Australian Institute of Export - Wednesday, January 18, 2012
Despite the global economic downturn, Australian businesses continue to find exciting opportunities to trade and expand overseas. It's at times like these that viable international opportunities can be at risk due to the challenges in providing adequate security to underpin the financing required. Often the bank may agree with their customer’s potential for success, but simply can’t look beyond the balance sheet.
Strong demand from both the large corporate and SME sectors, particularly those involved in or supplying to the manufacturing and mining industries are creating further demand for services from Australia’s export credit agency, Export Finance and Insurance Corporation (EFIC).
That was the case of Innovative Technologies 2 Pty Ltd (ITG), a Melbourne-based automotive manufacturing supplier that won a $1.4 million contract to manufacture and supply production line equipment for a client in China. However, like many SMEs going through rapid growth, ITG’ s working capital was stretched by the funding required for the new contract works.
To support ITG, EFIC provided a $750,000 export working capital guarantee to the company’s bank, ANZ. ANZ was then able to lend this amount to ITG to help finance the manufacture of the equipment.
With the help of EFIC’s export working capital guarantee, ITG was able to deliver on this contract and once again demonstrate their ability to meet the market demands on high quality vehicle testing equipment in the Asia-Pacific region.
Australian Institute of Export - Tuesday, January 17, 2012
Warning: Coface country risk assessmentmeasures the average level of payment defaults by companies in a given country within the framework of their commercial transactions. It does not pertain to sovereign debt. To determine the country risk, Coface combines the economic, financial and political outlook of the country, Coface’s payment experience and business climate assessment.
Assessments have a seven-level scale: A1, A2, A3, A4, B, C and D.
On the occasion of its 16th Country Risk Conference, Coface is principally issuing a warning about the systemic nature of the current crisis, of which the Euro zone is the epicentre. In 2012, the European economy will be marked by a recession rate of -0.1%, while growth will stabilise in the USA at +1.6% and recover in Japan at +1.8%. This should prevent a return to the worst of the 2008-2009 crisis, characterised by a synchronised recession in all three advanced economic areas. Overall, growth in advanced economies will be 1.1% in 2012. Emerging countries should maintain growth at 5.1%, with a 0.6-point drop in GDP against 2011. Emerging European economies will be the areas most exposed to the intensification of the Euro crisis through both commercial and external banking credit channels.
In addition, among the risks to be monitored is a clear return of political risks in emerging countries.
European companies: victims of the new global systemic crisis
The period from the second half of 2009 to the first half of 2011 was a brief respite for the world economy. The situation worldwide has deteriorated since the summer of 2011 with the crisis in the Euro zone worsening. Coface has noted a clean break in companies’ payment behaviour in the second half of 2011, with a sharp rise in non payments. For 2011 as a whole, Coface recorded a 19% rise in payment incidents worldwide, with a particularly marked increase (28%) for companies in the Euro zone.
The deterioration of average company solidity demonstrates that the crisis is taking a new direction and has attained a global systemic level with Italy entering a recession. The situation appears to differ from the 2008 shock as a result of this critical mass effect, but also because of increased financial interdependence and the exposure of banks both inside and outside the EU to European sovereign debts.
“With no rapid response from institutions to the crisis, negative forecasts on financial markets have prompted the distrust of actors of the real economy. However, it will be the corporates that will feel the repercussions of this crisis despite that fact that they have never been managed so well. In 2012, the combination of significantly weaker growth in Europe with the drying up of credit facilities could significantly affect the companies’ credit risk”, stresses François David, President of Coface.
In light of the deteriorated situation, Coface has downgraded its assessment of Italyand Spainby one notch to A4. Italy has been made vulnerable by massive public debt; Spain by the debt levels of its private sector. The two economic powerhouses of southern Europe will also suffer from a contraction in activity in 2012. Coface has noted a rise of 50% in companies’ payment incidents in the two countries since the start of 2011.
Increased vulnerability in emerging European economies to a contraction in European demand
The emerging European economies will suffer the most from the contraction in demand and financing movements within the Euro zone. Given their exposure to sovereign debt in the Euro zone, Western European banks will be obliged to reduce support to their subsidiaries, which will affect the granting of credit facilities to companies. Assets held by European banks account for 70% of Eastern European GDP. It is also estimated that one-fifth of the growth in the last decade in Eastern Europe can be attributed to dynamic trans-frontier credit. Were the European credit tap to be shut off, there would be a major impact on emerging European economies, which also frequently have a private sector with massive currency debts.
