It’s a market with a population twice the size of Australia, strategically positioned between Eastern Europe, Russia and the Middle East, thus with the potential to service a number of growing areas.

According to Valentyn Adomaytis, Ukrainian Ambassador to Australia and New Zealand, interest in Australia is increasing, just as bilateral trade has grown to more than AUD500 million over the past few years.

“In the current global economic recovery we are witnessing a growth of business cooperation between Ukraine and Australia,” he says, noting that Australian exports to Ukraine more than doubled in the first quarter of this year.

While Australia isn’t generally well known in Ukraine, there are sectors where we are well regarded, says Dan Tebbutt, senior trade commissioner in Austrade’s Moscow office which services Ukraine: “In mining, we have an extremely positive reputation and in agriculture we’re widely known and respected.” And with Ukraine evolving its agribusiness and mining industries, it’s a country wide open to Australia’s expertise in those areas.

New exporters

Ukraine is not really a market for new exporters, warns Tebbutt. “It’s a country of great potential but it’s also a country of considerable challenges. It’s still an emerging market and it’s still a country where issues such as the rule of law is a concern.”

He does, however, suggest that leveraging our expertise in agriculture may help. “It has a fair bit of unrealised potential. Australia has a lot to offer Ukraine in terms of services for increasing the efficiency of their agricultural production,” he offers.

Another aspect of agriculture is livestock, suggests Stefan Romaniw, chairman of the Australian Federation of Ukrainian Organisations. “I’ve been put in touch with people who are interested in exports from Australia. They want cattle and sheep, of all things, because they’re trying to build their industry.”

Similarly, the mining sector can play to Australia’s strengths. Ukraine has an energy shortage and is largely reliant on Russian gas. Australian companies can help by providing more modern techniques for exploiting their coal reserves and unconventional gas.

“We know of Australian companies actively looking for those types of opportunities in Ukraine as Australia has a lot of knowledge and experience in that area,” says Tebbutt.

New exporters to Ukraine tend to be larger as they are able to take greater risks. Smaller businesses should watch out for the offshoot opportunities that arise from bigger players making moves in the market.

Existing exporters

Mining and agricultural technology and services are more the domain of small to medium sized businesses than big corporates and the two sectors are just a launching pad for other services that Australia could introduce, notes Romaniw.

“We have a lot of intellectual property: for example, we could go to government and provide some of the expertise in processes that we have here.” He suggests that concepts such as occupational health and safety training to reduce mining accidents could reach other areas: “There’s a huge market in Ukraine, because that’s not a concept that people have quite grasped, especially when you see some of the building sites.”

He adds that although Ukraine is very advanced for an ‘emerging’ market, Australia could offer complementary services. “There are opportunities such as in operational maintenance; you may have the great planes but we can certainly service them,” he says.

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WARNING: ‘This Superman costume will not enable you to fly.’ Such a warning does not tell us that children have been jumping off roofs. What it indicates is that if a child put on his Superman cape and then launched off a roof his parents would find someone to sue.

Most likely, they would take action against the cape’s manufacturer, following a host of precedents in United States courts finding manufacturers liable for failure to warn.

The increase in seemingly frivolous warnings on manufactured goods reflects a changing market, where litigation is common and courts tend to rule in favour of the plaintiff. More and more frequently, victims of injury through use of a product are bringing liability suits against producers. And they’re winning.

In a buyers’ market, manufacturers need to protect themselves against liability litigation. Even the most carefully researched and tested product may involve some risk, and sensible producers need a management plan in place to protect themselves, particularly as they move into overseas export markets.

Product liability

In layman’s terms, product liability is an area of business law that allows consumers injured by a purchased product to sue its manufacturer, retailer and distributor for liability. A court can determine whether the manufacturer, retailer or distributor can be held responsible for injury or damage to the plaintiff on the basis of:

• failure to warn
• inadequate user instructions
• defective products.

A liability suit can be extremely costly for a business but there are ways to manage the risk and invest in adequate protection.

Product liability insurance

In case of litigation over an issue of product liability, it is wise for a corporation to have financial protection in place. Product liability litigation is often a drawn-out and extremely costly process. Even a single accusation of liability can snowball into a class action, where the company found liable has to pay legal costs as well as compensation to all parties represented by the suit. Liability insurance is an investment in protecting your brand and company from the financial penalties of product failure.

