Small Business & the Kath and Kim Effect

This is not surprising as wholesale trade typically has many exporters and importers involved in the distribution game. Wholesale trade was followed by manufacturing on 30 per cent and business services on 21 per cent. Less prominent was retail, hospitality and building and construction. So where do the small exporters go? Not surprisingly, proximity and language/business culture are important factors. Our nearest neighbour, New Zealand, is a destination for 36 per cent of all SMEs who export, followed by the USA on 29 and the UK on 22 per cent. Better macroeconomic news from Europe has given the continent a bit of a boost. Accordingly, many small Australian exporters now have ‘Eurovision’ (as opposed to ‘Europhobia’ a year ago) with 14 per cent nominating Europe as a destination.

In Asia, markets where Australia either has or is negotiating a free trade agreement (FTA) are prominent. Singapore is a market for 11 per cent of exporting SMEs, China for 9 per cent, with Japan and Thailand on 7 per cent (even the English-speaking USA market has improved as an export destination for SMEs since the FTA has been in place). China’s prominence in the top six most favoured destinations for exporting SMEs shows that you don’t have to be a big fish like Rio Tinto or BHP Billiton to succeed in the Chinese market.

Broadly speaking, what do our SME exporters look like? For the most part, they are likely to be more medium than small, more metropolitan than regional and more likely to be run by a male born overseas. And whilst the blokes still outnumber the women, there are a growing number of female-run businesses in outer-metropolitan areas which suggest a ‘Kath and Kim’ effect occurring in the Australian suburbs. After all as Kim famously once said "exporting makes you effluent".

In terms of age demographics, given that it takes a while to get established, SME exporters are also more likely to be ‘baby-boomers’ than generation Xers or gen Ys, and most have 15 to 20 plus years experience in the export game.

Do they make a buck? Previous research shows that exporting, on average, helps the bottom line. The survey results show that SME exporters, on average, are more likely to have an aggressive expansion strategy than other SMEs. They are also more confident than non-exporters and are more bullish on profits, wages and employment.

However, there is still much more to do to get more SMEs in the export game. Despite the rewards on offer, there is still a low ‘intention to export’ in Australia amongst SMEs. What are the major barriers? It is not a matter of labour costs but labour shortages. A major reason cited by small business for not entering export markets is the lack of skilled staff with overseas sales experience. They are willing to pay good wages, but are keen to have well trained and/or experienced export managers. This suggests that training programmes – like the new exporter development scheme are on the money in terms of small business needs.

However, it is not all bad news. According to the research, there are some positives that have helped SMEs get into exporting. SME exporters say they have been helped by improved market access through tariff reductions and the new free trade agreements. In addition, improvements in technology (through recent developments in e-commerce) have made getting into export markets a lot easier for them.

So expect more action to come on the SME front. This is good news as more SME export action means not only more growth and more profits for the businesses concerned but also more jobs for Australian workers at higher rates of pay. The ‘small is beautiful’ phenomenon also forges stronger links with other nations right across the Australian community.