When you want to tap into bigger markets overseas how do you set about identifying what the real opportunities are? One of the most effective ways to reconnoitre a potential export destination is to become a member of a delegation or mission, an organised group travelling to a target country specifically for the purpose of prospecting the market, connecting with the business community in their industry and meeting potential clients, distributors or partners. These initiatives can be jointly organised between the governments of Australia and another country (such as the Australian Pavilion at the China International SME Fair held 15-18 September this year), hosted by industry associations (such as the Australia China Business Council delegation to the World Expo in Shanghai, 1 May 31 October), conducted by a professional organisation with experience in leading delegations (the Think Global Consulting financial services delegation to Brazil in May) or organised by like-minded business people who can effectively access official endorsement for their group. All of these modes of approach rely on hooking into existing networks. Think Global Consulting’s CEO David Thomas says, "Generally with delegations you can get access to people and organisations that you wouldn’t get access to on your own." Plus, he points out, going overseas in a group keeps the unit price down, as costs incurred can be spread across the number of participants.
Where to start
Start with your state government which will provide information and support through its own resources as well linking you up with Federal Government organisations such as Austrade, the Department of Foreign Affairs and Trade, the Export Finance Insurance Corporation, the Australian Institute of Export as well as chambers of commerce. At the regional level you will be able to access resources that enable you to ensure you and your business are positioned to venture into overseas markets. Trade and Investment Queensland, for example, has a network of regional export advisors who work with Austrade under the TradeStart contract, "and who work one-on-one with companies to help them get export ready, select appropriate markets and find overseas business partners", says Tim de Jersey of Trade and Investment, Queensland. TIQ runs an export education program, Getting Export Smart, specifically designed for SMEs. The four workshops cover preparation and choosing the right partners; marketing; pricing, freight, packaging and payment; and e-business. The AIEx also runs a program of export training courses. Once you have identified the market you are interested in, look for events like trade shows in that country. "It helps to have an event like a trade show to build the mission around. That attracts the kind of people the delegation members need to connect with," says Thomas. "The event provides one reason to be there and then you can build other things around it." If an Australian presence has been planned at the event, state government bodies such as TIQ can ensure your business has a place in the pavilion and provide introductions and government contacts in the overseas market.
Finance: The level of assistance available from state governments varies. De Jersey cites Queensland’s funding under the government’s Business and Industry Transformation Incentives (BITI) program which helps develop businesses with growth potential. The cost of participating in a mission may meet the criteria of the Federal Export Market Development Grant, which provides 50 per cent reimbursement to qualifying businesses whose expenditure exceeds the threshold. AusIndustry also delivers innovation grants, tax and duty concession and venture capital products through $2 billion worth of assistance annually, and EFIC provides finance and insurance solutions to exporters, including additional funding unavailable from the business’ own financial institution. Information: Austrade State Manager, New South Wales and ACT, David Howard, a former New York-based senior trade commissioner, says information is the most valuable resource for would-be exporters. "Missions aren’t magic. Whatever you do has to be within a viable context of your own business. If you are going to go on a mission, why would you choose a particular market, and I think part of the answer to that is you have to research." Howard says Austrade has compiled a great deal of information into guides to different industries in different parts of the world and available on the website. "Beyond that we also have export advisors and a helpline where people can dial in. Any of the work we do in Australia or when you go offshore, if you want a basic market briefing or introduction to the market, there’s no real charge because it’s general information. The next step is if you want to commission something that is quite specific, such as the pricing survey, we have a flat rate of AUD190 an hour throughout the world." Austrade also has alliances and a corporate partnerships program working with consultants, accountancy firms and lawyers. "On the second tier we have a referral database that also covers freight and logistics providers. We’re always working with others to plug people into the right expertise," Howard says. "One of the major advantages that Austrade provides is its offshore network of people with an Australian commercial view of what’s happening in that market and they also have a good understanding of the business culture." He says understanding of foreign business culture is critical. "It plays back to researching the market, how do distribution and orders work in that market?"
