TODAY, there are 171 cities in China with a population larger than a million; Greater Shanghai alone has more people than Australia. Dubai, in the United Arab Emirates, boasts a higher per capita GDP than traditional trading partners Britain, France and the United States. Closer to home, Indonesia’s populace of 240 million people has grown by nearly 30% in the last decade.
Given these numbers, it is clear that the opportunities lying on Australia’s doorstep are fabulously rich for Australian companies. But it’s also clear that attempting to grasp those opportunities without the right preparation, understanding or groundwork can be mere wishful thinking for a business – especially in uncertain economic times like these.
When local racking and storage systems manufacturer, Dexion, realised in the mid-2000s that the next stage of its growth lay beyond domestic shores, management also realised that the then-current shape of the business was unsuited to the task.
"There were none of the regional synergies that were required to really take full advantage of the things that were coming up," said executive general manager, Mark Barraclough.
"We knew the sorts of things we wanted to do in the region. There was evident demand for the kind of product and category leadership that we were good at, but we had to get the conditions for the business right first. And that was where the hardest decisions had to be made," said CEO, Peter Farmakis.
The hardest decision of all perhaps, was the shareholders’ decision to sell the company to GUD Holdings in September 2010. However the sale, and subsequent injection of cash and capital, allowed Farmakis and his management team to get those ‘conditions’ right.
Dexion had already decided to broaden its manufacturing base, having established additional facilities in Malaysia and China before the sale to GUD. But the restructure and re-alignment meant that these assets could start growing export markets of their own. Proximity to boom economies in Asia and the Middle East meant that projects could be supplied more locally, and at a cost base more in keeping with local expectations while still meeting the quality and service expected of the brand. But this move wasn’t just about cutting costs.
"It was about putting in place a regional, rather than a national configuration. Having lower costs but inconsistent product lines and differing quality standards would have rather defeated the purpose," said Barraclough.
Eighteen months on from the GUD acquisition, and Dexion’s new direction has started to pay dividends. In partnership with category leaders like Vocollect (voice solutions), TGW (automated logistics) and Texo Applications (robotic shuttles), Dexion has secured a string of significant new projects across the region.
The company is servicing: the largest satellite DC in China, with more than 80,000 pallet positions; the largest DC in Indonesia, with over 160, 000 pallet positions; a regional DC in Hong Kong for a major international 3PL; and a leading retailer in the Middle East who requires a major systems project.
It’s also meant that Dexion have been able to track their Australian customers into the region.
"Our relationships with Linfox, Recall and Toll all originated with Australian projects. But as they’ve moved into markets in Asia, we’ve been able to support them, which is very pleasing. Systems integration is our strength. Working closely with our customers and supply partners, we are able to deliver our customers solutions in line with their strategic business plans. We’re hoping to announce some more exciting developments soon," Farmakis said.