52% of Ambitious Australian Businesses “Go Global”

Last year we conducted research into Australian companies’ international expansion ambitions and activities as part of our ‘UK Market Index’ report.

The results shed light on what the Australian business community was thinking prior to the coronavirus pandemic and provide an indication of how it might once again approach the international market when COVID-19 subsides—whenever that may be.

Founders/co-founders, c-suite executives and employees responsible for international sales and marketing took part in the survey. Respondents represent a wide range of industries, from tech and financial services to food & drink and hospitality.

An appetite for expansion at the startup phase

Over half (52%) of respondents said that the vision for their company had always been global as opposed to local—and younger businesses tend to make the first move.

2-5 years is the peak age that Australian businesses begin to explore international markets (23% of businesses surveyed), and 15% start to internationalise within just one year of trading. Only 4% of respondents began their international journey after 10+ years.

When asked ‘how many international markets do you want to enter in the next 12 months’, a few respondents cited as many as 10.

At the time China was the country Australian companies were doing business with most, followed by the US. The UK and New Zealand come in joint third, followed by an extensive list of 30 countries across different regions, including Canada, India and France.

What makes UK expansion attractive?

The Australian businesses surveyed ranked the UK as the sixth most entrepreneurial country after the US and China/Hong Kong, Japan, Germany and Singapore. Respondents also placed the UK at the number three spot for countries they are ‘not yet operating in that would be easiest to do business with’.

The top reasons Australian business believe the UK to be a viable market are as follows:

1. Access to a large customer base – 22%
2. English as an international business language – 19%
3. A stepping stone to other markets – 15%
4. Time zone – 14%
6. Multicultural customer base – 10%
5. Large talent pool – 9%
7. Ease of setting up a business – 8%

Challenges when entering the UK market

When it comes to “setting up shop” in the UK, 28% of Australian companies perceived challenges around “time taken to win customers”. “Understanding the business culture/way of doing things” followed suit with 24% of the vote, and 22% of respondents referred to “lack of contacts” as their main concern.

“Competing with local brands” and a “lack of understanding of UK financial and regulatory terms”—both of which can often prove to be the biggest hurdles—both scored 18%.

It’s easy to see why there are concerns around regulation among Australian businesses.

According to a survey by Stripe and global research firm VIGA, 39% of Australian businesses believe it is harder to operate in multiple countries than it was five years ago, with 49% suggesting that government tariffs are a major barrier to operating internationally.

Expansion strategy based on research, talent & advice

Of the ‘UK Market Index’ report’s Australian respondents, 34% believed that “conducting local market research/attending trade shows” is critical when entering the UK market. Obviously, this has been somewhat curtailed recently in terms of face to face opportunities, but virtual networking opportunities have increased – take a look at our recent UK Business Index poll results to get an idea of how UK businesses are thinking and reacting post COVID. Download the infographic here.

Other potential actions were “employing local talent” (33%), and “seeking local professional advice” (27%). 42% of respondents said they would consider “how to adapt their messaging” to appeal directly to the UK market before making the leap.

New research by Ipsos and the Australian Association of National Advertisers (AANA) reveals that, due to the uncertainty surrounding COVID-19, half of Australian marketers are withholding their budgeted advertising spend for the rest of the year.

It also acknowledges that, fuelled by “consumer uncertainty caused by new lockdowns and COVID hotspots” the trend towards marketing on online channels will continue and its “share of total media spend will accelerate as a result of the current economic crisis.”

The virtual space transcends international borders, so Australian businesses looking to expand to the UK following or even during coronavirus may want to focus more intently on optimising their online presence, including on social media and in the mainstream media.

Navigating the challenges that lie ahead

Australian brands are showing that international growth is still possible, despite the challenges the pandemic poses. In June Australian graphic design platform Canva announced a new valuation of US$6 billion from US$3.2 billion, after having raised a US$60 million round.

“Now more than ever, organizations of all sizes are doubling down on building a reliable remote workplace, and are turning to modern productivity platforms like Canva to ensure they remain flexible and scalable.”

  • Melanie Perkins,Canva CEO & cofounder

In terms of furthering its international growth, Canva is also open to considering acquisitions whereby it invests in companies for their world-class engineering and product teams.

It can be significantly more challenging for SMEs to access the funding they need to operate and grow at the moment, especially those in adversely affected sectors. However, there are other opportunities out there—especially when it comes to making international connections.

Many of the UK’s best trade shows and industry conferences are taking place online this year, making them much more accessible to international audiences.

“More and more organizations are offering their traditional conferences and events in online formats. Opportunities such as these can allow you to connect with others, expand your knowledge base, and gain new business acumen, all from the comfort of your own office.”

  • Jennifer Veenstra – Managing Director at Deloitte Consulting LLP

Remember, to get an idea of how UK businesses are thinking, you can download our UK Business Index infographic which shows what UK business is thinking and how it’s reacting post COVID here.