Five key steps to start exporting overseas
Australian small businesses generally like to keep things local, it seems, if we are to judge the state of play from SmartCompany’s recent Smart50 Awards.
The annual rundown of the fastest growing SMEs in the land showed that just 11 of the top 50 export their goods or services overseas.
This lack of international vision is something that start-ups would be unwise to follow. A report out last month by the Boston Consulting Group showed that Australian businesses not in the mining sector could earn a mammoth $126 billion by 2021 if they shifted their focus to the burgeoning Asian export market.
So how can you get started on the exporting trail? Craig Ford, director of flourishing international trade advisory firm My Import Label, says that it can be done relatively rapidly.
“While strategic exporting should only be considered after your business has developed a strong customer following in your home market, provided you have a suitable online store, you can start marketing to, and taking export orders from your first day of business,” he says.
Here are Ford’s five key steps to get your export operation up and running:
1. Check your online eCommerce store has exporting capability
Specifically look for:
- Automated international delivery calculation; and
- Activate/deactivate select countries. We do recommend you activate some countries, and deactivate countries that are known scammer locations, to avoid suspect transactions.
2. Look first at your neighbouring markets
For the Australian eastern seaboard (Queensland down to Tasmania), you should be looking at New Zealand from day one.
New Zealand is closer than Western Australia so parcel delivery will be quick and there should be minimal, if any product adaptations for the market.
So when planning your online store and digital marketing strategies, consider reserving your domain in that country (for New Zealand it’s a .co.nz domain), and consider local online advertising in the market.
Also check your marketing messages; just because Australia/New Zealand are close neighbours it does not mean your advertising will work as well there, so consider local trends.
While it may not be necessary to register a business in that country, it can help facilitate market access by observing local practices for your product market.
3. Assess if your product is ‘born global’, or best launched in your home country
If you have a new product to market and it can be easily purchased and used by consumers across the globe then it is born global, and you should be exporting from day one.
Products that require significant adaptations for new markets are best launched locally. Many technology products are often born global, meaning they are not restricted to your home market and can be equally marketed across the globe.
Some great examples of ‘born global’ products are:
- Technologies for global industries – technologies for the iron ore and coal mining sectors that increase productivity can be marketed worldwide to mine sites in Australia, China, India and the Americas.
- Any iPad or iPhone app – With Apple’s deep penetration across the globe, a unique product for these devices can go global easily from day one.
- Popular car accessories for models that are exported worldwide and rebadged for different markets.
4. Check your country’s export grants and subsidies
In Australia the EMDG (Export Market Development Scheme) has been administered for a number of years to support Australian business to invest in overseas market development.
The scheme has been extremely popular with Australian exporters for a number of years and helps small to medium-sized businesses travel to international trade shows to secure investors and distributor agreements which they might otherwise not be able to do.
5. Start strategic exporting
Pick one to three countries and work through the following criteria:
- Product adaptation – will you need to change the product to suit customer tastes or market demands?
- Standards and certifications – if your product has a mandatory standard, can you easily achieve that required standard in your target export market?
- Market receptiveness – will consumers in that market understand your product, or will you need to spend resources creating demand?
- Transferability of your competitive advantage – if you have a unique raw material, such as an opal (Australia produces 97% of world opals), you know that it will be unique product and you’re market advantage cannot be easily thwarted.
- Local competition – if local market competition is strong, prices are weak, and you face additional costs to deliver the goods to customers there, then you might want to rethink your strategy.
As an added bonus, check if you can claim back import duties paid.
In Australia, exporters of imported products can claim back any import duty paid to import the goods to Australia (although GST cannot be reclaimed).
The duty drawback scheme is administered by Australian Customs and requires an Export Declaration Number (EDN) as evidence of export.
While the minimum claim per application is $100, over the period of a year, small sporadic exports can easily exceed this amount and result in a very welcome return of duty.
Sporadic exporting can be done from day one with an online eCommerce store that is export capable.
Generally, unless you have a 'born global' product you should start selling to and developing your home market first, before strategic exporting.
Strategic exporting is visiting export markets and spending resources to develop the market.