WorldFirst partnered with Pinstripe Media and Kochie’s Business Builders to produce the below article.
If you’re eyeing global expansion for your small business, it pays to do your research first. While it’s tempting to leap – understanding different tax systems, local customs and manufacturing options are all considerations.
Reasons to go global
Global expansion is part of many Aussie businesses plans, for a few simple reasons,” says Airport Economist, and UNSW Economics Fellow, Tim Harcourt.
“Australia is only 25 million people, so we need to export to grow our economy, Harcourt says. “We also pick up ideas and technology and other forms of innovation when we go global.”
Harcourt believes there are numerous benefits to global expansion, not least of which is the financial advantage and opportunity for growth.
“Australian exporters are, on average, more profitable and productive than businesses that simply choose to supply local products or services. They pay higher wages and provide more job security than non-exporters,” he says.
Understand the market
Your business may be a local sensation, but that doesn’t necessarily mean it will be a hit overseas. Consumer behaviour can differ even at a regional level. In a global market, differences can increase. There can be language and cultural barriers as well as competition from local brands. Before making a move to an international exporter, consider how customers will take to your product. Understand your supply chains and how to find the right teams or partners to help you get your business off the ground in a new country.
Frank Chamaki cofounder and CEO of data science company, Hivery, says different countries need to be engaged differently.
“Japan is all about coming to a prospectus from ‘I like to learn more about your business, your market’. While the US is more ‘I know your problem, and I have a solution for you’ – it’s much bolder, and Europe is a mix of both extremes.”
Chamaki says it’s also critical to have locals on the ground when expanding globally.
“We did a lot of travelling but over the years hired folks and travelled less. But hire at the right time. We used and continue to use contractors but more recently have hired full-time people. It’s always good to test the market before committing to it.”
According to Chamaki, it’s also essential to leverage relationships such as your marquee customers.
“This is so true in markets like Japan, where a company’s reputation counts.
“Lastly, expect your product to be customised to address the unique market needs of each region. For example, Japan has vending machines that have hot and cold, while western countries generally do not. Our algorithms needed to understand this just as we did.
“Marquee customers have two key traits, they are influential in the industry that they operate and tend to be innovative,” he concludes
Make the most of Government grants
Government grants can help make expansion into new markets more achievable.
Chamaki adds: “There are government grants like Export Market Development Grant (EMDG) which allows companies to get reimbursed up to 50 per cent of marketing costs, including flights and accommodation, to make this process more cost-effective.”
With international travel currently on hold, EMDG can provide funds to exporters who are utilising digital marketing platforms to connect with customers overseas including: Google, Amazon, Facebook, Instagram, YouTube, TikTok, LinkedIn, email/SMS campaigns, webinars and more.
Gemma Hansen, Grants Advisor from Export Solutions added ‘many Australian exporters we work with are experiencing great results from their digital marketing. To maximise your EMDG grant, keep track of the geographic area you are targeting through digital marketing and social media — this often results in a higher percentage claim’.
Why FX should be part of your strategy
Having access to foreign currency when trading globally is also crucial, according to Harcourt.
“Exchange rates can be volatile. Most exporters also import equipment and technology. So they need access to foreign currency. WorldFirst is an ideal partner when you do business on a global scale.”
Chamaki agrees: “Eighty per cent of our revenue is overseas. So, you can imagine having the right FX partner is critical. WorldFirst has been a great partner in getting us the right tools and service to transfer funds around the world.”
The Airport Economists top five markets for exporting
North East Asia
“NEA includes China our number 1 export partner but also long-time friends like South Korea and Japan. They all include Free Trade Agreements that makes them attractive to exporters.”
South East Asia
“ASEAN as a whole is the third engine of emerging Asia together with China and India. It includes sophisticated markets like Singapore, Middle-Income countries like Thailand and Malaysia and up and comers like Vietnam and Myanmar in the Mekong Delta.”
Europe, Middle East, Africa
“Europe is a mix high-value manufacturing in places like France and Germany to the hard-working services economies like Poland. The Middle East is diversifying away from petroleum and building global hubs like UAE and Africa has a young emerging middle class.”
The Americas
“Whilst North America – USA Canada and Mexico – is still a powerhouse the Latin America countries especially Pacific nations like Chile, Peru and Colombia are looking to Asia and the Pacific as well as to North America and Europe.”
The Pacific
The Pacific is the nursery of Australian exporters where most SMEs get there start. New Zealand, PNG, Fiji and the surrounding Pacific Islands are a well-trodden path for first-time exporters and many have found success close to home.
Disclaimer:
These comments are the views and opinions of the author and should not be construed as advice. You should act using your own information and judgement.
Whilst information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed.
All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.
Please consider FX derivatives are high risk, provide volatile returns and do not guarantee profits.