and best position your product(s) for a multitude of targeted marketing programs which are conducted by category and region. 

2. Brand Exposure: Keep in mind that Amazon.com is now the top retail site where people go to do market research. Taking time to build a strong brand presence on Amazon will have flow on benefits to your ‘bricks and mortar’ business around the US.

3. Amazon Fulfillment: Drop shipping directly to Amazon customers from your US warehouse is generally inefficient and costly. Amazon has fulfillment centres across the States so that orders come directly from the retailer – Saving you time and money.

4. Optimise Product Searches: We all know the increasing importance of search terms and ‘ad words’ in online marketing. Make sure you optimise search terms for specific SKUs to ensure that they are the ones people see when they have a specific need.

5. Customer Ratings: Good customer ratings are key to success on Amazon. Shoppers pay close attention to feedback, as does Amazon for your performance rating. Again, take the time to accurately describe your items and be proactive in addressing any concerns raised.

"The Internet will help achieve "friction free capitalism" by putting buyer and seller in direct contact and providing more information to both about each other."- Bill Gates

Author:
Ian Smith
CEO – Access USA Pty Ltd
0417 020 429
ian@accessusa.com.au
www.accessusa.com.au

Mongolia: Opportunities for Australian exporters

According to the World Bank data, the economy of Mongolia grew by 17.3% in 2011 compared to 6.4% in the previous year. As of the first quarter of 2012, the growth rate was 16.7% and estimated to reach 20% by year end (Eurasia Capital, 2012). Traditionally the country is mainly dependent on livestock herding and agriculture, but in the recent years, due to exploration of large mineral deposits, mining has come to contribute to nearly 20% of the total GDP. Two of the major mining projects, namely Oyu Tolgoi and Tavan Tolgoi, are considered to be part of the five largest copper and gold mines in the world and considered to supply high quality coking coal for over a century (World Bank, 2012).

In terms of foreign investments nearly 70% of the total FDI is invested into the mining sector and about 20% into trade and catering services. In relation to the mining boom and the development in this sector, in the last 3 years the number of service imports in the form of financial and legal services, business consulting firms and human resource recruitment agencies has also increased exponentially. Australian mining and construction companies such as BHP Billiton, Leighton and Rio Tinto have been in Mongolia for many years and hold significant leases to the mineral deposits (FIFTA, 2012).

Diplomatic relations between Mongolia and Australia began in 1972; however it was not until 1990 when Mongolia transitioned to a free market economy that the bilateral engagement was enhanced. According to the customs official statistics report for 2011, the total export trade from Australia to Mongolia was 44 million AUD and the import from Mongolia to Australia totaled 0.5 million AUD. While the trade total is a modest sum compared to Australian trade with other countries, Australian exports to Mongolia have doubled every year since 2009 and has further growth potential (Australian Government, 2012).

A significant portion of the Australian export to Mongolia include heavy machinery, specialized equipment, measuring and analysis apparatus and technologies mainly used in the mining sector. The main exports from Mongolia are cashmere, coal and fluorspar. China is both the principal importer and exporter from Mongolia at 80% of the total export and 40% of the total import (Austrade, 2012).

Austrade has recently opened a permanent office in the capital city Ulaanbaatar with an aim to enhance the commercial ties between Australia and Mongolia and it serves as the gateway for Australian businesses and individuals hoping to expand into the Mongolian market.

With nearly half the small population of less than 3 million living in the capital city, and with a few large companies dominating the majority of the trade, it is easy to find distribution channels and buyers in Mongolia. Growing number of young people are educated abroad exposed to the western way of doing business and thus language barriers and cultural misunderstandings will not be an obstacle.

The Mongolian government policy to promote international trade has created a favorable environment for the traders and the country continues to facilitate trade. In order to overcome the over dependence on imported products and to enhance export, the export duty has been set to 0% and the import duty is one of the lowest at 5% for all commodities with the exception of a seasonal duty increase on vegetables between July and April at 15%. Throughout the country there are a number of free trade zones, free economic zones and bonded construction site and manufacturing areas (Mongolian Customs, 2011).

With an aim to support the small and medium enterprises, current import duty on equipment, machineries, mechanical appliances, reactors, boilers and the corresponding parts for SME purposes has been set to 0% until the 31st of December, 2012 (Mongolian Customs, 2011). Exporters in this sector must not lose the opportunity. Additionally, construction and services sectors and private consumptions are expected to grow for those in the business of exporting construction materials and food products.

Currently Australian export is less than 1% of the total import of Mongolia. With the increase in the average household income and people’s growing conscience toward quality health products, suppliers of food, beverage and snacks may be able to expand their market and increase Australian share in the market. Other main exports from Australia the Mongolians are accustomed to include Australian wine, machinery and mechanical appliances, prepared foodstuff, chemicals or products of the allied industries, and construction materials (Mongolian Customs, 2012).

