Australian exporters remain optimistic about the future, despite a sluggish world economy and a stubbornly high dollar, a major industry survey has found.
Australia’s International Business Survey 2014 (AIBS) commissioned by the Export Council of Australia, surveyed more than 1600 Australian businesses over a three-month period.
Minister for Trade and Investment Andrew Robb described the survey as “the most significant snapshot of Australian exporters in over a decade.”
Of those surveyed, 74 per cent indicated they are planning to expand into two or more markets over the next two years – a positive sign for future growth.
And as part of those expansion plans, companies are planning to target a broad range of countries.
Overall, participants nominated 81 countries as important future markets. China and the US remain at the top of the list.
The top 10 export markets comprise the US, China, New Zealand, the United Kingdom, Japan, Singapore, Indonesia, Malaysia, India and PNG.
Not surprisingly, the majority of respondents (60 percent) said Australia’s international reputation helped them to do business overseas. Only six per cent of respondents say it is a hindrance.
The processed food and beverage and agriculture industries are the most positive about Australia’s reputation internationally.
Singapore the ‘easiest’ market
The ease of doing business in overseas markets remains an important consideration for Australian exporters.
Among the top 10 most important countries chosen by respondents, Singapore is considered the easiest market, with 41 per cent finding it easier or much easier to operate in than Australia.
At the other end of the spectrum, India is the most difficult operating environment in the top 10, with 81 per cent indicating that doing business in India is more difficult or much more difficult than in Australia.
And 64 percent said doing business in the United States was the same as or easier than in Australia. New Zealand and the UK were also relatively easy to operate in.
However, 73 per cent said doing business in China is harder than in Australia.
The AIBS 2014 results also confirm that Australia’s international business engagement extends well beyond the export of goods.
Nearly half of respondents (46 per cent) receive at least some of their international revenues from the sale of services. Fourteen per cent of them benefit from sales of intellectual property (IP).
Respondents say lack of information remains a serious impediment for doing business overseas.
Local culture, business practices, language, consumer requirements, local regulations and tariffs are the most prominent challenges of doing business in the most difficult overseas markets.
Financial barriers are also an impediment, with more than 33 per cent of respondents needing financial support to conduct and expand their international business.
Nearly half (43 per cent) struggle to obtain equity financing and 33 per cent debt financing. SMEs (small to medium exporters) are having the greatest difficulty in obtaining finance.
Of those companies that participated in the survey, more than 90 percent have been operating for three years or more, and 44 per cent have been operating for more than 20 years.
Almost 85 per cent of survey respondents have been earning overseas revenues for three years or more and 44 per cent have been doing so for more than 10 years.
They come from a broad range of industries, with broad-based manufacturers making up the largest group (21 per cent). The education and training industry (nine per cent) comprise the second largest group followed by processed food (eight percent) and professional services and management consultants (seven percent).
The survey, conducted by the University of Sydney between October 22 and December 16 last year, with the support of the Export Finance and Insurance Corporation and Austrade, is available at: www.austrade.gov.au/AIBS2014
AIBS 2014 – Key Highlights
- 74% plan of 1,618 exporters surveyed plan to expand to two or more markets in the next two years
- China is the key target market for Australian businesses over the next two years
- Australian exporters named the US, China, New Zealand, the UK and Japan as their top current export markets
- China and India were identified by exporters as their toughest markets, but were also priority markets for export expansion
- Domestic challenges identified were the strong dollar, transport costs, access to finance, regulatory compliance burden and productivity issues
Top 10 current markets
- US 14%
- China 10%
- New Zealand 9%
- United Kingdom 7%
- Japan 5%
- Singapore 5%
- Indonesia 4%
- Malaysia 3%
- India 3%
- Papua New Guinea 3%
Top 10 future markets
- China 19%
- US 15%
- India 6%
- United Kingdom 5%
- Indonesia 5%
- Japan 4%
- South Korea 3%
- Malaysia 3%
- New Zealand 3%
- Germany 3%
Top 5 barriers to doing business
- Lack of information about local culture, business practices and language
- Lack of information on local regulation
- Problems in obtaining customer payment
- Tariffs, quotas and import duties
- Licenses, permits and product standards