Overseas warranties

Most contracts stipulate that the seller must be able to provide a warranty bond. This requirement offers security to the buyer, so that if a product fails overseas the buyer can recover the full cost of their investment. According to the Australian Export Finance and Insurance Corporation, if an exporter cannot provide a warranty bond it is generally out of the running to secure a contract.

The buyer needs to know that if the seller’s products do not meet contractual requirements, or fail after they have been on-sold, there is a reserve of money that can draw on. Banks usually require a business to have 100 percent of the value of a warranty bond before they will issue a bond on their behalf.

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In the event of an emergency like the Mumbai terrorist attacks or the floods in Pakistan, the software enables businesses to quickly identify which of their travellers are at risk, minimising response time and saving valuable rescue resources for those who really need them.

Business travel is a necessary part of international trade, but corporations which overlook their duty of care to travelling employees can face litigation when something goes wrong.

Developed in partnership by Dynamiq and conTgo, the software combines interactive technology and emergency management procedures to enable “very active” travel management, according to Dynamiq CEO Anthony Moorhouse.

MapCast gathers all travel information for a single traveller—itineraries, flights, check-ins and corporate travel policies—into an interactive web-based interface. The data builds an interactive map, updated every few minutes, allowing you to literally draw a circle on a map and identify your employees travelling in a particular region.

The list of travellers can be further specified by airline or by travel time. The software also integrates corporate travel policies, and can deliver automatic, real-time location-based reminder messages to ensure adherence to travel policies.

MapCast will be made available to Travel Management companies to rebrand and market under their own umbrella management programs. In Australia, travel management company QBT have exclusive rights to the software until January and plan to deploy it by the end of the month.

ˇ

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All you need to do is register your interest online, and then submit a 2-3 page executive summary of your plans for expansion.

To enter the UK-Market Entry competition, go to http://www.ukme.org.uk
To find out more about UK Trade & Investment go to
http://ukinaustralia.fco.gov.uk/en/business

Applications close on Friday 17 September, with executive summaries due by Friday 22 October.
Billed as “the world’s easiest business competition”, the competition is designed by UK Trade & Investment to expand trade links between Australia and the United Kingdom, and strengthen a historically strong trading relationship.

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Brand Australia launched in April under the ‘Australia Unlimited’ tagline. The advertising is a visual assault of landscape and landmarks: bush, beaches and bridges. Famous faces give way to a flickering slide show of ordinary people, conspicuous in their cultural diversity.

It is a reflection of what Tom Dery, CEO of M&C Saatchi, saw in his own boardroom. “We looked around and realised that you can come to this country, you can start with nothing, whatever your background, and you can achieve whatever you want to achieve.”

Dery explains that whatever the brief is for a national brand, a country will end up with the image it deserves. “The fact is, anything is possible in Australia,” he says with absolute sincerity. M&C Saatchi was chosen from 60 contenders and four finalists to build Brand Australia—a formidable brief.

“The task was to find a symbol and a line and a positioning that could be used on all Australian activity to do with promoting itself overseas,” Dery says. It needed to be a big, evocative and attractive concept.

Freya Campbell, the project’s group manager at Austrade, describes the new Brand Australia as an overarching strategic approach, an umbrella brand used to promote Australia’s capabilities across a number of sectors. “Its main aim is to position Australia in the global marketplace, and to ensure that Australia is highly regarded as global citizen and business partner and as a holiday destination.”

Dery is more specific. “We wanted to talk to potential migrants. We wanted to talk to people who want an education in Australia. We wanted to talk to scientists, to come and work in Australia. We wanted to talk to people wanting to invest in Australia. We wanted to talk to tourists wanting to come to visit Australia.”

The advertising speaks to all of these groups. “We looked at all the activities that we do in terms of getting export income and felt there was an idea here that talked about unlimited potential,” Dery says.

Between the rolling oceans and golden desert, M&C Saatchi’s take on Australia Unlimited boils down to a few words. ‘Infinite horizons, endless coastline, iconic cities. But our greatest asset? Our people.’ The emphasis is deliberate. Austrade conducted a great deal of research before embarking on Brand Australia. One of their commissioned surveys was by Simon Anholt, whose research team ranks countries on a ‘brand index’ after measuring dimensions including exports, governance, culture, people, tourism, innovation and investment. Australia ranked most highly in the people category, and least in exports and culture. Australia Unlimited hopes to trade on the positive rankings to enhance the sectors that are less well regarded internationally.

