Start-up exporters told to rethink target markets

A new report reveals Australian exporters are increasing their internet usage in a bid to protect their businesses from the high dollar, while experts are encouraging start-ups to rethink their target markets.

The DHL Australian Export Barometer is an annual survey of Australian exporters, asked about their views on the exchange rate, sharemarket, skill shortages and other issues.

This year’s survey, based on the responses of 496 exporters, reveals business confidence has fallen to its lowest level in at least eight years.

Exporter confidence, measured by expected new orders for the coming year, fell below 50% for the first time.

Meanwhile, more than 70% of respondents believe the strength of the Australian dollar is affecting their ability to compete with overseas rivals.

According to the survey, 72% of exporters say the dollar is affecting the prices they charge, while 70% say it’s affecting their sales revenue and 68% say it’s affecting their profits.

However, DHL senior vice president Gary Edstein said exporters are responding to the problem by increasing their internet usage within their business operations.

“Exporters are starting to rethink their business model and they are now looking at how they can use technology more to trade globally,” Edstein said in a statement.

He said exporters are looking at ways of cutting costs, including removing the “middleman” or wholesaler, and providing their product directly to the end consumer.

The survey also found 41% of respondents intend to increase their number of full-time staff over the next year, while 67% expect they will have to increase wages.

Austrade economist Tim Harcourt says while exporters will always have concerns about the Australian dollar, they have accounted for the fact that it could remain high for a long time.

“They’re a resolute little bunch… But they shouldn’t be too shy about asking for help,” he says.

“Accessibility of grants is part of the story – there’s nothing wrong with you, as an entrepreneur, using government resources offshore.”

Harcourt says the survey reveals that exporters with less than five years’ experience are typically more optimistic than those with 20 years’ experience because they’re “born to be global”.

“They may have grown up thinking more global and they’re using online [channels] more than traditional business,” he says.

According to Harcourt, there has also been a marked change in the destination of exports since the survey began in 2003.

“When we started, it was always Europe, [the] UK and a bit of China and India, and it’s now China, India and Brazil, and even Africa is moving up the ranks,” Harcourt says.

Harcourt’s claims back up recent comments made by Jim Cornish, chief executive of car-cleaning franchise Nanotek, which has expanded its mobile franchise into Russia.

According to Cornish, start-ups need to focus on entrepreneurial markets, rather than the United States, particularly in light of the credit crisis in the US.

“The US has always been viewed as the pot of gold rather than the BRIC countries Brazil, Russia, India and China,” Cornish told StartupSmart.