The growth of open economies will be halved from 4.1% in 2011 to 2% in 2012. The A2 assessments of the Czech Republicand Sloveniaas well as the A3 assessment for Slovakiahave been placed under negative watch. Hungary is facing increased investor distrust and has been downgraded to B. Exposure to Italian risks and the weakness of activity resulting from an exchange rate shock have prompted Coface to downgrade the assessment of Croatia to B.
Emerging countries fall prey to the return of political risks
The wave of political unrest in North Africa and the Middle East in 2011 was a turning point in emerging economies that heralded a return of political risks. In 2011 Coface noted several non payments as a result of political risks. The wave of regime changes can be attributed to the inexorable surge in the will to change the societies in emerging countries. This reflects profound economic and political frustration, supported by a burgeoning middle class and social and cultural changes (access to the Internet, falling fertility, travel). In emerging democracies, as in Latin American countries, frustration is expressed by higher crime rates, whereas regime changes in authoritarian States take place when incumbents are no longer capable of meeting the increasingly pressing hopes of their population in terms of political rights and access to employment and entrepreneurship.
The current process of political transformation in the North Africa / Middle East region is not without consequences for some country risk assessments. The assessment of Egypt, which faces pressure on its public finances and foreign accounts, was downgraded to C, primarily owing to the large uncertainty of its political situation in 2012. Syria, downgraded to D, is experiencing an extremely tense situation in which international sanctions will have an adverse effect on economic growth and public finances.
Coface has decided to remove positive watch on the D assessment of Nigeria. Its problematic governance remains a key risk factor for non-payment by the country’s entities.
The Coface Group, a worldwide leader in credit insurance, offers companies around the globe solutions for trade receivables management. In 2010 the Group posted a consolidated turnover of € 1.6 billion euros. 6,400 staff in 66 countries provide a local service worldwide. Each quarter, Coface publishes its assessments of country risk for 156 countries, based on its unique knowledge of companies’ payment behaviour and on the expertise of its 250 underwriters.
In France, Coface manages export public guarantees on behalf of the French state.
Coface is a subsidiary of Natixis whose share capital (Tier 1) was 16.8 billion Euros end December 2010.
Despite the global economic downturn, Australian businesses continue to find exciting opportunities to trade and expand overseas. It's at times like these that viable international opportunities can be at risk due to the challenges in providing adequate security to underpin the financing required. Often the bank may agree with their customer’s potential for success, but simply can’t look beyond the balance sheet.
Today, the resources boom is creating a new gap in financing for export contracts. Strong demand from both the large corporate and SME sectors, particularly those involved in or supplying to the Australian mining and resources industry is creating further demand for services from Australia’s export credit agency, Export Finance and Insurance Corporation (EFIC). Onshore projects with export supply contracts in place are increasingly calling on EFIC and international ECAs to participate in their financing while SMEs supplying these projects are also seeking EFIC and bank support.
That was the case of Lean Field Developments Pty Ltd (Lean Field) which won their first major Australian pipe laying contract with QGC Pty Limited (QGC), a subsidiary of Britain’s BG Energy Holdings Limited, for the installation of gas and water pipelines in Queensland’s Surat Basin.
The Brisbane-based start-up, specialising in servicing the rapidly developing coal seam gas industry in Queensland, is part of the supply chain to the massive Queensland Curtis LNG project.
Like other suppliers, Lean Field was required to provide performance bonds to QGC in support of its contractual obligations under the pipe laying contract. The company also needed additional liquidity for existing and proposed contracts. However, as a company without a long trading history in Australia, it was unable to obtain traditional bank finance for performance bonds.
Lean Field was able to meet its contract obligations with the backing of an EFIC’s bonding line and an export working capital guarantee facility to support a standby loan facility from the Company’s bankers.
