What risks do I need to be aware of when entering an export market?

Managing_export_risks_banner_new.jpg (1)

You are likely to come up against different risks when operating in international markets compared to your domestic market. Depending on the country, some of the key risks you may encounter include:

Political risks
An uncertain political environment can hamper export operations in a number of ways. A trade embargo could affect delivery of goods, civil war or political violence could affect the safety of your staff and partners, political instability could result in defaults on payments, confiscation of property and assets, and blockages in transfer of earnings.

Legal risks
Legal requirements and processes can vary significantly across different markets, so you will need to conduct research and receive legal advice to understand your legal position. Some common considerations include: local contract law, patent registration & IP requirements, product liability laws, dispute resolution processes and OH&S laws.

Operating risks
Exporters need to become familiar with the operating environment of new markets, as this can be very different to the Australian operating environment. Some important things to look out for are industrial relations policies & practices, permitting rules and import requirements.

Environmental risks
Natural disasters can occur anywhere in the world and can cause significant or even devastating damage to a business.  While no one can predict natural disasters, it is important to be aware of the potential risks of your business location and how you might prepare for possible events.  

Contract risks
Differences in contract law between countries means seeking legal advice on contract terms is important to ensure they are binding and enforceable – it’s also important to understand the local business culture to ensure you have an appreciation of the expectations of doing business with local partners.

Currency risks
Adverse movements in exchange rates are an inherent risk of doing business overseas and can lead to a loss of earnings or profit. You can protect yourself by quoting only in Australian dollars or taking out a foreign exchange facility which will allow you to lock in exchange rates and hedge your currency exposure.

Austrade and the Export Council of Australia provide more detailed information on some of the major risks exporters may encounter in overseas markets.

Hear from some of the panellists at our recent SME briefings on the risks they have encountered