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Govt targets 'new markets' as businesses seek to spread wings

Business

The State Government will develop three new international strategies for markets it considers vital to forging stronger trading ties, in a bid to create and sustain local employment.

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Premier Jay Weatherill has spruiked existing strategic plans for marketing the state in China, India and South-East Asia, emphasised by major trade missions to each destination this year.

But Trade Minister Martin Hamilton-Smith told InDaily: “I believe we need three more.”

He hopes to develop strategies for the North Atlantic, North Asia and the Middle East over the next 12 months.

The North Atlantic strategy will examine trade and engagement opportunities in the US and Europe, including the UK, while North Asia will cover Japan and South Korea. Hamilton-Smith said the third paper would address North Africa and the Middle East, “which I think is a really important market for us”.

“When we’ve got those three complete, we’ll have a more complete engagement strategy to trade, because that’s the way we can grow the number of jobs,” he said.

The revelation follows the release, detailed in yesterday’s InDaily, of the first calendar of in-and-outbound trade missions, which the minister hopes will become an annual fixture, to provide greater certainty to businesses both here and abroad.

Hamilton-Smith says while there have been moves towards helping businesses strengthen exports, “it’s not enough”.

“Businesses have been battling away on their own…79 per cent haven’t participated in an outbound event,” he said.

“They haven’t been engaged and we’re trying to engage them.”

To that end, his Department of State Development has surveyed hundreds of South Australian businesses, with the results to be published today as a snapshot of state business trends.

The summary follows the release last week of InDaily’s SA Business Index, which ranked the top 100 companies in the state.

Hamilton-Smith said when he began in the ministry he asked his department “how many businesses in SA trade with India…and I found my agency couldn’t tell me at that time”.

“What I found was we needed to improve our research and our science in who was trading, who was exporting and who was importing,” he said.

“I started a process of improving our science and research.”

mhsstats

Hamilton-Smith outlines his department’s findings. Photo: Nat Rogers / InDaily.

The department surveyed almost 2000 businesses, of which 543 responded.

Unsurprisingly, the results underlined that SA is a state primarily driven by small and medium businesses, with 85.7 per cent of respondents having exported in the past two years.

Of the remainder, 63.2 per cent said they intended to export in the next two years.

A much larger proportion – 84.9 per cent of 469 respondents – said they intended to enter “new markets” in the next two years.

More than half of the respondents (52 per cent) reported the total value of their exports to be less than $500,000, with 28 per cent less than $100,000. Only 15 per cent said their international sales were worth more than $5 million.

China was the single biggest export destination in the past two years.

SA Exports 2015 Stats - Circle

Markets exported to in the past two years.

Of the large “Other” contingent, the largest markets were Malaysia (3 per cent), India, Papua New Guinea and the United Arab Emirates (all 2.3 per cent).

However, India – to which the Government has already dedicated a specific engagement strategy – is expected to grow significantly as a trade destination, with 6.7 per cent of businesses surveyed intending to enter the market in the next two years.

China also represented the biggest single market businesses intend to enter in the next years, with Europe (including the UK), North America, South East Asia and East Asia (including Japan, Korea and Taiwan) also heading the list of prospective trading destinations.

The majority of respondents reported that cost was the main impediment to increasing exports.

Most wanted increased grant opportunities, less red tape and the chance to promote their export capabilities through trade missions, marketing and referrals.

Of those that had previously sought export assistance, most (30.6 per cent) found development grants the most useful means, followed by AusTrade (22 per cent).

Only a fifth of respondents had previously participated in outbound trade missions, but the vast majority of those found it effective to some degree (30 per cent found it “moderately effective”, 30 per cent “slightly effective” and 19 per cent “very effective”).

There was greater participation, though less enthusiasm, for inbound trade missions, though three quarters of respondents still found their experience effective (though only 12 per cent enthused it was “very effective”).

 

SA Exports 2015 Stats - Bar Graph

Industry sectors.

It followed the release last month of a sectoral analysis of the state economy, which found that 203,000 jobs in SA “depend on activities outside the state”.

“That’s tourism, it’s selling things,” Hamilton-Smith said.

Most of those – 113,800 – were from exports interstate while, as InDaily detailed yesterday, 65,200 were linked to overseas trade.

The research was independently verified by researcher John Spoehr.

“The starting point with this is the number of jobs that hinge on exports,” Hamilton-Smith said.

“Nearly 30 per cent of the jobs in SA depend on selling things outside the state.”

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