Not enough SMEs trading with Asia, says Australia Post whitepaper

Australia’s 1.4 million small businesses contribute more than 33% to the national economy, and yet are vastly under-represented in exporting.

38% of small businesses that invested in Asian expansion achieved a return of investment within 12 months. Source: POND5

With rapidly expanding economies on our doorstep, small businesses are urged to take advantage of rising demand for our products in Asia.

A recent Australia Post survey of 2,000 small and medium enterprises, or SMEs, found that small businesses that do export overseas reported approximately 20 per cent higher turnover than their domestic-only counterparts.

However, only a quarter of SMEs in Australia are currently trading overseas. Futhermore, only 11 per cent of small businesses export to Indonesia, which is home to 265 million people.

Christine Holgate, CEO of Australia Post, says soon Indonesia will soon be the fourth largest economy in the world.

“Our SMEs have an incredible opportunity ahead of them and I think it’s so exciting,” Christine Holgate said, addressing a recent Australia Post seminar. 

“If you care about your employees, and you care about your children, then I would encourage all SMEs to get involved with international trade."

One of the big hurdles to further SME expansion into Asia is the fear factor.

Many small businesses don't know where to go for advice or help with exporting overseas. Source: Supplied

Rebecca Burrows is Australia Post’s General Manager for Small Business and says owner-operators considering exporting to Asia often need help with financing or marketing.

She says Australia Post has a range of services to help small businesses export into Asia via partnerships and joint ventures on the ground.

“Whether through our postal connection or on the ground solutions, we can definitely help businesses with the actual logistics of getting their product into Asia."

“Ecommerce has opened up amazing opportunities and the growing middle class in countries near us are very ecommerce literate, so it’s actually an amazing opportunity for businesses there."

China’s population of 1.4 billion people includes 460 million online shoppers and that number is expected to rise by a further 200 million by 2020.

It’s estimated that half of China’s consumption will be via online purchases within the next 10 years.

Among local small businesses selling online in China, many are women’s clothing and accessories designers.

One business that's successfully entered the Chinese ecommerce space is dog&boy, a Melbourne-based scarf label featured on Small Business Secrets in 2018.

Sonya Michele, founder of scarf business dog&boy. Source: Supplied

dog&boy founder Sonya Michele manufactures in China. And online sales have boomed since a Chinese marketplace offered to carry her limited edition scarves – opening up a whole new world of opportunity.

However, Sonya says support from Trade Victoria was crucial to success.

“Trade Victoria introduced me to a platform called VIP.com, which is the third largest ecommerce platform in China, and the focus is fashion,” Sonya explains.

“Having said that, it still took a good 6 months and I had to engage a third party to build the shop because I don’t speak Mandarin."

“I just really chipped away, that’s the best way to describe it - seeking opportunities and getting information as to where the product was going to be best suited."

Sonya says over the past year, China has undergone rapid change across both the digital, marketing and regulatory landscapes.

“China is definitely the most challenging country in the world to sell into. It’s daunting, definitely daunting,” she says.

So far, other Australian businesses have found success exporting a surprising range of goods from toys to IT equipment and electrical appliances, and travel goods including handbags and luggage.

There are many others preparing to embark on an Asian adventure.

Watch this story at the top of the page, or catch the full episode on SBS On Demand.