Strengthening the brand

Ian Harrison, chief executive of Australian Made, has been trying to promote Australian business overseas for over two decades and understands the challenge of promoting Australian product internationally.

“The real need for Australia Unlimited is to strengthen, broaden and deepen the message about what Australia is about. We are a space for sophisticated manufacturing. We are a producer of high quality produce because of our clean green environment. We are a provider of world quality education, world quality health services and engineering services,” Harrison says.

While Australian Made welcomes the initiative of Brand Australia, the organisation is disappointed with the symbol that has been chosen. “The use of a couple of boomerangs to depict the east and west shorelines of Australia is a symbol that has no connection to Australia at all to people who don’t know what our island continent looks like—and of course that’s the great majority of the world.”

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Two hundred Australian businesses will exhibit their wares in the 220 booth MC Saatchi-designed Australian pavilion, hoping to capture a part of business deals worth over $20 billion from a traffic flow of 250,000 expected visitors to the world’s largest fair for SMEs. Every booth in the pavilion is occupied, making this the largest ever gathering of Australian businesses at an overseas trade event.

This year’s fair focuses on clean technology and green building and Australian SMEs operating in these sectors will take up 31 mega display booths at the fair. The Australian Wanwu Clean Technology mission will run alongside the trade fair, providing a coordinated marketing platform to introduce Australian firms to Chinese eco-projects, funding opportunities and trade partners.

Austrade will use the fair to launch the inaugural China-Australia Green Building and the Eco-City Forum to promote Australian capabilities in the green building and eco-city area to 200 senior Chinese officials in charge of urban planning and construction, environmental protection, water treatment and energy saving as well as property developers and architects.

The fair will incorporate a handover ceremony between Australian company Biofiba, which will this year license their groundbreaking invention of biodegradable pallets to a Chinese company. Other prominent Australian companies represented at the fair include Woods Bagot, GHD, PWT, Bauzer and Silverwater.

Over 100 staff across 14 offices in China and Australia are involved in coordinating Australia’s efforts at the fair. Support includes five business matching meetings for each participating SME to help them make contacts and win contracts, a massive gala dinner bringing together Australian businesses, their clients and relevant government officials and a collaboration with the L’Oréal Melbourne Fashion Festival to host Australia’s largest ever fashion event in China.

The event promises to help Australian SMEs develop relationships with key customers and potential partners, obtain market intelligence and take advantage of a culturally sensitive marketing platform with Austrade to back their efforts.

For more information, visit www.austrade.gov.au/cismef2010

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Here are at least eight reasons why India is a seriously compelling story for investors:

1. Size of India

India’s GDP is currently US$1.3 trillion, making it the eighth largest economy in the world. However, in PPP terms, which recognises India’s low cost base, the GDP notionally rises to three times this amount (US$3.8 trillion) which places it on a similar size to Japan and, by 2013, it will become the third largest economy in the world (after the USA and China) in PPP terms. However, despite representing 7.5 percent of Global GDP (on a PPP basis) in 2010, India attracts less than 0.5 percent of investment inflows. An anomaly which is unlikely to continue for much longer!

2. Economic growth

India’s economy is currently growing by 8.75 percent per annum (in 2010) and this GDP growth rate is expected to increase to 9-10 percent per annum for each of the next 10 years. India’s GDP will grow five times in the next 20 years, and GDP per capita will almost quadruple.

3. Diversity

The Indian economy offers investors exposure to a wide range of opportunities from consumer goods and pharmaceuticals to infrastructure, energy and agriculture. With its strong services sector (comprising 50 percent of India’s economy), particularly in knowledge-based services (IT, software and business services) India has proved that industrialisation and the export of commodities and resources is not the only path to rapid economic development.

4. Demographics

India is one of the youngest countries in the world, with an average age of 25 and likely to get younger. India’s working-age population will increase by 240 million over the next 20 years. With a population of 1.2 billion, a strong work ethic, high levels of education, democracy, English language skills and an entrepreneurial culture, India is poised to dominate the global economy in the next 20 years.

