In the agricultural sector prices are also holding up, a positive for farmers who have battled droughts for a number of years. However, behind the headline we are aware that many SME exporters are battling against strong headwinds.

The Australian dollar’s strength is a key headwind, and this is reflected in the June DHL Export Barometer which reported the highest negative impact on export sales was the exchange rate—higher even than the GFC.

Unlike mining, many export industry sectors can’t lift prices at this stage of the world economic recovery and have seen their profitability plummet, even though sales may have held up reasonably well.

The wine industry has certainly been affected by the high Australian dollar, battling strong competition from new players from South America and South Africa while demand in major European markets is on hold.

The intake of international students to our universities is also affected, with universities in the USA turning to offshore markets to cover a domestic downturn due to the GFC. Similarly our inbound tourism operators have seen the value proposition of an Australian holiday eroded by the high dollar.

The Barometer also indicates the top five sources of expected export orders over the next 12 months are South and Central America, South East Asia, China, India and Africa. Regions like South America and Africa would not have figured in the top five previously and indicate exporters are seeking out new markets to counter the downturn in the US and Europe.

And support to market to these new destinations has been diminished by the reduced amount available through the Export Market Development Grant scheme.

Although exporters surveyed remain positive about future orders, 48 percent report orders below the pre-GFC level.

SME exporters provide strong employment opportunities in their communities (one in five jobs is export dependant) so it is in everyone’s interest to ensure this sector stays strong and continues to grow. Our balance of payments outcome and, by extension, standard of living depend on it.

Included in the middle are the financing, payment, documentation, insurance and risk mitigation strategies that will all ensure successful exporting.

Being able to obtain, service and grow an overseas client is very different to looking after a domestic buyer. If you make a mistake with an overseas order, the potential ramifications to the business are much larger and can often be more significant to your business. Therefore, it’s best to prepare for your foray overseas by giving your staff the right skills to make it happen. The skills and know-how for export come from a range of sources, and there are some key ones that exporters need to focus on.

The sales/negotiation process

This involves an understanding of areas like contract law in the buyer’s legal jurisdiction, as well as the expected business and cultural ‘rules’ in the country. It also includes the business negotiation process and particularly the approval process when dealing with government contracts. There is also the concern of protecting your intellectual property in a new market, to ensure your original products or services are not stolen or replicated.

To cover off these areas, the tertiary sector, via international business and international marketing courses and MBAs, provides support. On a more practical level, organisations like Austrade, IP Australia plus accounting and legal bodies that understand the requirements of specific markets can provide assistance and guidance.

The supply chain process

This involves moving the product or, if you are a service business, perhaps moving staff offshore. Your staff need to understand the extensive process of booking transport by air or sea, the packaging requirements, deciding which party will organise and pay for tariffs and duties, freight, marine insurance, port charges and so forth. For service businesses that are stationing staff offshore, ‘supply chain’ considerations should include visas, accommodation and funding for expenses.

For support, you should work with a credible freight forwarder, which can be an immense help. The Custom Brokers and Forwarders Council of Australia (CBFCA) and the Australian Federation of International Forwarders (AFIF) are two freight forwarder membership groups you should consider for finding contacts. Both associations also run training programs on key logistic requirements such as dangerous goods rules and regulations for shipments. Understanding the process within the business is invaluable, and the Australian Institute of Export (AIEx) also runs regular courses on the end-to-end trade procedures.

For service providers, working with an accounting firm with international offices or global affiliations can provide the necessary detail on staffing issues and managing an overseas point of representation.

The documentation/administration process

The preparation of the documents that must accompany every export is another essential skill to learn. Apart from the transport documents, you are required to deal with commercial invoices, packing lists, certificates of origin, insurance certificates, health, and industry approvals. And if you are using a documentary letter of credit to ensure payment, all these documents need to be accurate and line up to include common information.

There are documentation packages that can supply a lot of this information in a template format, including authorised government forms such as a customs authority number (CAN) to allow export. A listing is available on the Australian Customs website.

There are training sessions provided by many of the banks, and the AIEx, on working through the documentary letter of credit process, and your freight forwarder may be able to supply these documents as part of their service.

Some recent data, and general observations, indicate the perhaps Australian businesses could and should be doing better in this space. For instance IbisWorld research indicates that less than three percent of total retail sales in Australia are made online, compared to seven and eight percent in the US and UK respectively. And according to Forrester Research, Australians spent some $23 billion on online goods in 2008, a large chunk of this offshore.

For some of our Asian neighbours, and certainly in the US and Europe, the internet represents a growing source of consumer purchases, so businesses need to think about an awareness, branding and sales strategy. Your overseas buyers want to find you 24/7 and when properly constructed, your website is your after-hours salesperson. Are exporters really maximising the sales potential of their websites to attract, hold and sell to overseas visitors?

Developing an appealing website for an overseas visitor or potential buyer is a good starting point. There is also the opportunity to claim back some of the expense of making your website export ready under Austrade’s Export Market Development Grants program.

