What started as a handbag endeavour has escalated into an international phenomenon. Today the brand is also known for its statement jewellery, modern headpieces and online range of shoes.

The Sydney-based design studio is one of Australia leading labels and is stocked in over 800 stores globally. Cates says the brand is fast becoming an editor’s favourite, regularly appearing on the pages of fashion magazines, and is snapped up in stores by celebrities such as US singer Kelly Rowland.

Noticing that Urban Originals was featuring on blogs as far afield as Tokyo and Los Angeles prompted her to develop the brand’s own in-house blog, providing behind the scenes insights and reporting on trends and emerging fashion and arts talents, in order to spread the international buzz farther. She also applied for EMDG funding to help her attend trade shows in her target markets.

“The Export Markets Development Grants scheme has been wonderful for Urban Originals, “ she says. “It has assisted the company in showing at some of the world’s best fashion trade shows, including London Fashion Week, Bread and Butter in Berlin and Magic in Vegas.”

Cates used an export grants consultant which she says has made the EDMG application process reasonably smooth and credits this with having been instrumental in achieving the grant for Urban Originals.

“As a result of this financial assistance Urban Originals has been able to grow its International customer base to include big-name stores such as Fred Segal, Kitson, ASOS and Urban Outfitters.”

With the EDMG assistance international growth has been able to be achieved without negatively impacting the brand’s local growth. Now Cates is in discussions with major distributors in the US and is signing licensing deals for the States, Japan and the United Kingdom which she anticipates will double her turnover in the next year.

Without a realistic and detailed marketing plan the opportunity for business success in a new market may be severely hampered.

Costing a marketing plan

The marketing activities that should be included and how much will they cost will be first determined by the product or service itself, the entry strategy selected and the market growth that is planned.

Your marketing plan will also depend on whether the intended customers are retail clients, businesses or government buyers. Certainly the consumer market is the most scattered and the most bombarded by conflicting advertising messages, while business and government buyers tend to be more easily targeted. In new markets it may be about first establishing a brand identity.

With today’s technology there are also inexpensive options such as direct mail to a targeted market segment, focusing on specific activities such as trade fairs, attending large industry conferences or using social media and other on-line media to build your potential client list.

Once you have decided on the best market entry strategy, the marketing cost can be more readily estimated. Take trade shows as an example. As Gemma Hansen of Export Solutions says, “Trade shows are one of the most effective tools for marketing your products internationally, however, they can be costly. Taking account of booth hire, stand costs and travel to the show it could cost you in excess of $20,000 to exhibit. The Export Market Development Grant (EMDG) may assist with some of these costs, providing a rebate of up to 50 percent on your international marketing expenses.”

Many exporters use commercial agents in their target markets, who will charge an agreed commission on sales and may request a contribution towards marketing expenses to build product recognition. Again the costs can be calculated.

What other marketing costs may need to be considered?

• Perhaps you will require intellectual property protection in the target country. For example, registration of a brand name may be necessary.
• In some markets, such as the USA, you will require product liability insurance.
• Perhaps some tweaking of packaging, labelling, use- by dates, colours, designs and inclusion of local language instructions will be needed.

So, having established what needs to be done, and completed a cost estimate, the next step is finding a way to finance your marketing.

It is a book that explains the how, the why and, importantly, the effects of technological change to the world’s economy. Why, with the ubiquitous spread of technology, it doesn’t matter where your business operates. Where the culture of hard work and enterprise is more important than resources, location and opportunity.

Why, he asked, is it cheaper and easier for Egyptians to import from China traditional lamps formerly manufactured by Egyptian peasants who earn an average of $50 per month? His explanation is the culture of hard work in China.

I was reminded of Friedman’s book last weekend when I read an article of his in the Sydney Morning Herald. He recounted a skit on Chinese TV that tells the story of a race between four children, one from the USA, one from China, one from India and one from Brazil.

The American child raced ahead to an early lead and exclaimed, “I will win because I always win” but later doubled over in pain. The explanation was given by the Chinese child: “He’s overweight and flabby. He ate too many hamburgers.” I guess that’s how they see us too.

Australia and our cargo cult mentality of relying on the mining industry to give us our national wealth, reminds me of the Papua New Guinea Highlanders in the 1970s who started a new religion where all the goods of the west would simply arrive by helicopter as a reward to the lucky few who joined the new religion.

In my last blog, I called on the government to assist Australian exporters with a lift in the Export Market Development Grants (EMDG) scheme for exporters rather than the niggardly attitude adopted by the current government.

Our real long-term prosperity cannot rely on simply digging up easy-to-mine minerals. There is no guarantee any of these ‘riches’ will be in demand into the long-term future.

We need to again emphasise our strengths in technology, our legal profession, education and manufacturing. We need to help these sectors of our economy to expand to new markets if we are also not to become “too fat and flabby”.

A proven and cost effective way is to provide exporters with grants that partially reimburses them for marketing activities in promoting exports.

