New South Wales doesn’t have the mining or agricultural clout of some of its fellow states, but Cameron Bayley finds it is leading the way in one export sector, and on the rise in others.
New South Wales prides itself on being the centre of Australia’s commerce, with a larger economy than not only other the states, but also countries such as Malaysia, Singapore and New Zealand. And when it comes to exports, with the newly recognised export services sector, NSW has taken the baton and is way out in front.
“Services make up the state’s largest export sector,” says David Campbell, NSW Minister for Small Business. According to Campbell, NSW services exports in 2005 were worth $16 billion, almost 44 percent of Australia’s total services exports and nearly 40 percent of the state’s total exports, highlighting NSW’s appeal to the foreign dollar for both business and pleasure. “This position reflects the state’s position as the nation’s premier international tourist destination, as well as a centre for international learning and business,” Campbell adds.
Ian Bennett, state manager of international trade for ABL State Chamber agrees: “There seems to be an emergence of management training and upskilling programs coming to the fore.” Several of its members are having export success in areas such as corporate training, team building and leadership development.
Education is another big player in the services market. While education provided to international students plays a huge part in NSW exports (figures released from the Department of Foreign Affairs and Trade show that from the 80,000 Chinese students enrolled in Australian educational institutions in 2005 almost half were located in NSW), Bennett says exporting education via the internet is also a big success for the state, with many NSW education providers putting fully credited courses online. “A lot of overseas students find if they’ve completed Australian accredited courses prior to arrival in Australia, their chances of getting a visa to further their eduction has substantially improved.”
Services exports in general have shown consistent growth, Campbell adds, showing an almost 10 percent increase in the last five years. And figures provided by Austrade show that in the 2004–05 period this sector increased by approximately half a billion dollars. Other services shining on the radar at the moment include ICT, financial and insurance services, and those provided by legal, accounting and architectural firms. Bennett adds arts to the list, both in terms of broader areas such as the film industry and print media, but also the success of local painters overseas.
“The services industry in NSW is obviously a dominant industry,” he says, “and with the competition, the next step is going to be looking for offshore markets.”
Merchandise exports are still a vital part of NSW exports, however. And while NSW is less reliant on agricultural and mining than states like Western Australia and Queensland, Campbell says coal is the state’s largest merchandise export, with aluminium, copper, beef, veal, textiles and petroleum products also contributing to almost half of the state’s merchandise exports.
Hi-tech manufactured goods and processed agricultural products are also becoming more prominent, says Campbell, with medicinal and pharmaceutical products, beverages (largely wine) and miscellaneous goods, such as hearing devices, jewellery and sporting equipment, contributing to the top 10 commodity groups for the state.
While NSW export may seem the realm of larger businesses, Campbell reveals small businesses in the state are huge contributors, with data from the Australian Bureau of Statistics showing small business is the fastest growing export sector. “The size of a business is no longer critical when it comes to export,” says Campbell. “What counts is the ability to innovate and to identify and quickly capitalise on commercial opportunities. By exploiting niche opportunities, SMEs can compete successfully in the global marketplace.”
Bennett points to the recent growth in the organic produce industry as one example of this. “NSW has a fair number of producers in the organic area, which is serving niche markets.” Exporters are taking advantage of the fact that while an industry like organic foods may only comprise a small percentage of the local market, that same percentage in somewhere like Japan can still be quite substantial and lucrative.
Export Opportunities
Campbell believes it’s a good time for SMEs to enter the export market, as the NSW Government’s export assistance programs are largely directed to this group. “An extra $300,000 for the New Export Opportunities Program was the focal point of the NSW Government’s $5.97 million commitment to the state’s small business.” The program, he explains, helps companies acquire the skills and planning to enter export markets through initiatives like engaging an external consultant and undertaking market visits independently or as part of a NSW trade mission.
The trade mission program run through the NSW Department of State and Regional Development (DSRD) is a particular help to exporters, says Bennett. “Especially for first or second-time exporters travelling in the company of other Australians who haven’t been there before, as well as some experienced officials from the NSW Government who are using their connections into the marketplace and to Austrade—it’s quite a substantial program for NSW exporters,” he says.
