2015 ECA International Business Today Winter by arkmedia4217

E x p o r t C o u n c i l o f A u s t r a l i a | w w w. e x p o r t . o r g . a u | W I N T E R 2 0 1 5

BUMPER PLACES ISSUE:

THE UNITED STATES: STILL THE LAND OF OPPORTUNITY

HOW TO AVOID A CROSS-CULTURAL FAUX PAS

GERMANY CONFIRMED A TOP PLACE TO DO BUSINESS

INDUSTRY 4.0: ‘SMART’ MACHINES & THE NEXT INDUSTRIAL REVOLUTION

SIEMENS AUSTRALIA CEO JEFF CONNOLLY

Weâ&#x20AC;&#x2122;ll be there for your next big step. Efic is a specialist financier that delivers simple and creative solutions for Australian companies â&#x20AC;&#x201C; to enable them to win business, grow internationally and achieve export success.

1800 093 724 www.efic.gov.au

CONTENTS International Business Today WINTER 2015

FOREWORD CEO’s report

Editor’s letter

FEATURES Export House Level 2, 22 Pitt Street Sydney NSW 2000 Toll free: 1300 361 526 Phone: 02 8243 7400 E-mail: info@export.org.au Fax: 02 9251 6492

The Hon Andrew Robb MP’s column

Tertiary teaching nearing a crossroads

Re-engineering global manufacturing

Regulations on military exports to be tightened

REGULAR COLUMNS News

People

Spotlight on

Staff profiles

Tim’s tips

Website: www.crowtherblayne.com.au

Calendar and programs

NSW sales manager: Tim Evans

Courses

Published by:

Phone: 1800 222 757 Fax: 1800 063 151 Email: publications@crowtherblayne.com.au

Sales: Liam Daly, Josie Mersnich and David Hayes Studio manager: Byron Bailey Design team: Carol Taylor and Byron Bailey Editor: Richard Szabo Production controller: Yvonne Okseniuk Printed by: Newstyle

BUMPER PLACES The US: still the land of opportunity

Postcard from Chicago

Germany: Europe’s export star

Postcard from Berlin

EXPORTER All rights reserved © 2014 ISSN: 2202-2236 No part of this work covered by the publisher’s copyright may be reproduced in any form by any means, graphic, electronic or mechanical, including photocopying, recording, taping, or information storage and retrieval, without the written permission of the publisher. Any unauthorised use of this publication will result in immediate legal proceedings. Publisher’s Note: Although every care has been taken to ensure the accuracy of the information contained within this publication, neither the publishers, authors nor their employers can be held liable for any inaccuracies, errors or omissions. Readers are strongly advised to contact their professional advisor before entering into any contract to buy or sell any security.

Giant ambitions for Aussie animatronics business

Truffles no trifling venture

DOING BUSINESS Avoid a cross-cultural faux-pas and save the deal

Secrets to export success finally disclosed

Understanding incoterms

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

CEO’S REPORT

he decision to export is a logical and natural option for many businesses. Sometimes, the motivation to develop an export market is triggered by an unsolicited request from an overseas company to purchase a business’ product or services.

At other times, the motivation to export is the result of a well-considered company decision to develop additional sales opportunities and increase profits. Irrespective of whether the motivation to export is based on the ‘pull’ of an unsolicited enquiry or ‘push’ of an initiative to develop overseas sales, the first step should be to realistically review resources available to develop and support this activity. This starts with building a real understanding of what it takes to make exporting a success. More importantly, management needs to commit sufficient resources for dedicated exploration of international markets. This includes resources to research global market prospects and develop an export plan. It is also essential to have financial resources to cover new expenses, given there has often been a long payback period when first selling abroad.

Lisa McAuley

Get global ready Here are some resources available to companies through the Australian Institute of Export. Export Procedures and Documentation course: This will help you and your staff develop skills and knowledge on export procedures and export documentation, which is vital for any company doing or planning to do business overseas. Australian Export Handbook: This essential export tool kit is a comprehensive guide to practical aspects of export for new and experienced traders. It is the authoritative reference on export practice. The Export Council of Australia also offers importing courses and publishes the Australian Import Handbook.