As Michele Azzopardi, director of Design Victoria points out: “Websites are often the first port of call for overseas interest in Australian products and services. Your website could be the first chance to impress overseas buyers, and your last if it doesn’t stand out from the crowd. Good website design is integral to piquing interest in your company. Businesses that don’t have an in-house web designer should invest in engaging an external designer to maximise their online presence and export potential.”

In reviewing a few reference sites that get your attention, architecture firm Denton Corker Marshall at www.dentoncorkermarshall.com is very easy to navigate, highlights their offshore projects, and clearly lists contacts at the company for enquiries. Also see 21-19 Graphic at www.21-19.com—you might not get past the game on the home page, but there is lots of interesting stuff inside that this company has produced.

One of our favourites for international sales online is aussieBum at www.aussiebum.com. The use of video clips to sell an Australian image, and the text conversion to key international languages, make the site both interesting and accessible. They also actively market their customer base with new releases, and sell around 80 percent of their product online.

Food is another strong sector for export, and use of the internet. Luv-a-Duck have a good export market, and details of their quality controls for export, and their overseas distributors are included on their site www.luvaduck.com.au.

Hot Rocks Dining offer a dining experience with a difference, starting with the home page where you can hear the steak sizzling! Their website includes details and video clips of how the experience works, recipes to try, and also customer testimonials. They have established overseas markets, which are listed on their site, www.hotrocks.com.au. Also note, it doesn’t hurt to display your export award achievements to build credibility with potential buyers!

Another point to consider is ensuring your site comes up with a high ranking, in any search. Many of us just don’t go past the front page when looking at results from a Google or Bing search. So structuring the site for high search engine rankings, or buying AdWords is another strategy.

Industry group websites are another source of referrals, providing links to their members’ sites and contact details. Austrade has the Australian Suppliers Directory listing more than 1,000 Australian businesses ready to transact with an overseas party, easily accessible from the home page at www.austrade.gov.au. There is also a separate link for food exporters at www.australianfood.net, encouraging a key industry sector.

Technology has certainly made the world a smaller place. And increasingly in our time-poor environment, technology will drive how businesses develop their contact and brand loyalty with buyers, how they sell, and how purchases are delivered. So perhaps now is the time to look at your website as the window to your business and ask the question: is it export ready?

The tales of businesses downsizing and demand falling have become familiar ones as we move into a year which is very different to 2008, faced with the GFC (Global Financial Crisis). And now we are also faced with the R word.

A short survey the Institute ran recently indicates that many local businesses are facing a contracting export order book. However the response is varied across the board, with   some industry sectors doing particularly well and finding demand increasing.

The demand for payment protection for export payments has certainly spiked. The traditional Documentary Letter of Credit, which had moved out of favour as too cumbersome over the past decade, has had a resurgence. It may be a bit cumbersome but it adds a bank guarantee to the buyer’s promise to pay. And with many overseas banks seeing their ratings drop, there is also an increased demand for confirmation by exporters (a guarantee on the buyer’s bank, generally given by the sellers bank).

In tandem, the interest and enquiries for export credit insurance have also spiked, while insurers are reducing their exposure in some industry sectors in the face of increasing claims. Of course this increase in demand and the higher risk profile of both banks and buyers has led to an increase in prices and premiums.

So with a slowing demand in traditional markets, and the higher cost of protecting payments,  it’s very easy to focus on doom and gloom, and not look for the opportunities .

Against that backdrop, a very interesting seminar run by the Institute recently focused on the opportunities in the BRIC economies (Brazil, Russia, India and China).  As noted by the keynote speaker, David Thomas of Think Global, the BRIC economies are apparently investing heavily in infrastructure development to move their economies along, providing opportunities for both domestic and international firms in design, engineering and construction. The BRIC countries were also not so directly involved in acquiring the now referenced  “toxic assets”, and had not seen the same level of asset inflation and consumer borrowing as in the developed west. Accordingly, the argument goes, they should pull out of the global downturn sooner, and with large populations that leaves a sizeable consumer market to approach. Together the BRICs hold 41 percent of global foreign exchange reserves, so they are not short of finance.

Other positive news is the recent signing of a Free Trade Agreement with Chile, which as a gateway into South America is a wonderful new opportunity; certainly an opportunity our miners and mining service companies amongst others, are looking to explore.

And on 27 February 2009, the signing of the AANZFTA took place in Thailand. The agreement brings Australia and New Zealand closer to our neighbours in the region. ASEAN (Association of South East Asian Nations) comprises Burma, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, The Philippines, Singapore, Thailand and Vietnam.
In terms of coverage, it’s the largest FTA Australia has ever negotiated, covering 16 percent of Australia’s trade in goods and services, worth $71 billion. The combined population of the ASEAN countries is some 570 million, so it represents a sizeable market.

So focusing on the opportunities is certainly the way forward. That’s not to say that a level of caution is not warranted. These countries will also be subject to financial buffeting, but with a sensible approach there may be amazing potential for our exporters across a range of Industries in these markets. The demand for quality food, good education, health care and increasingly environmental solutions will continue even through the downturn.

Many of today’s major corporations were founded in times of extreme difficulties or during great wars. So when the going gets tough, we know what good Australian exporting businesses will be doing.

—Peter Mace is the general manager of the Australian Institute of Export