Australian Institute of Export - Monday, January 16, 2012
On behalf of us all at the Australian Institute of Export welcome to 2012. One can never really predict what lies ahead but if the dollar remains high and the international business environment shows little sign of recovery, it will continue to be tough for many Aussie exporters. But in saying that, the US is looking brighter and if China holds up then many major export opportunities will continue to flourish pushing growth in the Australian economy, albeit a two speed economy, for some time yet.
The Institute’s agenda in 2012 is strong. First we have a new President. Dianne Tipping, well known to many of our colleagues particularly those who have experienced an AIEx training program, who took up the task this month. We would like you to join with us in welcoming Dianne to this important role and wishing her well.
Top of the AIEx activities list is the Australian Export Heroes Awards which will be held this year in Sydney. If you know of someone who has, over a long period of time, made a significant contribution to international trade please let us know. Nominations close at the end of February should be directed to Lisa McAuley at lisamcauley@aiex.com.au
This year we also celebrate the fiftieth anniversary of the Premier's NSW Export Awards. Given this important milestone the Institute and NSW Trade & Investment are planning a number of special events in metro and regional NSW culminating in the awards ceremony in October. It will be the biggest export event on the state’s calendar and we encourage you to get involved through entering the awards and having your company recognised for its export achievements. Contact lisamcauley@aiex.com.aufor details.
For those new to export, those looking to export to develop their business, or current exporters assessing new market opportunities, the Institute has a range of activities planned for 2012 designed to help develop and build a sustainable export business. Details of these programs including the Future Leaders in Export Club, seminars and workshops on new markets and international trade disciplines will be available on our website at the end of this week.
In the meantine, we would like to invite you to participate in a short survey that will help ensure our 2012 Future Leaders in Export (FLEx) program continues to present topics that you are interested in. Please click here to follow the link to complete the survey online, which should take just 5-10 minutes of your time. We look forward to seeing you at FLEx meetings commencing in February 2012.
In a difficult export environment possessing the sound international trade skills must be top of your list. Never has it been more important to effectively manage the export risk than it is today. With over fifty year’s experience, the Institute has the best skills development programs available in Australia. Whether face to face, on-line or at your company the Institute provides a flexible range of programs on all key aspects of doing business overseas. For details contact petermace@aiex.com.au or consult our website at http://www.aiex.com.au/education-training/short-courses-workshops
One of the most important things we do at the AIEx is to work with Government in building Australia’s international competitiveness. Whether promoting improvement to the Export Market Development Grants Scheme, lobbying government on tackling the high cost of trade facilitation or building a case for greater access to trade finance, the Institute is there on your behalf taking these issues to Government. To do this effectively, build our export skills and recognise excellence we need your input and participation. Through becoming a member of the Institute you can participate in a range of rewarding activities, benefit through discounts on skills development programs and assist us in getting your message to Government. Details can be found on http://www.aiex.com.au/membership/membershipWe wish you every success in 2012 and thank you for your support.
Ian Murray
Executive Director, Australian Institute of Export
At the Opening Ceremony for the 2012 Association of Southeast Asian Nations (ASEAN) Tourism Forum in Manado Indonesia, Australian Company Laservision, were honoured for creating the ‘Best New Tourist Attraction’ in South East Asia.
The ASEAN Awards for Excellence in Tourism gives recognition to ASEAN organizations who have contributed to the development and promotion of tourism in the Southeast Asian region including, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Laservision’s ‘Wonder Full’ Light and Water Spectacular was selected as the Best New Tourist Attraction for its creativity in design, functionality, harmony with the environment and the overall quality experienced by audiences. This Award recognises Laservision’s continual contribution in delivering new and innovative solutions to the tourism industry stimulating economic development within the region.
The Singaporean Tourism Board (STB) represented by the Assistant Chief Executive of the International Group & Corporate Development, Mr Lawrence Leong, was present to celebrate the success of the Spectacular’s accomplishment.
The recently launched ’Wonder Full’ produced for the Marina Bay Sands Integrated Resort in Singapore, has become an iconic feature of the cosmopolitan city and the Number One Night Time Attraction in Singapore!