It is also essential to have international experience or the ability to access external advisers, if the company does not already have it internally, to work-out your market entry options. Aspiring global businesses also need to be aware there will be a substantial administrative impost on the business when it begins to explore international opportunities. New payment arrangements will be required, and careful thought needs to go into how operating in a different currency will impact the business. Product and label modifications will more than likely be required, and most businesses will need to explore new production solutions for export markets. This is in addition to new logistical arrangements required to ship to a new market, as well as export insurance and credit insurance checks. If you are considering whether to enter a new global market you will also need to explore how to protect your intellectual property plus any new office, internet, email and teleconferencing facilities you will require – which are essential for any international business. While this might seem like a formidable list of things to do, there is assistance available to help companies navigate through the process. It is essential to be prepared in advance. There are many tools available through federal and state governments as well as the private sector to help businesses become internationally ready. The best advice I can give any company looking to expand overseas is to manage the risks upfront. While expanding a business globally can be a rewarding and profitable aspect of business, I urge anyone considering this path to explore some of the following tools in the adjacent box to ensure your journey is a success. More information on all tools available can be found at www.aiex.com.au

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EXPORTERS.

WE’VE GOT YOUR BACK. Exporters with the right intellectual property advice are more likely to succeed. Talk to AJ Park today. Coffee’s on us.

Blair Beven 02 9235 7610 export@ajpark.com

EDITOR LETTER

elcome to the winter issue of International Business Today, which once again is jampacked with fascinating stories to help you explore export markets. This time we will have a real focus on manufacturing, which is great news for a sector of the economy that has experienced its fair share of ups and downs. For instance, a new trend is emerging in manufacturing called Industry 4.0. You can read all about it in our special feature on this exciting new concept, which involves harnessing new technologies to bring manufactured products to the market in a speedier and smarter fashion. It bodes well for local manufacturers, although more could be done to stimulate investment, research and development to help support businesses that have potential to profit from this trend. We also look at the emergence of ‘massive online open courses’, more commonly known as MOOCs. In our feature, we explore their potential to be a disrupter in the education export sector. What’s most fascinating is the business case for the courses themselves is slim, but the products and services that are spun out of them have massive global potential.

Alexandra Cain

This issue is also a bumper ‘Places’ and ‘Postcards’ edition. You might be familiar with our Places section, in which we explore the economic dynamics of a particular export market. This winter we’re featuring two countries – the United States and Germany – which fits nicely into our manufacturing theme given these two nations are some of the most advanced industrial countries. Our ‘Postcards’ section also highlights two cities, Chicago and Berlin. Reading about the exciting things to do in both vibrant towns almost had me booking a plane ticket to see them first-hand. You might remember last issue we introduced some of the newest members of our team and, in this issue, you can learn more about them in our new staff profile section. It is a great chance to get a behind-the-scenes understanding of the Export Council’s work. Finally, don’t forget to read Tim ‘the Airport Economist’ Harcourt’s regular feature called Tim’s Tips. He takes a look at one of our most important trading partners, South Korea. Did you know former prime minister Bob Hawke launched the idea for APEC there back in the late 1980s? This laid the foundation for a solid relationship between Australia and Korea that continues to this day. I hope you enjoy this issue.

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EMPOWERING TRADE AND INVESTMENT BETWEEN AUSTRALIA AND THE ARAB WORLD

www.austarab.com.au

NEWS

Courtesy of Fremantle Ports

CLOSER CYBER DIALOGUE BETWEEN JAPAN AND AUSTRALIA

ustralia and Japan have started working more closely on a bilateral approach to cyber regulation, following the inaugural meeting of the Australia-Japan Cyber Policy Dialogue in February 2015. The purpose of the forum was to develop a co-operative approach to cyber regulation. At the meeting, the two nations were able to more deeply understand each other’s views on and approach to cyber regulation. Delegates discussed potential joint approaches to combating cybercrime, critical information structure protection and cyber security, in the lead-up to important events including Japan’s hosting of the 2020 Olympic and Paralympic Games. The second meeting will be held in Japan during 2016.

WA REMAINS DOMINANT EXPORT STATE

estern Australia remains Australia’s most important export state, according to a recently released report.

The Department of Foreign Affairs and Trade’s reports Australia’s Trade by State and Territory 2013-2014 shows exports from WA made up an impressive 41.7 per cent of our nation’s total exports across the period, accounting for $138 billion of export revenues. WA’s dominance in Australia’s export numbers comes as little surprise as most significant export commodities are iron ore, concentrates and coal. These resources accounted for $106 billion or 32.2 per cent of total exports. On a state-by-state basis, South Australia recorded the most impressive improvement in the increase of exports and imports based on percentages. SA produced a 9.3 per cent increase in export volumes, and a 6.7 per cent improvement in import volumes across the period. Meanwhile, WA experienced a 7.4 per cent increase in export volumes, Queensland jumped 4.7 per cent and Victoria rose 1.9 per cent. New South Wales and the Northern Territory each had a modest 0.8 per cent surge in export volumes. However, export volumes for Tasmania were down by 13.7 per cent while the Australian Capital Territory fell 9.6 per cent.