- Contributing article prepared by Enkhtuul Enkhtuvshin, Export Council of Australia

References:

Austrade (2012), “Mongolia Profile: Current Business Situation”. Retrieved from: http://www.austrade.gov.au/Mongolia-profile/default.aspx [Accessed 10/07/2012].

Australian Government (2012), “Mongolia country brief”, Australian Government: Department of Foreign Affairs and Trade. Retrieved from: http://www.dfat.gov.au/geo/fs/mngl.pdf [Accessed 10/07/2012].

Asian Development Bank (2012), “Asian Development Outlook 2012: Confronting Rising Inequality in Asia”. Retrieved from: http://bcmongolia.org/images/Articles-Reports-Mongolia/ado2012.pdf  [Accessed 11/07/2012].

Eurasia Capital (2012), “Mongolia’s GDP accelerates 16.7% in 1Q2012”. Retrieved from:  http://www.eurasiac.com/mongolia-s-gdp-accelerates-167-1q2012 [Accessed 12/07/2012].

Foreign Investments and Foreign Trade Agency (2012), “Economic Outlook and Major Economic Sectors”. Retrieved from: http://www.investmongolia.com/fiftanew/contents.php?id=1&sId=2&lang=Eng[Accessed 11/07/2012].

Mongolian Customs (2012), “Customs official statistics report – 2011”. Retrieved from:  http://www.ecustoms.mn/index.php?lang=mn [Accessed 11/07/2012].

Mongolian Customs (2011), “Annual report – 2011”. Retrieved from:  http://www.ecustoms.mn/about.php?wmid=102&wmsid=104 [Accessed 11/07/2012].

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 

Resources….an opportunity of a lifetime, let’s not let it slip

Every time I visit Western Australia I’m reminded of the line from the Aussie movie ‘The Castle’: “It’s the vibe...it’s the vibe” and there certainly is a vibe. All Australian’s are aware of the resources boom, but I’m not sure if everyone really knows what this means to Australia in terms of employment, advances in technology and the impact on companies that service and build infrastructure for the sector. It can, in my view, only be described as a once in a lifetime opportunity which if managed well, will be of enormous benefit to all Australian’s but if managed badly will simply be a wasted opportunity.

In late May, Perth hosted a “Careers in Mining and Resources forum” which was reported in a special feature for “The Western Australian”. One only has to flick though the pages to see its magnitude and the impact it is having on the State and to our export earnings. The Chamber of Mining and Energy of Western Australia (CME) is quoted as saying “Currently the sector has total export income of more than $100 billion and produces a royalty for the WA Government of $4.9 billion”. In 2010/11 the WA resources sector accounted for 95 per cent of the state and 46 per cent of Australia’s merchandise export income and direct employment of over 100,000 people in mining, oil and gas. A Department of Mining and Petroleum report claims there are over $180 billion worth of projects committed or under consideration which will create more than 57,000 construction jobs and 18,000 permanent jobs. When you look at the sheer scope of what’s happening and the impact it is having, you have to wonder why the unions are trying to create havoc for Hancock Prospecting for planning to engage 1700 guest workers when their Roy Hill project is reported to employ 6000 Australians.

The feature also puts a personal touch to this massive industry and tells the story of Christopher Turland, a dump truck driver with Fortescue Metals Group who wanted to become a train driver.  Christopher decided to take advantage of the opportunity and after completing a fifteen month traineeship become Fortescue’s first qualified Indigenous train driver. He is not alone, in May 2012, Aboriginal people comprised 10 per cent of Fortescue’s workforce and the company has awarded $580 million in contracts to Aboriginal businesses across its operations and growth projects. Nobody could argue that this anything but a fabulous outcome and I am sure there are more.

Opportunities of course can be realised and opportunities, even those of a lifetime, can also be wasted. Gina Rinehart, one of our Australian Export Heroes, in her article in Australian Resources and Investment draws comparisons between Australia and Singapore and highlights some clear differences between the two. “Despite the country’s small size, low population and lack of resources and local water supply, Singaporeans benefit significantly from the country’s policies”. “Its neighbour Australia,” she says, “is the complete opposite despite wealth generated from vast resources”. Australian’s, Ms Rinehart says “drown in red and green tape, taxes and government costs that make us less competitive.”  Singapore she says on the other hand “makes a real effort to minimise red tape, has lower tax rates, enables guest labour and has no debt”.  This view is reinforced by a World Bank study which placed Australia as the 34th easiest economy for trade access. Singapore, I understand tops the list.

There are enormous opportunities flowing from the resources boom for all Australian’s. They will not be realised unless we lift our game in cleaning up our act in terms trade facilitation and processes, reducing not increasing taxes and charges, having duplication and waste eliminated and encouraging not discouraging our entrepreneurs. Undertaking these fundamental disciplines will also have positive impact on the other side of the economy that is facing great hardship in this two speed economy.  Failure to address these issues will simply mean the once in lifetime opportunity will be wasted while those exporters in the ‘slower lane’ will be sacrificed.

- Ian Murray, Executive Director- Export Council of Australia