Should SMEs export?


For many Small and Medium Enterprises (SMEs) and start ups, export market seems to be too difficult. Should SMEs export?

The answer is YES. SMEs should build their business with export market in mind from day one for three reasons:

1. SMEs Export market is a big

We all know there is a limitation of local market and export business gives you the power to many potential markets. Take Australia for example, we only have 24.38 million. Sydney is the biggest city with a population of 4.9 million. In China, there are 21 cities with populations bigger than Sydney (over 5 million people) and three cities have the population over 20 million (Shanghai, Beijing and Guangzhou).

Not only the population, but the consumption power in overseas is growing, especially in our biggest trade partner-China. According to a report of the Boston Consulting Group (BCG) and AliResearch (Alibaba Group) the population of China Upper Middle Class (Household income between AUDD 2,400 – 4,500/month) is about 150 million; the population of Affluent ((Household income over 4,500/month) is about 60 million.

The growing Upper Middle Class and Affluent Consumers are looking for high quality products, especially imported foods from Australia. See picture below.

ChinaMiddleClassChart

(Source: BCG & AliResearch Report. 1 USD = 0.75 AUD)

Small business (SMEs) should look for big markets to grow.

2. SMEs Export market is awarding

SMEs can always grow very quickly once they penetrate export market.

When I started my International Business Development Manager job with a small Brisbane based food manufacturer, my desk was in a ship container in the warehouse. Three years later, a new factory was properly built for export market and the export sales increased ten times.

Another food manufacturers I worked for have their 70% revenue from export and they grow so quickly that they have to build new factory every five years!

TWG Tea is a Singapore based fast growing company. They started in 2007 and 10 years later they are exporting to over 40 countries with a turnover of USD50 Million (AUD66 million). This can never be done if they only sell in Singapore! The CEO Taha Bouqdib said in an interview with The Peak “From day one, we never build this for just a city. We planned for a global brand.”

Build your products and brand with export in mind and you will be successful.

3. SMEs Export market is much easier now

In the good old days, export business was not easy. Expensive communication cost (Telex, fax and international calls), difficult transport (long shipment time and Union strike), lack of market information (no internet and language barrier) and trade protectionism made export market too far for SMEs to reach.

However, with the Internet and the popular social media the global is getting smaller and export market is reachable for everyone who is dedicated to do it.

According the ABS (Australian Bureau os Statistics), the SME exporters are increasing much faster in 2013 to 2016 period. See the growth chart below:

SEM exporters growth 2013 -2016 ABS

SEM exporters growth 2013 -2016. Source. ABS Data. For the business size classification, please see here.

Small business exporters grow quickly then medium exporters and medium exporters grow faster than large exporters.

There are many success stories of SME exporters and the governments has many different grant and organisations to support SME exporters.

However, not all the business are conducted the same way as in Australia.

Export market is good for SMEs, the first things to build up your export business is to understand the export market, your buyers and your consumers.

If you want to avoid mistakes and loses, please talk with our Export Consultant first before starting your export business venture.

Want to know why you should use an export consultant? Please read “Why you need an export consultant“.


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