My difficulty is not with the background of the new minister. It is the current Labor government’s niggardly policy in promoting private enterprise’s efforts to tap the export market.

Perhaps a look at the 2008 Review of Export Policies and Programs by David Mortimer might help the new minister. Mortimer found that for every dollar of EMDG provided to exporters, it generated between $13.50 and $27 revenue for Australia.

In addition, earlier reports found that for every dollar of grant provided to exporters, 40 cents returns to the government in taxes.

At a time when every competent economic commentator is pointing out that the best and quickest way out of the GFC is through increasing international trade, where Australia is arguably overly reliant on the export of minerals to China, where the EMDG encourages a diversified trade in goods, services and IP all around the world and the EMDG generates between 13 and 27 times the revenue for every dollar spent and the government in any event gets back 40 percent of the grant anyway, why has the Labor government reduced the total EMDG in its budget to $150 million and refused to increase it for the foreseeable future?

This compares unfavourably to the coalition’s promise to increase the total of $200 million, which in my view is also too low.

For the difference of $50 million, we can expect between $675 million and $1.3 billion less revenue to Australia.

The government promotes the EMDG scheme as providing up to $200,000 in EMDG to exporters. Good press, sounds good but it’s not true: last year exporters were guaranteed only $50,000 and this year only $27,500.

Exporters at a time of increasing value of the Aussie dollar are finding it hard enough. To compete they need to increase marketing, and yet the very scheme designed to promote exports is hamstrung.

It’s time to uncapped the EMDG scheme and really help exporters. Are any of the independents listening?

The changes proposed aim to extend the life of the EMDG scheme and better balance the cost of the scheme to its budget as well as ensuring that those exporters most deserving of grants receive the greatest level of support possible within the budget available for the scheme.

The changes are as follows:

1. Extending the EMDG scheme so that it applies to all grant years from 2011-12 to 2015-16 inclusive;
2. Reducing the maximum grant from $200,000 to $150,000;
3. Reducing the maximum number of grants available for an individual recipient from eight to seven;
4. Capping intellectual property registration expenses at $50,000 per application;
5. Increasing the minimum expenses threshold from $10,000 to $20,000;
6. Increasing the income limit for members of approved joint ventures/consortia from $30 million to $50 million;
7. Removing approved trading houses as an eligible special approval applicant category;
8. Reinstating disqualifying conviction provisions in the Act that were unintentionally removed when Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 rules replaced earlier disqualifying conviction provisions;
9. Enabling Austrade to impose conditions on the accreditation of EMDG consultants; and
10. Amending the ‘form and manner’ requirements and claim lodgement deadlines for applications submitted by accredited EMDG consultants (enabling Austrade, for example, to accept later lodgment of claims from accredited consultants).

“These proposed changes are fine as long as they provide certainty that SME exporters can rely on what they are expecting to receive,” remarked Ivan Kaye, CEO of consultancy Business Strategies International.

The EMDG scheme has helped businesses generate more than $5 billion worth of exports, employing some 60,000 Australians for the investment of approximately $200 million last year, said Harvey Gartrell, spokesperson for BSI.

Reducing the amount available in the scheme is a blow to exporters, especially smaller businesses, he said. “The Government’s failure to provide additional funding in the budget for this scheme places further unnecessary pressures on export-oriented Australian businesses and hampers their efforts to realise existing and future export opportunities.”

Exporters that have applied under the scheme should not expect to recover the full amount requested, with Gartrell saying it looks like only about 60 percent will be paid back.

“We now call for the government to reconsider the EMDG funding, as it did in 2008/09 and 2009/10, when it provided extra funding to ensure exporters received their expected entitlements,” he said.

At the top end, Murray said the miners will be hit by the super tax, while at the bottom end, the popular Export Marketing Development Grants (EMDG) scheme has been cut by $50 million, with funding for Tradestart halved.

The successful EMDG scheme will fall short this year by an estimated $30 million and the budget cut will mean that it could be $80 million short next year. “This will destroy the confidence of SME exporters who will simply stop spending on developing their overseas markets,” he said.

“While Australia may have escaped the impact of the GFC, that’s not the case for exporters,” he said adding that the Australian dollar’s rise has already affected our competitiveness.

“What the industry wants is a scheme that is fully funded. Lift the funding to $200 million where it was last year, instill certainty and build confidence back into a program that every piece of research supports,” he urged, warning that otherwise, Australian exports will suffer “well into the future”.

Particularly painful was the 50 percent cut to Tradestart, he said. “It beggars belief that a program that costs so little and delivers so much can be slashed with the stroke of a pen. With one in five jobs being export related, the budget should be going up not down.”

Compared with the Rudd government’s first Budget in 2008, this was a disappointment, remarked Murray. “In 2008 the Rudd government spent a considerable amount of money on a review of Export Policy and Programs. Both the Export Market Development Grants scheme and TradeStart received the tick of approval for their continuation. In the budget this week they were slaughtered.”

