Do your homework before chasing export sales

Image: businessadvice.co.uk

Recent figures show that more Australian businesses are exporting, assisted by the lower dollar. However, there’s a lot to consider before considering any new market, as Christelle Damiens, founder of Exportia, told Brent Balinski.

After the horror period earlier this decade and a peak of around $US 1.10 in 2011, the Australian dollar has come down much closer to its historical average.

The AUD’s depreciation has been cited during the current run of positive PMI results – 12 straight months of growth, according to the Australian Industry Group’s research – and in recent export figures from the Australian Bureau of Statistics.

According to Austrade’s reading of the 2014 – 2015 ABS stats, 4,000 new companies joined the ranks of our exporters, bringing this over 51,000, and nearly 300 new manufacturers started exporting (total 9,306).

The potential for manufacturers to play a bigger role in international supply chains has been highlighted ad nauseum by various politicians and industry bodies, and – as the figures above show – there’s been a greater attempt made to reach export markets.

However, there’s a long list of things to examine before tackling an overseas market, as anybody who’s done it can tell you.

European-focussed (with particular expertise in France and Germany) SME consultancy Exportia assists advanced manufacturing, ICT, clean technology and other firms in the task.

Founder and managing director Christelle Damiens believes there’s a host of issues to research, including how well established a firm is in Australia (and if it actually needs to export to expand), what enquiries have come from overseas, what resources are available to get there and serve the market, and if the company’s IP is protected in the market.

Exportia has developed a “seven pillar” approach over the years to the problem, including things such as the country, marketing, channels, customers and forecast. After that, a six- to 12-month strategy is established, then validated.

“We talk to roughly five potential customers – so if you’re in the tyre industry or want to target the tyre industry, we talk to very large European multinationals and ask ‘are you interested in that technology?’” she told Manufacturers’ Monthly.

“Then [they] give the feedback: ‘Which country is most likely to take on your product? Are the distributors really interested to sell your project? Are potential leads going to be hot or not? Are you going to get some leads? Rapidly or not?’”

A lot of excitement on reaching a Chinese, southeast Asian or Indian market has been displayed in recent years. All the same, trade with both France and Germany – both developed, affluent markets, with populations of 64 million and 81 million respectively – is substantial.

One of the consultancy’s success stories in Europe in recent years is vehicle power solutions specialist Redarc. The SA business engaged Exportia for tasks including in-depth market research, identifying the right market (France was a better fit than Germany, for various reasons). identifying suitable distributors, lead generation, eventually striking an agreement with a major distributor, and launch.

Another area where assistance is often needed is in securing export grants.

The French market is one with good potential for manufacturers, believes Damiens, in sectors including water management and defence.

“There are large opportunities around defence, given the submarine contract, which has been allocated to a French company, DCNS,” she said.

“So that’s a very big focus for Australia at the moment. And that’s a way for an Australian exporter to be able to have some exports.”

The exact opportunities have yet to be properly defined, given the recentness of the announcement, she added.

“It’s just my [personal] interpretation… What I see as potential opportunities for Australian companies obviously are around 3D, around virtual reality, there’s a lot of electronics, a lot of different opportunities that are going to emerge with that contract,” said Damiens.

Overall, though the Australian has lowered, the Euro is also down recently, perhaps counterbalancing whatever benefits might’ve been enjoyed in Europe by Aussie exporters, she added.

However, successful Australian high-end manufacturers – as others have pointed out – are generally not competing based on price. Currency fluctuations aren’t as big a deal for these as they are for others.

“You don’t want to be too price-sensitive – you want to have a positioning that doesn’t make you too dependent on pricing,” offered Damiens.

“Otherwise you’re competing with cheap products. That’s not what you want to do.”