REVIEW TO BOLSTER SERVICES EXPORTS

xport service providers will be pleased that Federal Treasurer Joe Hockey, and the Minister for Trade and Investment Andrew Robb will have asked the Productivity Commission to conduct a review to increase Australia’s services exports. Service industries are a large and growing share of the Australian economy and world trade. While services account for approximately 70 per cent of the Australian economy, they represent only 20 per cent of Australia’s total exports. This indicates there is scope for significant growth. Exploring this potential is the main aim of this review. The study will focus on education, financial services, health services, information technology, professional services and tourism sectors. We encourage Australian service exporters to put forward submissions. For more information go to www.pc.gov.au

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NEWS

BE RECOGNISED FOR YOUR EXPORT SUCCESS AT THE NETWORKING EVENT OF THE YEAR

pplications for the 2015 Premier of Queensland and Premier of New South Wales Export Awards open in May, giving Queensland and New South Wales exporters another chance to be recognised for their export success. These programs are statewide competitions that reward businesses, regardless of size or location, which have shown a commitment to growing a global business. The Export Awards provide winners with an opportunity to raise their company’s profile in Australia and overseas, while exposing businesses to valuable networking opportunities. These prestigious annual awards are part of the national Australian Export Awards program and celebrate the innovative talent and spirit of the nation’s top exporters by honouring the significant contribution they make to our state and national economies. “Winning the Export Award has given our team fantastic recognition for all the hard work they put in every day. It’s also invaluable in helping explain to stakeholders the importance and reach of what we do,” says Kate Hynes of Halfbrick, one of the 2014 winners. “People often don’t understand what we do or the size and complexity of the industry we are in. Having this award helps us demonstrate the importance of our achievements,” explains Kate. The award ceremony for each program brings together the finalists for each award category, showcasing the best of their industry and state and is widely considered the networking event of the year. Organisers encourage all Queensland and New South Wales exporters to enter these prestigious awards.

ECA LAUNCHING GUIDE TO SHANGHAI FREE TRADE ZONE

he Shanghai Free Trade Zone (FTZ) is one of highest profile and most-hyped economic and financial reform measures undertaken by the Chinese government in recent times.

It also one of the most complex and difficult-to-understand for foreign business, and has been a work-in-progress since its September 2013 launch. Nevertheless, the zone offers real advantages and benefits to foreign businesses that take advantage of it. Among other benefits, the Shanghai FTZ has simplified approval procedures for inward investment, customs declaration and quarantine procedures. It has also loosened restrictions on foreign ownership and crossborder trade, enhanced overseas financing, funds transfers – and eased restrictions on RMB convertibility. The Export Council of Australia will launch a guide and a mobile app to the Shanghai FTZ, supported by the Department of Foreign Affairs and Trade’s Australia-China Council, Asialink Business and Austrade. This will help Australian businesses understand what the Shanghai FTZ is, what it means for Australia and how to take advantage of opportunities it creates to enter or restructure their China operations.

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

NEWS

FTAs MADE SIMPLE

esearch by the Economist Intelligence Unit found just 19 per cent of Australian exporters have taken advantage of each of the nine FTAs signed between Australia and other nations since 2005. The major reasons Australian companies did not chase the trade opportunities, business expansion and new market openings offered by FTAs are: • Poor understanding of FTAs • Complexity and length of FTAs • Sense the negotiated FTAs are not relevant to them

HELPING SERVICE PROVIDERS UNDERSTAND OPPORTUNITIES IN KOREA

outh Korea offers a wealth of untapped opportunity for Australian service providers.

It now enjoys market access on par with the best access granted to any of Korea’s trading partners thanks to the KoreaAustralia Free Trade Agreement (KAFTA). Australian financial service providers can now do business in Korea without establishing a full commercial presence, allowing greater opportunity to take advantage of the country’s investment-hungry ageing population. An ageing population also makes Korea fertile ground for Australian health and aged care services. KAFTA introduces a number of firsts. It allows Australian accountants to provide Australian and international consulting services in Korea for the first time. It enables legal service providers to establish offices, hire local lawyers and eventually enter into joint ventures. South Korea boasts one of the highest broadband and mobile penetration rates in the world, and is a leading manufacturer of consumer electronics. This presents significant opportunity for Australian digital and mobile content providers, and KAFTA opens the door to wider distribution of Australian works. The Export Council of Australia will launch a report and guide for Australian service providers to access these opportunities. The report is being compiled with support from the Department of Foreign Affairs and Trade’s AustraliaKorea Foundation and Austrade. The report and accompanying mobile app will be available from July 2015.

