A major survey of more than 1,600 firms has found that the high value of the Australian dollar, difficulties in obtaining finance and a lack of information about overseas markets remain major barriers to expanded international operations.
The survey also found that Australia’s international businesses are diverse in terms of the industries they represent and the geographical markets they target. While China remains Australia’s largest trading partner by value, more survey participants rank the United States as their most important market.
The survey was commissioned by the Export Council of Australia, with the support of Austrade and the Export Finance and Insurance Corporation, and conducted by the University of Sydney Business School’s Discipline of International Business.
The final results appear in a publication titled Australia’s International Business Survey: 2014 Report.
Professor Sid Gray said: “This is an important collaboration between industry, government and the Business School to provide reliable, evidence-based findings that will be valuable to policy makers and international businesses.”
Australia’s official export figures are dominated by the mining sector. Mining companies are responsible for 54% of Australia’s goods exports by value, but represent only 1% of the number of Australian goods exporters.
“This survey provides an opportunity to better understand the activities and needs of the 99% – and of service sectors as well,” explained Dr Catherine Welch, the project leader.
In particular, manufacturing (especially elaborate manufacturing and food and beverage manufacturing) remains a critical contributor to Australia’s international business activities. At the same time, service sectors represented more than half of the top ten industries in the survey.
When asked about their most important international markets, survey participants identified a mix of advanced and emerging economies. The United States topped the list. It was also the number one market for some industries: elaborate manufacturing, software and media, technical services and mining support services.
China ranked second overall, but was the number one market for Australian firms engaged in education and training, food and beverage manufacturing, professional services and agriculture. The US and China were followed by the United Kingdom, Japan and New Zealand as important targets for Australian trade and investment.
Australian firms face obstacles to trade and investment both at home and abroad.
When asked about local factors adversely affecting their international competitiveness, 50 per cent of respondents chose the value of the Australian dollar – twice as many as selected transportation and freight costs, the next most important factor.
Labour productivity, regulatory compliance and access to finance were also cited as important by respondents.
The one-third of participants who sought finance in the 2012-13 financial year largely rated the task as difficult or very difficult. Obtaining debt or equity financing for international business from an Australian financial institution was rated as harder than sourcing it from overseas.
While the ease of operating abroad varied, participants indicated that the most significant barriers to international business were a lack of information on local cultures, languages, and business practices followed by regulations and customer payment issues.
Despite the barriers, survey participants were optimistic about their international growth prospects with 74 per cent planning to expand over the next two years into two or more countries, the most important being China and the US.
The University of Sydney Business School’s research team comprised the Professor of International Business, Professor Sid Gray, Dr Maria Rumyantseva, Dr Sandra Seno-Alday and Associate Professor Catherine Welch (project leader).
The Australia’s International Business Survey: 2014 Report can be viewed here.