Exporters eye Latin American markets to boost sales


Australian exporters are looking to Latin America, Asia and Africa to improve sales over the next 12 months, says DHL

Exporters eye Latin American markets to boost sales
Exporters eye Latin American markets to boost sales
June 15, 2010

Australian exporters are eyeing the emerging economies of Latin America, Asia and Africa to boost new sales over the next 12 months, according to the 2010 DHL Export Barometer.

The annual survey of Australian exporters also reveals the high exchange rate and GFC contributed to lower than expected sales in the past 12 months.

However, it is not all bad news - a record number of exporters are confident of increasing sales in the next three months.

According to DHL Express (Oceania) Senior Vice President, Gary Edstein, the results show Australian exporters’ resilience and
readiness in targeting emerging economies early to boost flagging profits.

"While only 19 percent of businesses exported to Central and South America in the past 12 months, almost two thirds of those surveyed (63 percent) expect to increase their orders to the region in the next year," Edstein says.

"Australian exporters tend to be very proactive and are always looking for new trade partners to diversify their opportunities. This adaptability is crucial to weather-proofing exporters against fluctuating global markets and for business continuity in uncertain times," he says.

EXPORT GROWTH REGIONS

Austrade Chief Economist Tim Harcourt adds Brazil has joined Asia as a key engine of growth in the global economy and says
this is attracting the focus of Australian exporters and investors.

"Brazil has strong macroeconomic management under the administration of President Lula and approximately 20 million additional middle class Brazilians are expanding their purchasing power at home and abroad, making it an attractive destination for Australian exporters," Harcourt says.

Other key export growth regions for the coming year are South East Asia (62 percent), China (61 percent), Africa (59 percent) and India (59 percent).

The Middle East was the most favoured destination for Australian exporters last year, but has dropped to 10th place this year.

"The construction boom in the Middle East has slowed, particularly in United Arab Emirates. In addition, the impact of the GFC on global financial services, travel and tourism – particularly in Europe, UK and USA, has especially affected hubs for financial services and transport like Dubai," Harcourt explains.

OUTLOOK

Unsurprisingly the soaring exchange rate and GFC hit Australian exporters hard in the past 12 months.

In 2009, 60 percent of exporters predicted their export orders would increase in the year however, only 38 percent recorded an actual rise.

Despite this, exporters are optimistic for the future with 53 percent forecasting an increase in orders in the next three months and 69 percent in the next 12 months, equaling the highest recorded confidence in the survey’s eight-year history.

"In 2009, world trade contracted by the largest amount in 70 years and Australia was the only industrialised country to achieve positive export volumes; a remarkable achievement by Australian exporters," Harcourt says.

"These results show that exporters are looking beyond the recent global financial turmoil and just getting on with business. The exchange rate is now their biggest concern, although exporters are learning to compete overseas even with a high dollar," he says.

Along with increased sales confidence, exporters forecast an increase in profitability, wages and staff numbers over the coming year.

More than half (59 percent) expect to increase profitability in the next 12 months while 69 percent will increase wages, up 26 percent from last year.

Despite the optimism, exporters acknowledge selling overseas still has its challenges.

For new exporters, the strength of competition (35 percent) followed by set-up costs (34 percent) and different business principles (34 percent) are the biggest barriers to trade.

In addition, 63 percent of exporters find it difficult to secure trade finance.

Now in its 8th year, the DHL Export Barometer is based on the responses of 600 Australian exporters.


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