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INTERNATIONAL BUSINESS TODAY – WINTER 2015

But for the Australian businesses that do use an FTA, 75 per cent have experienced export growth, with key advantages being access to new markets (40 per cent), a wider client base (39 per cent) and new business opportunities (37 per cent). Nevertheless, there is a need to tackle the lack of awareness about FTAs. In partnership with ANZ Bank and assisted by content developer Hunt & Hunt, the Export Council have developed an FTA website called FTAs Made Simple. The tool is designed to help Australian exporters quickly and easily navigate the basics of Australia’s FTAs across the nation’s major export industries. Through the website, companies have the ability to search by either an individual country’s FTA or industry. The site also provides a quick and easy reference to FTAs plus how to do business overseas. The site has been launched with four FTAs including the United States, Korea, Japan and China. The remaining six existing FTAs will be progressively added.

FAST FACTS • 2015 marks the 10th anniversary of the Australia-US FTA, one of the most important trade agreements Australia has in place, with exports from Australia to the US totalling $10 billion in the 20132014 financial year. • We also celebrate a decade of the Australia-Thailand FTA in 2015. Find out more about our close trading relationship with Thailand in our Spotlight On section in this issue. • Congratulations to the Department of Foreign Affairs and Trade (DFAT) on the first issue of its Business Envoy publication, which shares insights from members of DFAT’s global diplomatic network. It is a must-read for all Australian traders who want better insights about Australia’s involvement in international diplomatic relations.

COLUMN

By Minister for Trade and Investment, the Hon Andrew Robb

ree Trade Agreements we have concluded with three of Australia's major trading partners, Japan, Korea and China, will have a transformative impact on Australian business and the broader economy. Our FTA with South Korea entered into force on 12 December 2014, while the Japan-Australia Economic Partnership Agreement (JAEPA) took effect on 15 January 2015. We are confident of having the China-Australia Free Trade Agreement (ChAFTA) in force this year. Together these economies account for around 55 per cent of Australia’s exports. In 2013-14, our two-way trade with China alone was worth A$160 billion. The growing middle-class across Asia-Pacific is set to reach 3.2 billion by 2030. It is a market Australian business cannot afford to ignore. There is no doubt that many Australian exporters are actively pursuing business in these often demanding but rewarding markets. We know that while business is generally aware of the broader benefits of FTAs, many individual firms are unsure of the direct benefit to them specifically. Importantly, they are also unsure of how to access any provisions in the agreements that may be relevant.

JAEPA guarantees outcomes for Australian service providers equal to or better than the best commitments Japan has made in any of its previous trade agreements. To truly reach the potential and maximise all opportunities these agreements represent, Australian industry needs to understand the detail. It is also important to engage with firms that have only just thought of expanding into overseas markets to raise awareness about the opportunities in Korea, Japan and China. Business people need the opportunity to ask questions to inform their future international strategies and planning. That is why I have asked Austrade and the Department of Foreign Affairs and Trade to develop comprehensive material and resources for business to learn about the agreements. Some of this is available online. Most importantly, face-to-face information sessions will be held around the country. These sessions will be organised in conjunction with my colleagues Bruce Billson, Federal Minister for Small Business and Steven Ciobo – who has recently taken on relevant portfolio responsibilities as my Parliamentary Secretary.

FTAs are not simply reductions in tariffs, as important as these are. They also include provisions establishing a level regulatory playing field, and this is of particular importance to our services industries.

We have already held events in Bentleigh and Frankston in Melbourne, Queanbeyan, the Gold Coast and Adelaide. The response from those who attended has been positive. We expect to hold more than 200 similar events over the next two years, aimed at reaching at least 10,000 firms – and they won’t just be held in the Sydney and Melbourne CBDs.

For instance, in China our health sector will be able to establish fully Australian-owned hospitals and aged care facilities.

I encourage all businesses, large and small, to seize the opportunity to attend one of these sessions.

The Korea agreement opens new markets for Australian law firms, accountants and telecommunications providers.

