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19.June 2008 |
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| Most exporters planning to keep production at home |
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Despite decisions this year by some companies to close all or part of their operations in Australia, 76 per cent of Australian exporters have no plans to move their business offshore according to the latest DHL Export Barometer.
Of the two per cent of exporters planning to take their entire operations offshore, the majority are from the services and manufacturing sectors with China the most likely offshore destination.
The 2008 DHL Export Barometer also found that the strong performance of the emerging economies will provide some relief for Australian exporters who were troubled by a record high exchange rate and the United State's credit crunch.
"The emergence of the sub-prime crisis in the US has affected exporters although it has not affected their view that North America is a good bet for exporters in the medium term," said Austrade's Chief Economist, Tim Harcourt. "But significantly, exporter confidence in the emerging economies has softened the impact of the credit crisis."
That confidence has emerged in the 2008 DHL Export Barometer which showed that growth in exports to China and India will be higher than any other destination in the next 12 months.
According to the DHL Export Barometer, 62 per cent of exporters will increase their orders to China in the next 12 months followed by 61 per cent who are targeting India. Last year, China was ranked second in growth prospects.
"The DHL Export Barometer's findings support new research from the Reserve Bank on the importance of China and India to Australia - especially in resources and education exports.
"In 2008, there is a noticeable decline in the proportion of exporters who are expecting to increase orders over the next 12 months to Europe - 49 per cent compared with 65 per cent in 2007," Mr Harcourt said.
Surprisingly North America is still an attractive destination in the medium term despite the impact of the US sub-prime crisis. About half of the exporters surveyed will increase exports to North America, still at healthy levels, but behind the future economic superpowers of China and India.
"Exporters are concerned about sub-prime but they expect the US to bounce back from its short-term slump. The resilience of the US economy has been factored in by Australian exporters," Mr. Harcourt said.
And despite the strong dollar and sub-prime issue, Australian exporters still remain confident about their business prospects for the year ahead.
The DHL Export Barometer recorded that 60 per cent of Australian exporters expect to increase orders over the next 12 months. The SME's are the most bullish with 64 per cent expecting an increase in orders, compared with 56 per cent of large businesses.
"This is a welcome development as the strong Aussie dollar is adversely affecting 66 per cent of all exporters compared with 50 per cent 12 months ago," Mr Harcourt said.
"They're hurting, but they are hanging in there."
More importantly, the export bullishness by the majority of exporters is expected to translate into higher profits.
The majority of exporters are optimistic regarding their profitability over the next 12 months with 57 per cent of exporters expecting an increase.
To keep up with demand, 46 per cent plan to lift their staff numbers with wages likely to move upwards in 79 per cent of organisations.
While the DHL Export Barometer has traced the outlook for Australia's traditional exporters, Australian businesses are looking beyond traditional exporting and importing to other avenues to expand their global presence.
These alternatives include strategic alliances, joint ventures, strategic alliances and outsourcing.
"One in five exporters want to spread parts of their operations across geographic boundaries to be closer to global supply chains, particularly in China, ASEAN, North America and Europe," said Mark Foy, Strategic Development Manager of DHL Express, Oceania.
Not unexpectedly, this phenomenon will increase demand for Australian government services that support these objectives.
Two thirds of exporters want marketing grants like the Emerging Markets Development Grant to assist with their exporting activities.
Other types of assistance required include, market access, help with offshore regulations and business practices, Free Trade Agreements and help with finding importers, distributors and partners.
The DHL Export Barometer found that the barrier faced most often by exporters when they first begin to export is the setup costs (32 per cent).
Other barriers mentioned by about 30 per cent of exporters are strength of competition, understanding different principles, regulatory environment and transport and logistics problems.
"Export support programs, especially those directed at exporters planning to enter dynamic markets like China and India where the legal framework and local business environment is constantly evolving are critical," Mr Foy said.
"And while burgeoning markets in China and India offer tremendous opportunities for exporters, they can also pose significant barriers. Many first time Australian exporters struggle because they don't have a meaningful understanding of their export destination.
"Poor payment practices, lack of cultural understanding, political uncertainty as well as the better understood barriers like regulatory regimes and logistics can mean the difference between success and failure for first time exporters," Mr Foy said.
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