Online businesses in Australia have a strong appetite for international growth but are falling behind businesses in Asia Pacific and Europe. This was revealed in a new research published by payments infrastructure company Stripe.
It also showed that these businesses are increasingly spending more on regulatory and compliance issues, likely impacting their expansion plans.
The report, conducted independently by global research firm VIGA across 15 markets and 10 industries, surveyed more than 9,000 founders and senior executives and found that online businesses today are “global natives” expanding into international markets faster than ever; often, within the first year of their existence.
Australian businesses lag behind many of their counterparts in Asia Pacific and Europe, with 66 per cent of online businesses selling internationally. By contrast, businesses in Hong Kong and Singapore are leading in their expansion efforts, with 88 per cent of online businesses in both of those markets selling internationally. The EU is also outpacing Australia, with a majority of online businesses in France (84 per cent), Italy (78 per cent), Spain (77 per cent) and the Netherlands (76 per cent) selling to more than just their home countries.
Globalisation crucial to the success of Australian businesses
Research showed a demonstrable desire among Australian businesses to grow internationallyㄧ71 per cent of these “global natives” in Australia plan to further expand their international presence in the coming years, with 38 per cent planning to do so dramatically. Australian businesses themselves cited an influx of new ideas and products (58 per cent), better long-term prospects (46 per cent), and access to a wider talent pool (45 per cent) as key reasons for expansion.
Significantly, Australian businesses that expand internationally typically expand fast, with two-thirds of those businesses (67 per cent) entering new markets within the first year of their existence. The report surmised that it may have something to do with the correlation between the speed of a business internationalising and its economic success.
Regulatory hurdles are driving up costs for “global natives”
More than a third of Australian businesses surveyed (39 per cent) also say that it is harder to operate in multiple countries now, compared to five years ago. These businesses identified government tariffs (49 per cent), taxes (48 per cent), regulatory barriers (44 per cent), and high business expenses (44 per cent) as the top barriers to operating internationally today.
Dealing with compliance and regulatory complexity in different markets is driving up operating costs for businesses selling overseas. More than a quarter (28 per cent) of Australian online businesses selling internationally spend an estimated AUD$68K-$139K per year on compliance and complex regulatory issues, while a further 29 per cent spend $139K-$689K. Crucially, nearly half (47 per cent) say this amount has been increasing. They are also spending an increasing amount of time on these issuesㄧ46 per cent say that the time spent annually on regulatory and compliance issues has increased in recent years.
Technology a key lever for internationalisation
Technology has emerged as a key lever for globalisation. More than half (53 per cent) of Australian businesses selling internationally today noted that internet and technology services like Stripe and others have removed barriers to going global.
In fact, Australian businesses that find it easier to run an international business online today (25 per cent), cite the rise of internet-based technology and tools as the key reason for this (65 per cent), ahead of availability of funding (37 per cent), skilled talent (27 per cent), physical infrastructure (16 per cent) and government support (29 per cent).
