The benefits of careful planning can be well worth the effort for Australian exporters targeting the UK.

Going international can be a daunting task for many Australian companies. Aside from the physical distance between yourself and many major markets around the world, taking your business offshore requires commitment, patience and planning.

But the benefits can be well worth the effort. Exporting can be a profitable way of expanding your business and spreading your risks across a number of countries. Export can provide growth and profit. Austrade research has also shown that exporters on average pay their staff more than non-exporters, are able to provide a safer and healthier workplace, offer more training and career development opportunities and tend to be better in tune with new and changing technologies than their domestic counterparts.

The Australian community also reaps the rewards from international trade – exports account for around 20% of Gross Domestic Product (GDP), while 1.7m jobs (or one in five) depend on international trade.

Australia and the UK

Market entry: identify your customers and plan your export strategy

The United Kingdom has historically been a preferred trading partner, its popularity accounted for by the similarities in language, law and culture. It is currently the sixth most important export destination for Australian products, totalling A$4.6bn in 2000/1.

Even so, the UK economy has experienced its fair share of turbulent times, which makes it imperative for the potential exporter to look closely and identify how to correctly enter the market and reap maximum benefit.

With a population of 60m, the UK economy remains in relatively good shape despite evidence of decline in some areas. Unemployment is less than one million, inflation is below target, and growth, while less than the 3.1% achieved in the year 2000, is expected to reach 2.2% in 2002, making the UK still among the strongest in the G7 group of industrialised countries.

There is no denying that some sectors in the UK are experiencing difficulty. In 2001, we saw a rapid rise in public companies profit warnings. The IT sector slowed down markedly, manufacturing continued to be hit by a high sterling rate making exports less competitive, while the rural sector has been affected by both BSE and foot-and-mouth disease, which also impacted on tourism.

Meanwhile the divergence between the manufacturing industry, officially in recession, a resilient services sector and a widening gap between output and expenditure, is creating a two-speed economy. Yet while some sectors are slowing, consumer confidence remains high.

Key markets

Eurotunnel: the United Kingdom offers Australian companies an entry point to the vast European market

On balance the outlook for Australian exporters in their biggest European market remains clearly positive. While many sectors targeted by Australian exporters have matured there are many opportunities to be exploited. My team in London, headed by Senior Trade Commissioner Fiona Buffinton, has identified ICT, wine, health and education as key markets for Australian companies, in addition to the established sectors of resources, consultancy and financial services.

One outstanding area where Australian companies have continued to hold the competitive advantage is in the ICT industry. The UK’s pole position in new technologies coupled with the advantage of a common language and sales in pound sterling continues to draw Australian interest.

More than 200 Australian ICT firms have now set up a presence in the UK. One such player, NeoProduct, opened a plant in Birmingham to supply some 9000 touch-screen kiosks to UK employment services, allowing jobseekers to scan vacancies through fingertip navigation. Other successful Australian firms that have established a presence in the Birmingham area include Manusoft, SMS, TNA and Auto-bake.

The United Kingdom has always been a natural location for Australian companies that wish to access a larger audience. Its importance to Australian exports and investors lies in the fact that it is our biggest European market. The UK’s membership of the European Union means the country can also serve as entrée to the world’s largest single market place.

Know your market

Aussie IT in UK job centres: NeoProducts’ Affinity kiosks

As with any new venture, successful entry into the UK is largely reliant on the potential exporter having a full and comprehensive understanding of the market. This doesn’t mean relying on outdated stereotypes, but includes visiting the country, assessing the competition (which is generally stronger than in Australia), looking for and identifying gaps and opportunities that exist, as well as investigating alternative market entry strategies.

Potential exporters into the software sector will find that it is important to consider setting up your own office in the UK. While this will certainly have a greater impact upon your company structure and can be costly, it is required to convince potential buyers of your commitment to the product support of the UK market.

More detailed information on market entry strategies is readily available on our website, or by speaking to one of our advisers on 13 28 78. It is a good idea for potential exporters to undertake exhaustive research and seek as much professional advice as possible before making any commitment. This is an area in which the Austrade team in London is well established and committed to assist.

Website: www.austrade.gov.au