In accepting the award, Laservision’s Shannon Brooks (Director of Projects and Marketing) stated “Laservision has a long and enviable track record of producing number 1 night time Tourist Attractions around the globe. From Singapore’s ’Wonder Full’ Light and Water Spectacular to Hong Kong’s ‘Symphony of Lights’; the Guinness World Record for the ’Largest Light & and Sound Show’ in the World. The recognition by ASEANTA of this success brings credibility to companies like Laservision who are at the forefront of the Entertainment, Attractions and Tourism Industry.”
The 360 degree Multimedia Attraction entertains millions of spectators around Marina Bay, acting as a ‘beacon across the bay’ drawing audiences and onlookers to the Integrated Resort. Recognised as Southeast Asia’s Largest Light and Water Show, the 13 minute multi-sensory spectacular explores humanity and the beauty of the human life through original Singaporean footage, in harmony with a culturally customised Sound Score and an abundance of mediums spanning the 20 hectare Marina Bay Sands Site.
Ceremony Guests included the Secretary General of the United Nations World Trade Organisation Mr Taleb Rafai, the ASEAN Tourism and Creative Economy Minister Mari Elka Pangestu and the Vice President of the Republic of Indonesia H.E. Prof. Dr. Boediono. In his opening address, Mr Taleb Rafai highlighted the importance of the Asian tourism industry in light of the unstable economic environment experienced through Europe. Mr Rafai went on to say that “With over 75 million tourists visiting the ASEAN region last year, generating 1.2 trillion dollars in tourism revenue, the ASEAN nations form an significant part of the world’s tourism industry.”
The Association of Southeast Asian Nations were represented by officials from Japan, Thailand, Singapore, Malaysia, Vietnam, Philippines, China, Indonesia, Korea and Cambodia.
With offices in Singapore, Hong Kong and Sydney , Laservision are currently engaged on projects in Australia, Hong Kong, India, Saudi Arabia, Macau, The United Kingdom, Singapore and Russia. Laservision looks forward to expanding its scope of multimedia attractions throughout 2012 whilst continuing to entertain millions of spectators around the world every night with their unique technologies and Innovation. Learn more about Laservision’s amazing projects at www.laservision.sg
“To be world leader in medium voltage pole mounted switchgear”. This is the NOJA Power Group corporate vision statement and another step towards achieving it has been taken with the establishment of NOJA Power Switchgear Do Brasil, in the city of São Paulo.
The new NOJA Power subsidiary in Latin America will include office and factory facilities to allow for all business activities to evolve further including sales, marketing, manufacturing and service of the NOJA Power´s OSM Automatic Circuit Reclosers and RC10 microprocessor based controllers.
NOJA Power has nearly a decade of history in Brazil where the OSM product is in reliable operation in the network of all major power utilities today. Design features such as reduced size and weight, solid dielectric insulation, arc fault containment and venting in a stainless steel tank, voltage measurement on all six bushings and functionalities such as full directional protection, built-in automation algorithms and powerful application software have turn the OSM product into the solution of choice for standalone and Smart Grid applications of several Power Utilities in Brazil and worldwide. Another key point of the company´s success in Brazil is NOJA Power´s unrivalled service and support provided by factory trained engineers and technicians available on a 24/7 basis to provide customized technical support and engineered solutions, assisting the users to make the most of their devices.
The new office and factory premises will allow for intense marketing and sales activities, as well as for the manufacture of the OSM Automatic Circuit Recloser up to 38 kV both for overhead and substation applications and the RC10 controller, being the first units scheduled to be outputted in the second quarter of 2012. The strict quality and environmental policies which are part of the NOJA Power business philosophy will also apply to the Brazilian branch and certifications such ISO 9001 and ISO 14001 are also on the way.
Whilst primary planned to supply the domestic market, NOJA Power Brazil will have the capabilities to assist other markets in Latin America, not only from the supply but also from the marketing, service and support perspectives, strengthening NOJA Power´s presence and business activities in that part of the world.
“NOJA Power established NOJA Power Do Brasil to service the Brazilian market due to the growing demand for pole mounted switchgear in Brazil. We see Brazil as the powerhouse of South America and the right location to develop our South American base. NOJA Power Do Brasil capabilities will be developed to manufacture our standard pole mounted switchgear products in Brazil to service the local and surrounding markets”, says the Managing Director of The NOJA Power Group, Mr. Neil O´Sullivan.