He added: “At a time when countries like the USA are putting serious money behind an ‘export driven recovery’ the Rudd government is abandoning the countries lifeblood. One should never forget that export delivers 22 percent to GDP. Investment in export would be a far better way towards a black bottom line than slapping on taxes and chopping programs that assist our SMEs.”

More than 5,000 Australian businesses submitted grant applications this year, an increase of 15 percent compared with last year. Claims have also risen 20 percent to more than $269 million.

According to Austrade, final payment outcomes won’t be known until final processing of EMDG applications in June, but it estimates that businesses approved for grants up to $50,000 will receive the full value of their claim.

While these claims represent the success of Australia’s export sector, large grant claims are not likely to be fully covered, however. Said Crean: “We are now faced with a shortfall in funds to cover claims above $50,000.”

Last May, the Federal Budget aimed to restore EMDG coffers by providing $50 million in additional funding for the scheme in 2008/09 and a further $50 million in 2009/10.

For more on the EMDG scheme, visit www.austrade.gov.au/exportgrants

The coming year will be another interesting one: the global economic situation looks on the mend, it will be an election year in Australia and in the UK and, export-wise, forecasters predict sectors like mining, building and construction, and possibly agriculture should be strong. While there is always a flow on effect, these sectors are largely driven by ‘big end of town’ exporters, so what of SMEs?

Here’s where the Government can assist. While nobody is after handouts, there are things that can be done to assist both the experienced and inexperienced exporter in the year ahead.

The issue of research was most recently discussed at the Trade2020 forum on trade finance. There’s a lot we don’t understand about export dynamics, exporters’ business behaviour, and factors that make exporting successful or unsuccessful. There is lot, too, that could be done in understanding the markets better, including mapping markets to assess where investment is likely to present the greatest opportunity and return.

It is encouraging to see EFIC continue their annual Global Readiness index (GRi). The study, undertaken in March, looks deeply at the current drivers, decision-making processes, risks and barriers that Australian exporters and offshore investors face regularly. I encourage exporters to participate, as the results help in the development of programs that assist SME exporters. It would be good to see the Government put more money into GRi, and into doing well thought-out research to be shared with various service providers to benefit the whole industry.

My next wish won’t surprise anyone: having sufficient funds for the Export Market Development Grants scheme, one that will provide the Government with the best ‘bang for buck’. Most support the views expressed in David Mortimer’s report of Export Policies and Programs in relation to the cap and the need to instill confidence in those reliant on the scheme to build their export business. However, there’s no point using the scheme to fund one-off export ‘adventures’. While issues like reducing the threshold and length of time from eight to five years may be justifiable, it may be better to set the scheme at a maximum of $1 million per company and use other mechanisms to keep expenditure within the cap. TradeStart may well be a better vehicle for looking after the smaller guys.

And so to TradeStart. My wish is to see it continue, backed by Government for another four years. Data in the Mortimer report showing an ROI up to 23:1, as well as recent Austrade research supports its financial viability, though there are some things that could be done in line with its evolution, the first relating to ‘hurt money’: anyone in a program has to demonstrate their commitment by spending some money.

Beyond will, money, and product or service, a successful exporter undertakes the dynamics of the market by experiencing it. Stats show 75 percent of first export sales come from those that have been on a trade mission, or been into the market. This should be a condition of participation in the TradeStart program, along with undertaking export education, given export requires a special range of skills and knowledge beyond domestic business.

Finally, also the Mortimer Review, Commonwealth and State Governments need to work together to provide dollar-for-dollar assistance programs for TradeStart participants for things like the completion of export education, participation in missions, and the preparation of an effective export business plan.

Lastly, I wish for the broadening of the export skills of Australian business. Mortimer recommends: “Extend the tertiary focus of export education program to encourage a new generation of international business leaders.” Evidence collected here and internationally supports the link between developing export skills and having a profitable, sustainable export business. The more invested in developing the skills base, the better the result. The programs are there; all that’s required is to engage more companies. Done well, the above will form a pathway to export with a focus on ‘backing winners’, giving Government the opportunity to maximise its return for every dollar invested.

We encourage the Government to be courageous in addressing the needs of the export community, but only where there is fair investment at both ends. Nobody is looking for a free ride; if they are, they won’t make good exporters.

Australian exporters that spend at least $10,000 for eligible export expenses in 2008/09 have until November 30 to apply for an EMDG.

“The scheme is designed to encourage new and existing exporters to increase their international marketing.  This has a direct effect on their income,” said Ian Chesterfield, Austrade’s general manager for Business Policy & Programs. “For example, EMDG gives exporters the means to attend trade shows in new markets, develop intellectual property, and ultimately engage new staff.”

Past recipients have come from across Australia, representing a variety of industries. Chesterfield said they report that the EMDG “has been instrumental in allowing them to identify and secure customers in markets that helped grow sales”.

For information on the EMDG scheme, and for eligibility requirements, see Austrade’s EMDG site.