Trade is a key driver of jobs, innovation and long-term prosperity for Australia. Increasing trade and investment is absolutely crucial to unlocking Australia’s future economic growth.
As of 2013 there were approximately 45,000 exporters that exported $318.5 billion worth of goods and services.
However, just 1% of exporters accounted for over 90% of all goods exported from Australia – which is much more concentrated than the international average, where the top 1% of exporters account for just 53% of goods exports.
If we drill down even further, the actual number of companies that are regular exporters is even smaller.
Currently only a small number of large companies are responsible for the majority of the volume of trade in goods, so SME sized exporters and their export success are of increasing importance to Australia’s future economic growth prospects.
Australia is not alone in this challenge, the 2015 European SME Exporting Insights Study, found that SMEs that export within Europe and beyond are the most dynamic contributors to the SME economy.
However, the European Commission’s SME Performance Review points out that growth in the SME sector overall had slowed since 2011; mainly a reflection of weak domestic demand compared to strong export demand – however it remains the case that the majority of SMEs do not export.
The report also highlighted that exporting SMEs grow faster because the main contributor to EU growth since 2008 has been foreign demand. ‘In an increasingly internationalised world, there are competitive advantages for those businesses that begin with a global strategy and can move quickly to take advantage of cross-border activities,’ says the European Commission.
Australian firms enjoy more overseas opportunities than ever before. This is in the context of international demand for what this country produces and a growing array of liberalising trade agreements, particularly in Asia, our largest trading partners. The challenge for Australia is to capitalise on these opportunities.
The trade development challenge is to provide the support businesses need to take advantage of these opportunities abroad.
Why is it so important?
Increasing Australia’s level of trade will ultimately play an important role in improving productivity and fostering sustainable economic growth.
In doing so, Australia will not only be creating the opportunities that support future economic growth, but will expanding Australia's business connections in the region.
The challenge for Australia is to capitalise on our trade potential and continue to broaden Australia’s export base. The opportunities for growing our services exports sector, is just one such example.
To meet this challenge, we need to encourage more export capable companies to actively pursue international opportunities and to do this we need to offer accessible and affordable support to help them take advantage of these opportunities.
I do often wonder what is potentially holding back driving SME export growth in Australia?
Could it be a general lack of awareness of the opportunities? That domestic opportunities have in the past provided a level of comfort for Australian companies so that they do not need to look at expanding overseas? Maybe it is a general adversity to international risk and the perceptions of potential export barriers?
Whatever it is that is holding back SME’s from taking advantage of the new market opportunities that are opening up, there is support available and the ECA is just one of many organisations that provide support to guide companies through their international business journey.