DSRD also provide an Export Advisers Network helping regional exporters enter export or expand their markets, with advisers located in key regional centres of the state including Gosford, Wagga Wagga and Bathurst. Exporters throughout the state can also take advantage of the NSW Exporters Network which connects exporters via an interactive website, and several informal meetings and seminars.
Each year, DSRD runs its Small Business September month (www.smallbiz.nsw.gov.au/sbmonth) which has a large component of export-related events, and this year is no exception. “Events will focus on markets of importance for NSW exporters, and workshops on various aspects of exporting including, for example, cultural awareness, e-business and maximising results from trade shows,” Campbell says.
As well as state government run events, industry associations such as ABL State Chamber are useful resources. The chamber runs Stepping Out coaching programs, in partnership with DSRD, which takes a small group of companies from an industry and mentors and prepares them to enter export markets.
Bennett says exporters should look to recent free trade agreements (FTAs) and those on the horizon (such as proposed agreements with Malaysia and the Middle East) for niche markets for their business. “Look at what opportunities are coming out of those FTAs, how the reduction of duty barriers and recognition of standards could make these really good markets of choice.”
Campbell agrees, and says the recent agreement with the US bodes well for the state. “Given the strength of its services industry, NSW is better positioned than the other states to benefit from the agreement’s liberalisation of bilateral services trade. The same is true of Australia’s other FTAs.”
Bennett sees NSW success in services exports as proof the state’s export industry is innovative and responsive to global trends, and Australia’s relationship with the Asia-Pacific Economic Cooperation (APEC) and the coming APEC forum in 2007, are signs things can only get better. It’s not just a case of new doors opening, he says: “We’re finding the doors open even further into
places like Chile, which then take us into Argentina and Brazil and we’re being very warmly received there. So there always seems to be new markets opening up for NSW companies.”
Growing Exports Case Study
Kym Grant’s first experience in the export market was like the old adage: if something sounds too good to be true, then it probably is. When a Japanese company expressed great interest in obtaining herbal tea from his company, Austral Herbs, Grant jumped at the chance to add a new arm to his herb wholesaling business, buying a tea-bagging machine and investing in the new field.
“At the beginning we were rather naive, thinking … this is really good, if we get that order we’ll be laughing”, he says. Unfortunately the smile was wiped from his face when the deal didn’t eventuate. “Our first endeavour was a complete and utter disaster,” he admits of the partnership falling through. “And if we were relying on that we would have been broke.”
While the break into the Japanese market never came about, the company, located in northern NSW, has since turned things around and is now exporting their range of organic teas, teabags and herbs to several Asian markets, including Malaysia, Singapore and Thailand.
After the initial disappointment, pressing on has paid off for the company and exports now account for around half of Austral Herbs’ business. But it hasn’t been easy. “It’s been a long, bloody hard road,” he says. “You’ve just got to keep going, grinding away at it. Don’t take no for an answer.”
Although the Asian market is full of traditional teas, there is a market for the herbal variety, Grant explains, admitting there’s plenty of competition for exporters, especially from German and American companies. What it eventually comes down to is pricing, he adds. “You’ve just got to shave it as hard as you can.”
The Australian image also helps. “Even though a content of our herb is imported, because we reprocess it, it still comes under the Australian-made logo. That was something we never thought possible,” he says. “That’s a big plus.”
Using Austrade to find initial contacts, Grant has found it beneficial to conduct follow-ups personally. “You have to start with Austrade or you just won’t find the leads. But once you’ve got the leads, you really want to chase them yourself.” Particularly in his industry and market, Grant says trade shows can sometimes be overwhelming for a small business, and it can be hard to get your voice heard or product seen. “With the Asian market, face-to-face is a really good way, you’ve got to meet with them. You’re probably better off to go on a specified trip and organise one-on-one meetings with potential customers rather than just trade shows,” he advises. Emailing is a godsend, he admits, as is perseverance. “Once you’ve got some contacts, send samples and then keep talking to them.”
Next stop for Austral Herbs is China. While traditional teas still hold strong in that market, Grant is confident things can change. And, as luck would have it, the right time could be now, with style gurus in Hong Kong apparently deciding teabags are chic. “It’s the ‘in’ thing to have the tag hanging out of the cup so that people can tell you’re drinking tea,” he says, bemused, knowing that in export, timing is everything. “You’ve just got to be there at the right time to get in there.”