A Redhead manufacturer of ultralight aircraft has seen positive growth in its exports to China with assistance from the NSW Government.
Member for Swansea Garry Edwards said Airborne Australia, which specialises in the design and manufacture of ultralights and hang gliders, had received assistance this year through NSW Trade & Investment’s Global Growth program.
“With strategic advice and assistance and some financial support from the NSW Government, Airborne Australia’s marketing in China has resulted in increased sales,” Mr Edwards said.
“Airborne Australia is an established exporter, with sales to Mexico, the United Kingdom, USA, Indonesia, New Zealand, Italy, France and Canada, and with expert advice from NSW Trade & Investment’s Central Coast export adviser, the company is expanding the international side of its business.”
Airborne Australia’s Marketing Director Rob Hibberd said the structured support from NSW Trade & Investment helped the company to grow its exports despite difficult global business conditions and the strong Australian dollar.
“International sales make up about half our business. Through the Global Growth program, NSW Trade & Investment has helped us with our export strategy, market research, focused information and other advice that we can apply across markets,” Mr Hibberd said.
“We used the Global Growth financial support for Chinese language advertising on a web portal and a Chinese language page on our website, which have proved very effective and resulted in increased sales.
“These initiatives are part of our social media strategy, which includes a YouTube channel and a Facebook presence and has been very successful in driving traffic to our website.
“China has become Airborne’s largest foreign market and we believe there is considerable potential for our sales to grow even more. The sport of microlighting, hang gliding and paragliding is growing in China and with Chinese airspace opening up to recreational flying, it will give many more people the chance to experience the thrill of flying.
“One of our microlights is being used in a crop spraying trial in China, which could further increase our sales.”
NSW Trade & Investment provides a range of export development programs for new and established exporters across the State.
MEDIA: Office of the Member for Swansea (02) 4972 1133
“Brazil, because it’s one of the world’s fastest growing markets, promises wonderful opportunities for Australian exporters” says Ian Murray, Executive Director of the Australian Institute of Export. But Mr Murrays says “Brazil is a very complex place in which to do business, with lots of unknown traps for the inexperienced exporter”. Good upfront research which identifies not only the market dynamics but importantly the business culture is a critical factor.
“For five lucky Australian exporters the University of Sydney can assist” Mr Murray said. “In February 2012, five teams of three to four final year Masters’ students from the University will be heading to Brazil to undertake market research for five members of the Australian Institute of Export all of whom have identified Brazil as a potential export opportunity”.
“The five companies involved are really quite diverse” Mr Murray said. Flip Screen Australia, a Wagga Wagga company is an industrial screening company targeting the mining sector. Taree based commercial boat builder Stebercraft is looking at the police, armed and emergency services sectors. Gloria Jean’s Coffees International and McWilliams Wines, companies needing little introduction believe the retail opportunity is strong while surf and streetwear company Zanerobe need to know the fashion business dynamics.
The projects Academic Advisor is Professor Sid Gray, Head of International Business at the University of Sydney. Professor Gray said “It won’t be a walk in the park or two weeks taking in the sights of Sao Paulo, it’s going to be full on in Brazil and during the briefing sessions, which essentially start now”. These briefings he said will be followed by visits by the students to all the companies involved, meeting the key people and getting a thorough understanding of the company, the products, the competitive advantage and of course their financial ability to meet the likely demands of building a business in Brazil. At the end of the project, he said “students will be required to deliver a presentation and submit a report for assessment”.
Given the interest in the Brazil project Professor Gray said the University of Sydney is planning similar projects with the Australian Institute of Export in China and India in 2012.
Media Contact: Lisa McAuley on T: 02 8243 7400 or E: lisamcauley@aiex.com.au
Australian Institute of Export - Thursday, December 15, 2011
Having worked in some difficult business locations I know the value of having somebody do some good upfront research which identifies not only the market dynamics but importantly the business culture or business philosophy likely to be encountered in a complex market.
Brazil, because it’s one of the world’s fastest growing markets, promises wonderful opportunities for Australian exporters but in saying that, it remains a very complex place in which to do business, with lots of unknown traps for the inexperienced exporter.
