Strong dollar, golden opportunity
The major structural change that is currently taking place in Australian industry due to the strength of Australian dollar is going to have a long term impact on how, or if, exporters can compete in their target markets. We already know that many industries are suffering from the strength of the Australian dollar, facing uncertain futures in the domestic market, let alone overseas markets. For many businesses there will need to major changes in their approach to export markets if they wish to continue exporting.
The traditional export model of manufacture in Australia (appoint distributors in key markets and then export products to these markets) is no longer feasible. Australian businesses have been flexible and have made changes to their approach to export markets in recent years but more substantive changes are required.
Many Australian businesses already use the cheap manufacturing ability of China and other Asian countries to supply components or part of their product range or a final product. The Australian businesses are relying on their skills in design, research and development, marketing, logistics, servicing and management to add value to their product and sell it at a competitive, profitable price. This will become more widespread with Australian businesses likely to establish permanent facilities in Asian markets for their manufacture, distribution and servicing activities and Australia continuing to provide the higher value activities such as research and development, design, marketing and management.
A further step would be for the Australian business to develop a relationship with a European or North American supplier of complementary products or even competitive products where the Australian business would take on the responsibility of manufacture, distribution and servicing on behalf of the European or North American supplier. The Australian company could contribute to marketing, logistics and management activities while the European/North American business would continue with research and development and design as well as marketing and management in their home territory. The Australian business would be able to utilise its facilities in the Asian market to distribute other products on behalf of its European and North American partners. This situation is likely to be attractive to many businesses in Europe and North America as they accept that Australia is located on the doorstep to Asia and able to deal with any issues that arise on a timely basis.
[Continued]
Got something to say? Join the export forum here at DynamicExport.com.au.
