Many Australian compa nies have emerged from the global financial crisis with strong balance sheets and banking relationships intact, according to the Export Finance and Insurance Corporation’s (EFIC) Global Readiness Index (GRi) survey.
Now in its third year, the 2010 EFIC GRi examines Australian companies’ overseas expansion plans and seeks to discover how the global economic downturn has affected these plans. Of the 936 Australian businesses sur veyed in March for the 2010 GRi – which was 30% up on 2009 – 37% or 343 companies were from the manufacturing sector, with services (20%) and wholesale (14%) making up the second and third most represented areas.
According to the survey, global growth plans have held-up remarkably well in the face of difficult financial conditions over the past year. GRi authors claim that much has changed in the world since last year’s survey.
“Back then, businesses every where were battling a meltdown in asset values coupled with a deep freeze in credit markets and a ‘Great Recession’ that threatened to rival the 1930s,” they said.
Australian consumer products manufacturer, Superior Jetties, is one such company that plans to expand its export focus over the coming year. According to the company’s managing director, John Hogan, China will be among the countries that the company will expand in to this year.
“China is a new market for us and one we’ve studied for quite some time. Hogan told Manufacturers’ Monthly .
“There will be a lot of export growth for us in the coming year and we will definitely be focussed on China.”
The 2010 GRi suggests that a high dollar and distracted competitors may present a moment of opportunity for global expansion for Australian companies, however risks remain.
Seventy-eight per cent of sur veyed companies with an existing offshore presence are planning further expansion, with another 44% in the next year planning to expand, according to the report. Of respondents with out offshore operations, 26% are planning an initial global step, with 8% in the next year.
“One clear message from the GRi survey is that global expan sion plans are founded on access to markets and better serving the customer,” the report authors said. In this vein, Australian exporters are looking towards North America (30%), South East Asia (30%), New Zealand and Pacific (28%), China (27%) and Europe (26%).
In five years, all except New Zealand and the Pacific are expected to grow, with Europe moving to the top of the scale despite current difficulties. Investment in South Asia is expected to increase from 11% to 19%, reflecting the growing importance of India.
Superior Jetties remained afloat throughout the financial downturn with up to 30% of its business made-up of export to the Middle East and Korea. The company has typically focussed on export markets under govern ments that have handed out stimulus packages to kick-start the economy.
“We have been focused on the Korean market for about three years since they started doing regular boat shows there; they have government subsidies there too,” Hogan said.
Cultural challenges, access to local market IP and exchange rates are common factors affecting the choice of expansion markets, the GRi reported.