Although Australia’s exporters are finding new business in the Asian emerging markets, Philip Aiken, chairman of Australialive, cautions that they shouldn’t ignore opportunities with the UK.
Major exporting powers are presently focusing much of their efforts promoting their products and services in the expanding emerging markets in order to escape recession. Yet, Philip Aiken, chairman of Australialive, believes strong links between developed markets such as the UK and Australia should not be completely pushed aside.
“[We aim to] make sure people don’t forget there has been a long-term relationship between the UK and Australia, not just in heritage but in commerce,” he tells GTR.
Aiken’s comments come ahead of this year’s Australialive event hosted in London between September 6 and 22. The event follows on from last year’s G’day UK exhibition, and consists of a series of events and displays aimed at promoting better relations between Australia and the UK, in terms of culture, as well as business and trade.
“The objective of this programme is really to raise the profile of Australia in the UK, to show Australia as an attractive investment destination, to engage British business. This year we are concentrating on doing business,” he says.
As promoting trading opportunities is the central theme of this year’s event, one of the highlights of the exhibition is the CEO forum held on September 14 which brings together a select group of senior corporate executives from both UK and Australian companies.
Australia and the UK are long-standing partners in business and trade, inherently tied together with a shared culture and history. But Aiken urges that these ties need to be continuously maintained: “I think a lot of people take for granted how much trade and investment there is between the two countries,” he remarks.
The UK is the second largest cumulative investor in Australia, according to the Australian Bureau of Statistics, and Australia is the seventh largest investor in the UK, according to UK Trade & Investment (UKTI). “People don’t realise how important Australia is,” Aiken says.
Australia is the 18th largest importer of UK goods. Australia also receives high levels of foreign investment; with a cumulative total of A$1900bn invested as of December 31, 2009. Of this total, nearly A$500bn (approximately 26%) was sourced from the UK, making it the second largest cumulative investor, just behind the US, and ahead of both Japan and the Netherlands.
The UK is also the destination for 5% of Australian goods and services exported globally and over 50% of Australia’s exports to the EU. The UK is also the sixth largest export destination for physical goods from Australia, and the third largest market in terms of service imports, according the DFAT [The Australian Department for Foreign Affairs and Trade].
Such strong trade ties were relatively immune from the financial crisis, with Australian exports to the UK declining by only 3.6% in 2008-09, compared to an overall decline in Australian exports of 9.8%.
Traditionally, much of these huge trade and investment flows to the UK, as well as other markets, were dominated by large companies such as BHP Billiton and Rio Tinto, but Aiken notes that there is now huge potential among the SME sector as well as in the technology-based industries.
Certain Australian states have set up specific export promotion agencies such as the Australian Technology Showcase (ATS), aimed at encouraging the international expansion of Australian technology-based goods.
It is the SMEs that are also the ones in most need of support. “The big companies can do it – but it is more about the little guys getting together via promotions like this that can work very strongly,” Aiken explains to GTR.
Barriers to growth
The real obstacle for Australian companies eager to win business in the UK is the geographical distance between the two countries, something they can only overcome, Aiken believes, by physically moving to the UK.
“One of the greatest problems is to encourage people to move here and be on the ground. Unless they are here on the ground – I don’t think they can do it.”
For UK companies looking to expand into the Australian market, there are further difficulties to overcome. Whereas the UK market is more centralised, obviously the Australian market is vast in comparision. “I talk to small manufacturers going to Australia, and they are not sure whether to go to Melbourne, Sydney, or Perth,” explains Aiken.
Again, these decisions are matters that Australialive would like to help support.
Furthermore, Aiken wants to promote Australia as a suitable place for UK firms to use as a stepping stone for expansion into Asian markets.
The Australialive initiative is being promoted by the Australian state governments, Australian Business (a UK-based networking organisation for both UK, Australian and New Zealand companies), the Australian Trade Commission and the Australian High Commission in the UK, as well as Qantas and Tourism Australia. Australian banks ANZ, Commonwealth Bank, Westpac and National Australia Bank are sponsoring the event. GTR