The Australian business sector has shown incredible resilience in recent years, surviving lockdowns, natural disasters, a labour shortage, increasing interest rates and inflation.
In the 2022 financial year, there was a 7 per cent (or 167,646) increase in actively trading businesses in the Australian economy1
However, as the risk of an economic downturn looms, new research reveals the lengths to which businesses will go to survive, with two thirds willing to expand their sales or suppliers in international markets.
The finding was derived from a survey of an independent panel of 210 owners and senior decision makers of Australian SMEs by Money Transfer Comparison, a comparison website that enables Australian individuals and businesses to source the best money transfer providers and rates.
The respondent pool comprised 44 per cent of micro businesses (1-10 employees), 27 per cent of small businesses (11-50 employees), 18 per cent of medium-sized businesses (51-200 employees) and 11 per cent of large businesses (over 200 employees).
One in three SMEs would expand their sales to overseas markets
Money Transfer Comparison found 32 per cent of businesses would expand their sales into overseas markets to help them through tough economic times.
This significant interest in expanded customer bases and revenue through new international markets comes after nine months of unrestricted overseas travel and trade, and despite only 5 per cent of businesses revealing they were already trading internationally.
More Victorian businesses are likely to expand to international markets, with 41 per cent willing to make the move for more customers and revenue, followed by an equal 33 per cent of ACT and South Australian businesses, an equal 29 per cent of NSW and West Australian businesses, and 24 per cent of Queensland businesses.
Nearly half of the ASX100 generate more than 30 per cent of their revenue from overseas markets2, and while the pandemic led many businesses to focus on the Australian market, overseas expansion with the right products, services, support, and research can offer businesses significant growth opportunities and cheaper suppliers.
In 2021, McKinsey issued a report, warning businesses not to return to ‘business as usual’ after a tough economic year and encouraging businesses to make use of weakened international markets to expand internationally. It provided insights into previous crises that showed how businesses return from a downturn can set the tone for a future decade of success.
Two in three SMEs would outsource some form of suppliers internationally
Money Transfer Comparison found 66 per cent of businesses surveyed would outsource some of their suppliers overseas.
A third (33 per cent) would outsource labour internationally and more than a third (35 per cent) would use international parts and materials, to develop their goods. One quarter (24 per cent) would use international software and technology services to support their business.
More micro businesses are willing to stick to Australian suppliers, with 57 per cent unwilling to switch to any overseas suppliers, in contrast with 21 per cent of medium-sized businesses and 11 per cent of small businesses.
Small businesses are most likely to outsource labour internationally, chosen by half (51 per cent) of this group, followed by 37 per cent of medium-sized businesses. Despite their traditionally lower incomes and margins, micro businesses are significantly less likely to change their local suppliers to cheaper overseas labour, with only 16 per cent willing to outsource international employment.
Across the states and territories, ACT businesses are most likely (chosen by 67 per cent) to outsource parts and materials to develop goods for their customers. This was followed by an equal 40 per cent of Queensland and SA businesses, 38 per cent of WA businesses, and an equal 32 per cent of NSW and Victorian businesses.
Manufactured goods account for over two-thirds of world merchandise trade3 and Australian-made products are integral to significant economic and trading opportunities for the nation.
While international production can reduce business costs significantly, the Australian manufacturing sector employs roughly 900,000 people and indirectly supports the jobs of another 1.5 million.4
The Australian Council of Trade Unions reported in 2021 that 400,000 new direct jobs in manufacturing and 265,000 new jobs throughout the manufacturing supply chain could be created if we produced as many manufactured goods as we consume in Australia.5
Manufacturing is also the most ‘innovative-intensive’ industry in the economy, with countries high in manufacturing capabilities heading the forefront of innovation leadership.
Alon Rajic, founder and managing director of Money Transfer Comparison, said Australian SMEs have faced extremely tough challenges in recent times, so it comes as no surprise that many may be looking to recover faster, or survive better, by expanding their customer bases to new markets or switching to overseas suppliers.
“While there is risk associated with business expansion, especially in uncertain economic times, a well-researched shift to international markets or suppliers can be an effective growth strategy for the right products and services, with the right funding and support.”
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