Export mood on the rise for small-to-medium enterprises

efic_export_news_banner16.jpg

Rowan Callick, Asia-Pacific Editor, The Australian

Australian small-and-medium enterprises that are exporting have started the year in an optimistic mood, with 39 per cent expecting sales to rise over the next year. But tougher access to credit is constraining their growth ambitions.

The survey of 871 exporting SMEs with a turnover of up to $100 million a year and of 643 non-exporting SMEs was carried out by the federal government’s Export Finance and Insurance Corporation, which has a new focus on small business.

China’s role as their most important market has grown by 6 per cent over the past year, now identified as such by 26 per cent of the firms surveyed.

The next biggest market is Oceania, including New Zealand, named by 20 per cent, followed by India with 11 per cent and the US with 10 per cent.

Wholesale trade remains the largest customer sector of the exporters surveyed, identified by 26 per cent, but there is a strong swing towards services, and away from the export of products.

The companies listed professional, scientific and technical services and health care and social assistance as providing the strongest growth over the past year, a performance which they expect to be maintained in the year ahead as well. Retail trade is also expected to grow faster over the coming 12 months.

Access to finance is becoming harder for SMEs who are exporting, or wish to do so, with most of the companies surveyed — 57.5 per cent — expecting this to become even tougher in the next year.

A very high proportion, 43.3 per cent — report their credit lines being withdrawn, reduced or simply refused.

And according to the SMEs, a weak financial performance is becoming less relevant in determining whether they can gain access to credit.

They blame as the biggest single factor, the lack of understanding by the banks of potential foreign markets, followed by the banks tightening the screws in compliance — requiring increased collateral and information.

Most of the SMEs are anticipating that they will either maintain their present staffing levels or will decrease them over the coming year — with 19.1 per cent expecting to cut staff.

EFIC comments that this “suggests a shift towards productivity focused strategies”.

More than half the exporting small to medium enterprises — 51.9 per cent — named labour costs as the key driver raising the costs of exporting, with borrowing costs the next major factor, cited by 37 per cent.

This work has been licensed by Copyright Agency Limited (CAL). Except as permitted by the Copyright Act, you must not re-use this work without the permission of the copyright owner or CAL.