5. High Savings

With a savings rate of 37 percent of GDP, India’s domestic savings fuels most of its investment requirements, and only 20 percent of India’s total public debt is sourced from foreign borrowing. With significant investment to be made in upgrading India’s poor infrastructure in the next 10 years (estimated to be US$1.7 trillion) India’s government is taking various steps to further encourage private and foreign investments.

6. Domestic economy

India’s domestic consumption, generally led by the private sector, has played a significant role in India’s growth and is expected to remain firm as more people enter the workforce and the emerging middle classes. India’s wealthiest consumers (those earning US$1 million or more in PPP terms) will increase by 40 million in the next 10 years! Every sector within India’s consumer market is booming, making India far less vulnerable to external shocks and pressures than other emerging markets.

7. Robust financial sector

India has a robust, diversified and well regulated financial system which has allowed it to weather the global financial crisis without any major difficulties and present an image of quality, resilience and transparency. India’s banking sector is strong, with top quality balance sheets, high levels of competition (there are around 80 banks in India) and strong corporate governance.

8. Quality of Investment Markets

The Bombay Stock Exchange is the second oldest in the world (165 years) and offers investors a low cost, highly efficient, modern and well governed environment in which to prosper from India’s extraordinary economic growth. The Indian stockmarket has generated investment returns of over 15 percent per annum for the last 10 years and experts expect this rate to increase in the next decade. More significantly perhaps, Indian investors have doubled their money over the last three years at a time when many have lost money in almost every other market.

Don’t take my word for it: talk to investment professionals and advisers who can offer you objective and independent forward-thinking advice. But don’t wait another 10 years to find that India offered a compelling investment story, or you might be too late!

I am grateful to Bharat Shah and my friends at ASK Investment Managers for their assistance with some of the points made above, and hope that ASK and other Indian specialists will continue to promote Indian investment opportunities in Australia.

—David Thomas is CEO of Think Global

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When a firm gets into financial difficulty they look for loopholes and reasons to justify delaying payment, or not paying at all. When a sale is made it’s great to celebrate, but we all know things don’t always turn out rosy down the track. One of the best ways to protect yourself and ensure you get paid is to have well prepared, clear and concise Terms of Trade between your business and those with whom you transact. Verbal and handshake agreements may be appropriate in some circumstances, but when things don’t go to plan you want to have something solid in writing to back you up.

I spoke with RP Emery & Associates, providers of contract templates for business. They told me why smart businesses need good Terms of Trade.

Manufacturing Agreement

A manufacturer and purchaser worked well together for a year, but then a dispute arose over an overdue account. The manufacture claimed substantial interest and late payment fees. The case ended up in court, because it was unclear whose terms of trade applied, as there had been express agreement on who made and supplied the goods, but not as to the terms of payment. In this case the Court held that by going ahead and fulfilling the purchaser’s orders, the manufacture had effectively accepted the purchaser’s terms.

The expense and aggravation of having such a dispute resolved by a court is always stressful (and a distraction), so when you enter into an agreement, just make sure that your terms of trade are also signed by the other party.

Similarly, when it comes to licensing and distribution agreements, it is important to make sure that there is a clear understanding between the parties, as to what the intellectual property component really means. It is commonly thought that one can get around design, copyright, or a patent merely by changing the product by X percent, but that is folklore.

IP Terms of Trade

Just this year, Solitaire Homes won a landmark case in which an architect made what he thought were adequate changes to a Solitaire project home design. Once it was established that the architect had in fact based his drawings on the Solitaire design, he was guilty of copyright and trademark violation. So acknowledgement of your copyright and other IP in your terms of trade is critical.

Addressing matters such as these in your terms of trade will keep you out of court. Even the judge commented in the Solitaire case that after five years, the legal costs exceeded the cost of construction of the house, let alone the damages awarded!

Personal Guarantees

Another very important issue is the question of personal guarantees. There was a case in which a company delivered industrial design services and did not get paid by the purchasing company. A magistrate held that, because a director of the purchaser used the word ‘I’ in a letter (rather than ‘the company’), there was an implied personal guarantee, and awarded judgement against the director. Now, the fact that this decision was clearly wrong at law is irrelevant: the director had to appeal to the Supreme Court on a matter of law, and it was cheaper to pay the bill rather than incur the costs of a Supreme Court appeal.