For five lucky Australian Institute of Export members upfront research into the Brazilian market is about to be the order of the day. In February 2012 five teams of students from the University of Sydney will be heading for Brazil to undertake a two week intense business project as part of their Masters’ degree. Each team comprising up to four final year students in Master of Management, Master of Marketing or Commerce will work with an Australian export company that has identified Brazil as a potential export opportunity.
From a university perspective the objective of the project is to provide students with real life business experience along with the opportunity to prove skills within a professional environment. From a business perspective the assignment will provide the five participating companies with a skilled resource to undertake research and provide solutions/outcomes by way of a professional consulting.
All that sounds pretty straight forward and exciting, but as Academic Advisor Professor Sid Grey puts it, “it won’t be a walk in the park or two weeks taking in the sights of Rio, it’s going to be full on in Brazil and during the lead up which essentially starts now”. Briefings in fact started this week. These briefings will be followed by visits by the students to all the companies involved, meeting the key people and getting a thorough understanding of the company, the products, the competitive advantage and of course their financial ability to meet the likely demands of building a business in Brazil. At the end of the project, students will be required to deliver a presentation and submit a report for assessment.
As one would expect there was strong interest from Australian companies wanting to be involved. Submissions were assessed by key University personnel who will be involved in supervising the project from start to finish. On the final list is a really diverse range of companies all with great potential and all providing the students with a wide range of challenges. The five Institute members involved are, Flip Screen Australia, a Wagga Wagga based company in industrial screening, whose key interest is the mining sector. Well known and highly successful coffee company from Castle Hill in Sydney, Gloria Jeans Coffees International, award winning and well know wine company McWilliams Wines, Taree based commercial boat builder Stebercraft, who design and build craft for the police, armed services and emergency services and surf and streetwear company Zanerobe.
What is really pleasing about this project is the value it adds to both parties. Students will get enormous benefit from working on real projects and delivering business outcomes. The companies involved will naturally receive professional research and between them I’m sure strong relationships will evolve.
And given the success of the Brazil project the University of Sydney is planning similar projects through the Australian Institute of Export in China and India in 2012.
With all the difficulties being faced by exporters, cut backs by Government for programs that drive our export growth, it’s really refreshing to see this sort of initiative from Sydney Uni. We wish Sid and his team a safe and successful trip to Brazil and perhaps we will see a few export winners a little further down the track.
Australian Institute of Export - Thursday, December 15, 2011
The year just past will not go down in history as the most satisfying for Australia’s export community, many of whom are our members and friends.
While skills development is and always will form the cornerstone of what we do, we have this year played an increasing role in getting the message to Government on the plight of our non resources based exporters. While on the surface it may not be apparent, the message, we believe, is getting through. Our task in 2012 is to “maintain the rage” and simply not accept the argument that Australia’s future is based on the resources sector alone, but on a well balanced portfolio of exports which includes manufacturing, food and services to name just a few. With your continued support we will continue to hammer this message home and to take the strongest stance possible on reminding Government that continued additional taxes will even further erode our international competitiveness.
We would like to take this opportunity to thank all who participated in the 2011 Export Awards across Australia and congratulate those who won. The awards program is a wonderful vehicle for exporting companies to review their export strategies, reward their hard working staff and measure their performance against their peers. It would be remiss of me not to make mention of the six outstanding people who become Australian Export Heroes this year. Their extraordinary contribution to building Australia’s international business capability and our export culture was recognised at Government House in Queensland in June.
As a sound believer in the value of collaboration, the Institute has worked closely this year with a whole range of organisations including Universities, associations and government agencies. We would like to thank all our partners and sponsors for their support this year and we look forward to working with you in 2012 to play our role in driving Australia’s export performance. Especially though, we thank our members and friends for not only their support but their wise counsel, which is often drawn upon. It’s greatly appreciated.
Although next year will once again be tough, the Institute has on the agenda some exciting initiatives a number of which will be revealed quite early in the year. All these initiatives are aimed at building capability and performance in International Trade. We wish you all a safe and happy festive season and look forward to attacking the challenges of 2012 with your support. And please remember, if you are a member and you have issues you would like taken to government or queries relating to the process of International Trade please send them to us; it is what we are here for.
Ian Murray- Executive Director, Australian Institute of Export
