MT84

18 June 1995

GLOBAL ECONOMY PRESENTING NEW OPPORTUNITIES FOR AUSTRALIA'S SMALL AND MEDIUM ENTERPRISES - REPORT

Continuing globalisation of the world economy is providing favourable conditions for expansion and development of the contribution of small and medium enterprises (SMEs) to Australia's export drive, the Minister for Trade, Senator Bob McMullan said today.

Releasing Winning Enterprises - How Australia's Small and Medium Enterprises Compete in the Global Market Place - a study of international activity by Australian SMEs - Senator McMullan said the SME contribution is already valued at $6.5 billion, but significant growth is possible with the new opportunities and challenges of the global economy making the international option more attractive for SMEs.

"At present, about 4,500 Australian SMEs have established a firm presence in international markets, and are making a substantial contribution to the Australian economy as a result of their international activities," Senator McMullan said.

"They generate around $6.5 billion a year in international turnover, giving rise to significant employment activity, with about 40,000 jobs being created as a direct result of their overseas operations.

"The number of internationalised Australian SMEs could at least double over the next five years, but we can't just sit back and wait for it to happen.

"There is a need to ensure that Australian SMEs maximise the benefits from the increased integration of Australia into the world economy, especially in the Asia-Pacific region.

"To consolidate the establishment of a dynamic, globally oriented SME sector will require ongoing efforts by industry, government and the wider community."

Senator McMullan said the report identifies a need to further develop an environment which encourages the internationalisation of our SMEs, and to continue to improve enterprise capabilities and competitive advantages.

"With opportunities emerging in many regions of the world, the report calls for quick action to assist Australia's SMEs in their efforts to compete and win in global markets," Senator McMullan said.

"The report also outlines the strategies which SMEs have employed to break into new markets, the problems they have encountered, and what they have learned in the process.

"These case studies will provide a wealth of information for other SMEs looking to establish international operations."

Key findings of Winning Enterprises - How Australia's Small and Medium Enterprises Compete in the Global Market Place include:

  • Within Australia, it is beginning to become part of the culture of competitive SMEs to extend their operations internationally and not be constrained to operate only in the domestic market.

  • Lower costs in communications and travel, combined with advances in communication and information technologies, have made it easier for SMEs to operate internationally. Government efforts to secure increased market access and facilitate trade are also important in facilitating international activities by SMEs.

  • The main reasons why Australian SMEs go international are the limited opportunities in the domestic market and the need to achieve economies of scale. Personal contacts are an important means for entering international markets, and these can be developed in a structured way through attendance at international exhibitions and trade shows.

  • The strategies used by SMEs to internationalise need to be tailored to the operating environment faced by individual firms. There is no single strategy which provides a sure-fire recipe for success. Most successful internationalised SMEs use a combination of strategic options. These options may include 'going it alone', appointing agents, and using distribution networks, strategic alliances, licensing and joint ventures.

  • To sustain competitiveness requires not only producing a world class product, but also good marketing, innovation, and paying close attention to customer needs.

  • Major constraints on the ability of SMEs to operate internationally include difficulties in accessing timely information on market opportunities and the ability to manage uncertainty and risk.

    Winning Enterprises - How Australia's Small and Medium Enterprises Compete in the Global Market Place was produced by the Department of Foreign Affairs and Trade in Canberra.

    Further information:

    Senator McMullan's office: John Flannery, (06) 277 7420, 018 482 887

    DFAT: Tony Urbanski, (06) 261 3061

    For copies of the report, please contact Tony Urbanski on (06) 261 3061