The lesson to be taken from that case is that the terms of trade did not exclude directors’ guarantees.

Import/Export

When it comes to international trade (import/export), the subject takes on an entirely different hue. For example, you need to be aware of roughly five kinds of commonly used international trade documents—government control documents; commercial (invoice) documents; banking documents; shipping documents; insurance documents—and any one of those can bring you undone if you haven’t done it right.

Also, we all understand the definition of ‘quality’ under Australian law, and the implications of the Sale of Goods Act. But do you understand the United Nations Convention on Contracts for the International Sale of Goods? This convention defines such things as ‘material breach’ and ‘minor breach’ of contract and these have a significant impact on how disputes are handled in the global arena.

This means that you must be across the requirements of establishing quality, and that may be through inspection: sample; grade and standard; and brand or place of origin. These issues bring into play the methods of payment (irrevocable L/C; mail transfer; demand draft; telegraphic transfer) and making sure that you understand the effects of the pricing methods (FOB; C&F; CIF; DAF), because these aspects all impact on the documentary collection and the rights and obligations of the banker at either end.

Sounds complicated? You betcha! It is, but in a global world, we all have to come to grips with these complexities.

Terms of Trade considerations

Other items to be considered in your terms of trade are:

• How will the goods be ordered?
• How will the orders be confirmed?
• Will buyer/seller be entitled to cancel orders?
• How is the price to be paid?
• Are there handling/admin fees?
• Are there penalties for late delivery/late payment?
• Can either party offset amounts owing against an order?
• How are credit facilities to be assessed/granted?
• What defines delivery/collection?
• Can orders be cancelled if not delivered by a certain date?
• Must seller notify purchaser if delivery date changes?
• Can goods/services be delivered in instalments?
• What are the consequences if purchaser fails to accept delivery?
• Can seller retain title until paid?
• Does retention of title outlive termination of agreement?
• Is confidential information being imparted, and how is it protected?
• Are there any Privacy issues?
• Should either party have the right to terminate without cause?
• What are the consequences of termination?
• Have warranty and liability issues been adequately addressed?
• Are there guarantors, and are the guarantee terms clear?
• The laws of which State apply?

As you can see there is a lot involved in the delivery of a service or product. It just might save you a lot of money to have a clear understanding by all parties from the beginning, rather than having to go to court and incur a lot of unnecessary legal fees to sort out a problem later.

—Sue Hirst is the founder of CAD Partners – CFO On-Call

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But what if a company lacks the expertise and experience to enter new foreign markets, the resources to establish its own export department or lacks sufficient flexibility to react quickly to current market fluctuations?

Outsourcing has proved to be a powerful and effective solution for companies trying to enter and develop new markets, as well as saving costs and manpower, but before transferring parts of your company to an outsourcing provider there are a number of aspects to consider and decisions to be made.

An outsourcing company should provide:
* established processes
* a scalable compensation model
* a business mentality
* multicultural competence
* (long-term) references
* matching service range and options
* market knowledge, existing networks and contacts.

Benefits

Many small and medium sized companies lack the capacity and expertise to increase international sales activities but need to do so in order to stay competitive in a globalised market.

Market access barriers such as import and customs tariffs, investment logistics, complicated government requirements and many more issues often create insurmountable obstacles for companies trying to enter new markets. Sales managers often simply can’t handle additional demand on their already existing workload or don’t have the know-how.

An experienced outsourcing partner can be of great value here.
Besides know-how and experience, cost cutting and cost effectiveness are additional incentives to work with an outsourcing specialist. Economies of scale don’t only work in manufacturing but in services too. The outsourcing specialist with its established infrastructure as well as office facilities and employees on-the spot can operate much more cost efficiently.

Often they can also use existing networks acquired over the years and also by working not only for one but many customers, external service providers can achieve economies of scale unavailable to individual firms when they combine the volumes of multiple companies.

In Europe, the United States, Asia and other emerging markets worldwide there are innumerable cultural and social differences to navigate. Outsourcing specialists employ staff trained to deal with cultural considerations and who have worked in numerous countries. Many are multilingual and have extensive experience with foreign markets and cultures.

