Diversity in exports

Diversity in exports article image

As often happens when a successful outcome is achieved, many flock to take credit. When Australia came through the global financial crisis without falling into a recession, the Government claimed the stimulus package was the catalyst, the Opposition said it was the very positive surplus they left behind, while others simply said it was avoided because we have minerals and China maintained its strong demand. If you look at the other side of the coin and ask why other countries fell into recession, you can probably argue that one primary reason was that many developed economies were reliant on a small portfolio of exports, in particular a rapidly growing services sector. From many years in marketing, I learned one thing at a very early age: that the ‘Boston Matrix’ does exist and that at any given point in time you are likely to have star performers-high performing brands-‘cash cows’ and sadly, in the other corner, ‘dogs’. You can also bet that stars can turn into cash cows and dogs but few dogs ever become star performers. The theory is that having a varied portfolio and a diversified user base are both critical success factors in marketing; the same can be said for export. Diversification not only of Australia’s product base, but also the markets we sell to, was a factor in helping us avoid recession and will remain critical to the growth and protection of our export performance. In 2008, Australia’s two-way trade totalled $561 billion, up from $456 billion in 2007. Our top trading partners were Japan, China, the United States and Singapore. About 70 percent of Australia’s trade was with member economies of the Asia-Pacific Economic Cooperation (APEC) Forum. In terms of exports, resources accounted for 43.4 percent (or $120 billion in sales), services 19.1 percent, manufactures 17 percent, rural 10.1 percent and all others, including gold, just over five percent. While there is a sound breakup within the sectors, it can be argued that our reliance on coal and iron ore (about 64 percent of total resources) is too high and that in services, we rely too heavily on education and tourism, at 28 percent and about 22 percent of services respectively. Although APEC countries are collectively dominant, this group represents a diverse range of export markets and an area of the world where the greatest growth is occurring. In 2008, Japan accounted for 19 percent of exports, China 13 percent, Korea seven percent, the USA 6.6 percent, and India just under six percent. The star performers are China and India, while Korea, New Zealand and Japan remain solid foundations for business. Opportunity too exists in the growth economies of the Association of the South East Asian Nations (ASEAN), where we recently entered into a free trade agreement. ASEAN in 2008 accounted for 11.7 percent of exports, 50 percent of which went to Singapore and Thailand. It goes without saying that resources will continue to grow and dominate our export performance. China and India will, I suspect, remain our key growth markets, while rural exports to Japan and Korea in particular should provide good profitable growth. But those factors alone may not be enough to protect us from the next inevitable economic downturn. If we are to learn anything, even from recent history, diversity in product and services and in having a wide range of export destinations are critical factors in not only protecting our export business, but the economy. To create the environment for business to respond and develop that diversity, the government must continue to play a strong role in trade policy and programs. Minister for Trade Simon Crean is a strong advocate of the World Trade Organisation and of bilateral trade agreements. He is also committed to pushing growth sectors like services and investment, and to having a highly effective trade facilitation agency and a competitive range of programs for new and existing exporters. We who operate in the sector must continue to promote the importance of export to our economic wellbeing. We encourage you wherever possible to make sure you local Member is familiar with the facts, and that trade, and in particular export, remains high on the agenda of government at all levels. We may not be able to say that it was export alone that kept us from recession, but we can say that having a strong diverse export base played a key role, and that strengthening that diversity is critical to our future.


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