Being an island doesn’t inhibit Tasmania as an export state.
Cameron Bayley finds this is actually one of Tasmania’s biggest export advantages. And its clean, green image is another major attraction.
Tasmanian businesses are used to shipping goods over ‘seas’. As it’s quite common to deal with the mainland states, shipping to international markets is not so foreign to them.
“It’s just a quantum leap to the international market as opposed to another national market,” says George Chambers, deputy general manager of the Export and Market Development Unit in the Tasmanian Department of Economic Development.
Tasmania’s island image sets it apart from the other states, and that’s a big help in export. “Tasmania, as an island state, is clearly identified in certain foreign markets, particularly Japan,” says Chambers. “It’s more difficult for Victoria or New South Wales to convey the image Tasmania can convey. This is a marketing thing. We’re definable because we’re an island.”
“Being an island state allows you to really capitalise on that regional branding,” agrees Tristram Travers, Austrade’s state manager in Tasmania. He believes Tasmania almost has a monopoly on the ‘clean, green’ image. “The world is running out of places that are as environmentally clean as Tasmania.” He also points out that Tasmania is in the unique position of being the only Australian state that is easily identifiable on a map of the country.
Export from the state is healthy, with recent Australian Bureau of Statistics (ABS) figures showing that merchandise trade grew by 9.1 percent up to $7.21 billion for the year to January 2006. While this falls below the national increase of 17.8 percent, Chambers says Tasmania just doesn’t have the resources to compete in the current worldwide boom for minerals and processed mining, especially with the huge output of states like Western Australia.
Processed metals make up the state’s largest exports, with other major exports including ores and concentrates such as zinc and aluminium, and wood and paper products. The state is a large supplier of woodchips, and also the opiate by-products of poppies, which are supplied to the pharmaceutical industry.
Another significant industry, and one in which many small businesses operate, is food and beverage. “We have a very strong food and beverage sector, and that ranges from fresh produce such as cherries and apricots and apples, to processed foods,” Chambers explains, naming wine, mineral and spring waters, and jams and mustards as examples of the state’s processed foods output. The Tasmanian brand is particularly solid in the world of eating and drinking. “We are a recognisable producer of quality, safe and reliable food and beverage products.” Seafood export, particularly abalone, is another big sector, bringing in $64 million according to the recent ABS figures.
Large manufacturers are having great success in export, such as ferry construction company Incat, and manufacturer of underground mining equipment, Caterpillar Elphinstone. Supplying these larger companies provides a niche for many small businesses in the state. “You’ve got a fairly cohesive little network of supply businesses to the likes of Incat,” says Travers. “But they also supply elsewhere, and it’s a great starting base for those businesses to grow the economy of the state.”
Growing Sectors
One area that Chambers would like to see more exporters enter is IT. “The IT sector is a challenge,” he admits. In particular, e-learning and e-health are areas where Tasmania has the capability to prosper. “I think we are well placed to produce content for those two sub-sectors and it is in demand. It is a challenge in that sector because very often there’s a lot of good ideas, but there’s sometimes not a lot of capital. Secondly, there may not be a huge amount of business management expertise. They can be inhibiting factors in the development of the sector. The ideas and innovations are excellent, but the delivery is sometimes more difficult.” Travers agrees, “You’ll have great producers, people will churn out fantastic products, but they don’t get it to market because of the gap in marketing and business skills.”
Addressing problems such as business management and financing provides the basis for two schemes run by the Tasmanian government, through the Department of Economic Development. The Export Market Assistance Scheme provides funding to Tasmanian businesses who may not have high enough marketing expenses to be able to apply for Austrade’s Export Market Development Grants (EMDG). “We provide funding for things like export market research undertaken in the market by a third party, export advertising and promotional items, travel, the cost of air travel and on-ground costs such as hotels, trade exhibitions and promotions,” Chambers explains.
Applications for EMDGs are good, says Travers, with recent figures from Austrade showing the percentage of Tasmanian exporters who do apply for EMDGs is comparable with their counterparts in other states.