With an experienced outsourcing company on your side it will be much easier to overcome cultural differences and challenges, allowing you to enter new markets much faster, better prepared and with the ability to be flexible. At any time capacities and the number of employees can be adjusted without difficult terminations of contracts. Because your outsourcing partner has precisely defined tasks to perform, assessment and monitoring is simplified.

The right outsourcing strategy

In order to implement outsourcing strategically a company has to decide which units it might want to outsource. This will always be a very individual decision as well as a dynamic process.

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In 1974, a commercial television station in Australia held a telethon to raise funds to take an obscure Australian biotech project to prototype. Four years later, the medical device was implanted in the first human patient and 71-year-old Rod Saunders heard sound for the first time in 25 years. Now Australia’s most famous medical invention, the Cochlear story aptly demonstrates the barriers faced by Australian innovators in the medical industry.

According to Janelle Casey, Austrade’s global leader for Biotechnology, Health and ICT, “we face difficulty in commercialising innovation because we need capital injection, and that’s traditionally really hard for Australian innovation and technology in this country”.

Despite this handicap, Australian bioengineers, scientists and doctors are punching well above their weight in the global healthcare industry. Children with minor infections have benefited from Howard Florey’s discovery of the curative effects of penicillin. Many Australians with a snoring bedfellow have peaceful nights using Resmed’s treatment devices for sleep apnoea.

Victims of the Bali bombings healed quickly with the application of spray-on skin for horrific burns, developed in Western Australia, and women all over the world face less risk of developing cervical cancer following the Australian development of Gardasil, the first vaccine against human papillomavirus.

Even with these achievements, Australian exporters hold only a tiny share of a world medical market worth US$174 billion. The global medical technology industry is growing at a rate of 10 percent per annum, and with population on the rise, it is an industry set to take off. The Australian medical technology industry is worth $6.7 billion, and is expanding slightly faster than the world market at 12 percent each year. Casey believes that with less than one percent of the world market, the opportunities for Australian companies are endless.

New exporters

Australians can be ruthlessly competitive in a world market, provided they believe in their product and are prepared to put time and energy into penetrating international markets, says Alan Oppenheim, CEO of Ego Pharmaceuticals. Oppenheim sits at the helm of an Australian household name that has been exporting for 50 years.

“You can’t do too much research. Get to know your new market and how your channel will run in the new market,” he advises. Ego Pharmaceuticals provides a good example for new exporters looking to emulate Australian success. An Australian-owned small business, Ego has been competing with multinationals in the world market for decades. They have 40 staff in eight countries, but spend little on marketing. Profits are channelled back into research and development because, as Oppenheim warns, “all the marketing in the world is only going to sell the first bottle”.

New exporters should take advantage of Austrade’s export assistance programs, including Commercialisation Australia and even the recently slashed export market development grant (EMDG). Austrade organises Australian pavilions at major international trade fairs, including Medica in Germany, the Asia Medical Fair in Singapore and Arab Health in the Middle East, allowing Australian businesses to exhibit at a fraction of the usual cost.

Small Australian companies can leverage the total dollar spend of the Australian trade mission to see what opportunities are available. “You have to go overseas,” Casey says. “You have to see who you’re competing with and where you fit to help you work out your positioning, pricing, market entry models and distribution channels.”

Existing exporters

An understanding of where Australia fits in the market is essential for existing exporters looking to expand. Casey advises against businesses competing on consumables, as manufacturing in Australia is too expensive to be competitive in the export of low value medical products.

Where Australia can exploit its advantages is in high value, niche industry products. Australian companies can trade off competitive innovation, quality research and development and a powerful precision engineering sector with a long-term record in the automotive industry. “We really have quality expertise to help prototype our medical devices here in Australia,” Casey says. “Contract manufacturers can do short runs of prototypes easily.”

While traditionally Australia’s biggest export markets in the healthcare sector have been in the Asia-Pacific, the Middle East is an important emerging market for exports. “The Middle East has a big shortage of hospitals,” Casey says. “Saudi Arabia alone is building 200 new hospitals and they’re looking to fit out with a whole range of medical equipment and devices.”

Australia has a good reputation in the Middle East and, according to Casey, because Saudi Arabia, Kuwait and the United Arab Emirates have adopted Australian medical standards, making it simple for Australian companies to enter the market there, we have a particular competitive advantage.

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