International demand for Australian products present a significant opportunity for Australian SMEs to grow their business through cross-border trade over the next 12 months, according to independent research conducted by FedEx Express.
Half of the 250 Australian SMEs surveyed have cited cross-border activity as accounting for 50 per cent of their annual turnover. The outlook for cross-border trade looks equally optimistic, with nine in 10 SMEs confident that their imports or exports will either stay the same or increase over the next 12 months.
Driving this trend is quality. Australian products remain in high-demand abroad with 49 per cent of respondents citing the perception of quality as one of the predominant reasons, followed by good value for money (38 per cent) and the reputation of Australian-made products (36 per cent). Opportunities remain plentiful, however demand across markets is changing.
When it comes to export, the current top three markets for Australian businesses are New Zealand (34 per cent), China (28 per cent) and the United States (24 per cent). Australian SMEs are looking to increase export to other markets such as India, Germany and Laos.
Kim Garner, Managing Director, International Operations, FedEx Express said, “This demand is likely underpinned by a growing middle class in Southeast Asia. South-east Asian consumers have a perception that Australian goods are inherently better quality, a perception that undoubtedly provides a significant market opportunity for Australian businesses.”
Delivery and logistics as keys to seamless cross-border shipping and trade
Despite the clear opportunities, there are challenges to entry into cross-border trade. The research demonstrates the most prominent challenges preventing Australian SMEs from partaking in cross-border trade are costs (58 per cent) and knowledge (50 per cent). Trade tariffs, market entry costs, and cash flow are the key cost barriers, while complex regulations, compliance and processes, understanding customs requirements and knowledge and expertise are the key knowledge barriers preventing Australian businesses from tapping into new markets.
Challenges within the supply chain are also barriers to engaging in international trade, with business owners citing diverse factors such as understanding complex regulatory, compliance and process matters, internal challenges such as cash flow, time and resources, and reliable logistics solutions.
However, delivery and logistics can provide the support that SMEs need to grow their business successfully in international markets. Reliable delivery services, transparent tracking solutions, and affordable delivery solutions are all critical factors in a successful cross-border trade strategy.
New technologies improving efficiency for SMEs
Most SMEs are generally receptive to introducing new technologies into their business to enable growth. Approximately one in four respondents have used new technologies over the last two years, and half of SMEs expect to increase their usage in the next 12 months. This continued investment and adoption of new technologies is led by the belief that it will reduce costs, speed up distribution, and give access to new markets.
Mobile payments (42 per cent) is the most widely adopted technology by SMEs, while 28 per cent use automation (software) and 22 per cent use big data and advanced analytics to support their business operations.
While there is an understanding of the benefits these technologies will provide, Garner believes there are more opportunities for SMEs to further integrate technology into their businesses, with 41 per cent of those surveyed saying that they expect technology to lead to efficiency gains and reduction of costs, while speeding-up distribution and access to new markets are also key outcomes.
“With these benefits in mind, we are likely to see a greater uptake of new technologies to enhance the cross-border trade process,” Garner said.