The department is also about to conclude a pilot program of the Export Market Acceleration Program. It funds businesses that are already exporting to bring an export manager into the business. “Very often for small enterprises, the owner is not only the managing director and the boss, he is also the exporting marketing manager,” Chambers explains. “When he leaves the state and travels overseas pursuing export markets, very often the resources of the company are left quite thin.”
The Federal government also launched an Export Hub in Launceston mid-2005, which offers the services of both AusIndustry and Austrade’s TradeStart program. Travers also recommends Austrade’s New Export Development Program for businesses new to exporting, or who have only done so sporadically.
The Department of Economic Development continually run workshops for exporters, drawing upon expert resources such as the Australian Institute of Export or KPMG, depending on the scope of the workshop. The Tasmanian Government also works with overseas contacts, to bring overseas buyers over to show off the capabilities of the state.
In terms of where Tasmania exporters are sending their products, “Clearly north Asia as a region is the largest recipient of our exports,” Chambers says. Japan is by far their biggest market, bringing in over $700 million in 2004–05, more than twice Tasmania’s second biggest market, Hong Kong. These two markets are followed by the republic of Korea, the US and China.
Chambers acknowledges that while some project management and architecture firms are exporting, Tasmania is largely a manufacturing state, with few services exported. Travers, however, advises that the services area of export is only a relatively new player on the export front and is confident Tasmania’s participation will increase. “Countries have often been accepting of product imports, but not as accepting of service imports,” he says. “As that sector grows, our exports will grow.&rd
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So, while Tasmania is unlikely to be Australia’s leading export state, its export capacity is healthy, and growing. Travers sums it up with an example: “It’s not going to be the mass producer of textiles, clothing and footwear that China is, but it’s got great little businesses like Blundstone knocking out quality, very functional footwear for specific industries.”
Its island status is not only the selling point, for many businesses in Tasmania it is also the catalyst to enter the world of export. “You have to remember that Tasmania as a market of just under half a million people is exceptionally small,” Chambers explains, “so for companies to grow and be able to achieve economies of scale and other benefits from growth, they must look outside.”
Relocation Case Study
When Blue Rocket animation studios decided to relocate from Brisbane to the apple isle, it was seen as a move that was verging on criminally insane, says CEO, David Gurney. “People, particularly Sydney people, didn’t believe it was a sensible thing to do at all—that we’d fail or something.” Luckily, this view wasn’t shared around the globe. “We found that for our overseas partners it became more of a talking point.”
It seems Tasmania’s ‘clean, green’ reputation precedes it overseas. “Because it’s a world heritage area, a pristine environment. We found that people were interested in us, just for that.”
It’s also quite common for companies in the digital animation industry to base themselves outside large cities. “The cost of being in a city like Sydney or Paris or London is huge and it adds substantially to your overheads,” Gurney explains. “So, in Europe there’s quite a mentality that stuff can be done just anywhere.”
As Australia is such a small market for television and animation, Blue Rocket started exporting almost immediately. “You really are forced to go offshore and do co-productions to raise the money. And by the very nature of that, your project needs to be suitable for a world market.” Their first project to get off the ground, Hoota and Snoz, is now on television in 115 countries. To avoid language problems (the US wanted to subtitle them), a lot of their productions feature non-verbal communication. They also produce animated series for mobile phones, which are now available in 37 countries and their export success was acknowledged with the Austrade 2005 Arts and Entertainment Award at last year’s state Export Awards.
Distributors take care of getting Blue Rocket’s products into other markets, with large territories sometimes bringing in less income than smaller ones. “Licence fees that you get paid out of China are not particularly good,” he explains by way of example. “You might get a similar amount selling your program into Romania.”
Key markets for Blue Rocket are the UK, Germany and France. “We’ve got programming in virtually all of Europe,” he says. And, while they visit the international broadcast markets in France twice a year, most dealings with international markets are now done online. “We have this joke that the phone never rings at Blue Rocket,” Gurney says, laughing.
And with the media industry changing more rapidly than ever, the challenge for all players is to stay ahead of the game. “I wouldn’t be too complacent with things at the moment,” he advises. “If you want to be in the business you need to have your eyes open and stay with it.”
