How Australia’s small businesses are going further offshore

It is no secret that Australia is a nation of small and medium-sized enterprises (SMEs). The business landscape is changing for the benefit of SMEs, from policy recommendations that improve cashflow for SMEs, to free-trade agreements for the benefit of bilateral trade on all scales.

SMEs are aware of these opportunities and have a sunny outlook when it comes to business growth and cross-border trade. Nine in 10 SMEs are confident that their imports or exports will either stay the same or increase, according to FedEx commissioned research in 2018. Half of the respondents stated that trade accounts for over half of their businesses’ annual turnover.

While cross-border trade has a strong positive impact to business revenue, there is clear opportunity for SMEs to increase their export potential, with 91 per cent of businesses’ importing goods, while only 75 per cent are currently exporting goods.

Diversification opening new opportunities for SME trade

Australian SMEs remain optimistic about their business outlook. About five in six (84 per cent) SMEs surveyed believe that their business will grow significantly. So where is this optimism stemming from?

One compelling answer is that Australian SME export markets are highly diversified, providing multiple trade routes. While the current top three markets are New Zealand (34 per cent), China (28 per cent) and the United States (24 per cent), Australian SMEs are looking at new markets such as India and Germany (15 per cent respectively) and markets within North Asia and South East Asia, such as Singapore (18 per cent) and South Korea (17 per cent).

Recognising the opportunities available in different and new markets, and adjusting export levels to suit demand internationally ensures that SMEs are consistently maintaining a strong and stable revenue stream.

Brand Australia remains key

Australian products remain in high demand overseas, with almost half (49 per cent) of respondents citing the perception of quality as one of the key reasons. Interestingly, 93 per cent of respondents believe that Brand Australia matters for the economic success of our country. This conviction in Brand Australia is encouraging. Each interaction with an Australian experience or product will continue to create affinity for Australian goods with international markets.

Industry 4.0 for SMEs

Technology has made international trade easier and businesses are aware of this. Three in four (76 per cent) Australian SMEs have adopted new technologies in the last two years, and half (48 per cent) are expected to increase usage, with the belief that it will reduce costs (41 per cent), speed up distribution (38 per cent) and give access to new markets (35 per cent).

Not surprisingly, mobile payments (42 per cent) is the most widely adopted technology by SMEs, while over a quarter (28 per cent) use automation and another 22 per cent use big data and analytics. As SMEs continue to see the benefits technology can bring, there is no doubt adoption will continue to increase.

Where certain technology might be too onerous for an SME to tackle, partners and suppliers can step in and deliver. For instance, blockchain is being investigated by the logistics trade to further assist in traceability and other potential efficiencies, which will benefit all cross-border businesses, small and large.

Old challenges and new

Technology has helped SMEs overcome a number of barriers in doing business internationally, but important challenges remain. 60 per cent of Australian SMEs worry over regulatory and compliance matters, followed by time resources and cash flow (60 per cent) and understanding international trade documents (59 per cent).

Completely seamless and borderless international trade for SMEs remains some way off, but Australian SMEs clearly have the appetite and, increasingly, the tools to take on the world.

Kim Garner, Managing Director – International Operations, FedEx Express

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