"Partners give you credibility, they get you access and hopefully attract delegates to your mission," Thomas says. "An official looking mission is one with the support of at least two agencies of both country’s governments." He says there are two types of partners an effective delegation needs. "One is a supporting organisation, an association or some sort of government body that gives you credibility and opens doors because you can tap into its members, and the other is an overseas partner who can do things for you on the ground and get you access to key contacts." Again, approaching your state government is a good place to start. De Jersey says TIQ manages a network of trade representation in 15 global locations that provide Queensland companies with support including introductions to government and private sector contacts and assistance with identifying potential partners and customers. Chambers of Commerce can make introductions through their own international links and also issue ATA Carnets, which allow trade show participants to import items into a foreign country for demonstration, and then export them again without paying import duties. Nathan Backhouse, Manager of Trade Policy and Internal Affairs, Australian Chamber of Commerce and Industry, says "You want to get as much bang for your buck as possible and that means involving high-calibre sponsors from corporates, or a minister." He suggests accessing these through industry contacts, existing structures such as industry associations or business councils, or approaching a governmental organisation. "The other thing is to work out the right time to go, when you can gain access to key figures and support."
Both Backhouse and Thomas believe the most successful missions focus on a single industry sector, allowing them to be very focused or targeted. "For people who are on a fact finding or research mission, helping them define their goals is important," Thomas says. Even in this context the members of the group will have different agendas. "Success will potentially be different for each organisation. Someone who is conducting an initial reconnaissance may be seeking to develop contacts who can be followed up to flesh out a view of market potential-Austrade business development managers, officials of local trade and industry associations and so on. Another mission participant may have already confirmed market potential and be seeking distribution, perhaps aiming to meet and inspire interest in, say, three or four potential agents or distributors," Howard says. "Many will be seeking to secure an initial order, and in many markets this may be a challenge for an initial foray. In any case it is a good idea to check that your ambitions seem reasonable in each specific market context, and this can be done in discussion with local Austrade representatives before you leave Australia." Backhouse says that intending exporters should investigate the "pull factor" by finding out if there are mandated overseas trade opportunities. "The embassy network in Canberra has a direct line to foreign governments who have lists of what industry sectors they have identified as priority areas for development."
Work your contacts
Howard says, "By far the biggest failing of Australians-and I can only speak from experience-is lack of follow-up." He stresses the importance of keeping lines of communication open once the delegates return home. "Let’s assume that people have had a successful mission, they’ve met their expectations, they’re on a path to getting distributor. You can’t be too casual. Do the mission well, do everything well, do your homework and do the follow-up."
AusIndustry Export Hub: www.exporthub.gov.au Austrade: www.austrade.gov.au. Australian Chamber of Commerce: www.acci.asn.au. Australian Institute of Export: www.aiex.com.au. Department of Foreign Affairs and Trade: www.dfat.gov.au. Export Finance & Insurance Corporation: www.efic.gov.au
Case study: Asian Financial Forum
David Thomas, CEO Think Global Consulting, Sydney, with 20 years’ experience in Asian business, led a delegation of 15 financial services providers to the 2010 Asian Financial Forum held in Hong Kong from 20-21 January this year. The forum, in its third year, attracted 1,500 visitors from the Asia Pacific region and included a half-day deal-making session called DealSource, with one-on-one meetings organised between each participating company and other potential collaborators, based on shared areas of interest. International Monetary Fund Managing Director Dominique Strauss-Kahn, New York University Professor of Economics and International Business, Stern School of Business Nouriel Roubini, who predicted the GFC, and the Honourable Donald Tsang, Chief Executive of Hong Kong SAR, were among the high-profile speakers. Topics discussed covered China’s domestic market and its implications for the global economy, global investment opportunities, regional infrastructure issues and energy and natural resources. The Australian group included businesses with existing clients in Hong Kong, those eager to set up an offshore operation, fund managers seeking overseas partners and an asset management company looking for new clients. All but one business fulfilled their objectives for participating in the mission, and the exception was a company with a technology-based product, Thomas says. All the others want to return in 2011. The benefits they derived were:
- Making connections
- Networking with industry leaders
- Access to expert speakers
- The ability to research the local market and opportunities
- One on one meetings and introductions
- Representing the Australian financial services industry.