Australia’s continuing prosperity depends on your efforts.

And it guarantees access in other sectors including education and financial services.

More information and timings of events is available from: www.austrade.gov.au/ftaseminars www.dfat.gov.au/fta

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FEATURE

Alexandra Cain

WILL THE EMERGENCE OF MASSIVE OPEN ONLINE COURSES THREATEN THE DOMINANCE OF AUSTRALIA’S EDUCATION EXPORT MARKET?

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ducation export is a big business for Australia. ‘Big education’ routinely ranks second or third in terms of the nation’s largest exports in dollar value. However, new dynamics in education export markets such as the rise of massive open online courses (MOOCS), as well as budgetary cuts to tertiary institutions, threaten the ongoing dynamism of this important sector. According to figures released in late 2014 by the Federal Department of Education and Training, onshore international education activity contributed $15.7 billion to the economy in the 2013/2014 financial year off the back of international students studying and living in Australia. This was up from $14.6 billion in the previous financial year, representing an increase of 8.2 per cent. This is a particularly healthy result given flat economic conditions in other sectors.

Popularity of professional degrees soars According to Michelle Carlin, the University of Sydney’s director of global student recruitment, professional degrees are the most popular subjects for international students – particularly business, engineering, law and health degrees. “At the University of Sydney our postgraduate health sciences programs are increasingly popular, with international student numbers growing by 25 per cent in semester one of 2015,” Carlin says. University of New South Wales (UNSW) vice-president of advancement Jennie Lang says there is strong demand from overseas students for professional courses. These include business and commerce, especially finance and accounting, as well as engineering, IT and computer science, medicine, law – and courses for the creative industries such as digital media, public relations and communication.

Many students enrolling at UNSW undertake combined degree programs in order to give them better career opportunities.

Our lifestyle, work rights lure overseas students While the quality of Australia’s education system is certainly a draw card, other factors can also attract overseas students. Kathleen Newcombe, head of education and talent at the Sarina Russo Group, says Australia is a popular destination due to the lifestyle as well as attractive post-study work rights and the high regard our education system holds internationally. “International students are drawn to Australia for a number of reasons. It’s seen as being a safe and high quality destination for studying,” Newcombe says. As with many industries, the Asian market is one of the Australian education sector’s most important export markets. Carlin says for the University of Sydney, China, India, other parts of Asia, the Americas and United Kingdom are where most students come from. However, she says “it is very important for the education sector to diversify its markets to create truly global experiences for students”. Enrolments from students across various markets tend to rise and fall in-line with numerous variables. Newcombe says factors like exchange rate movements can sometimes impact the local education export market. “We see volatility from places such as Brazil depending on the exchange rate,” she says, adding the most important factor in determining where students will come from is the availability of visas. Every tertiary institution knows how important exports are for its financial wellbeing, and they all have programs to help attract more students from overseas.

University proactively pursues partnerships The University of Sydney is working on a number of initiatives including research

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

FEATURE

“It is very important for the education sector to diversify its markets to create truly global experiences for students.” 12 |

INTERNATIONAL BUSINESS TODAY – WINTER 2015

partnerships, exchange agreements and dual degrees with leading international universities.

popular Masters of Business Administration programs in Hong Kong.

The university’s Faculty of Arts and Social Sciences recently launched a dual bachelor degree with the highly regarded Parisian institution Sciences Po, which is one of the world’s top-ranked institutes for politics and social sciences.

Lang says the university maintains offices in China, Vietnam and Hong Kong while also pursuing partnership arrangements. It has built relationships with more than 200 universities around the world.

“The dual degree program gives students the opportunity to study for two years in France and two years in Australia, and graduate with bachelor degrees from both universities,” Carlin says. Indeed, with so much invested in real estate locally, most of the top tertiary institutions are not inclined to establish a greater physical presence in overseas markets, preferring instead to partner with quality institutions abroad. For instance, The University of New South Wales runs

Tertiary institutions need help to maintain position However, tertiary institutions cannot maintain Australia’s prominent position in the international student market by themselves. Given they rely on public funding, the federal government’s continued support of the sector plays a crucial role in Australia’s ability to maintain its position as a preferred destination for the ‘cream of the crop’ of international students. “We really need to send a powerful message as a nation we’re investing in

MOOCS: WHAT’S THE IMPACT ON LOCAL INSTITUTIONS? When they first emerged massive open online courses, or MOOCS, seemed they might pose a threat to the dominance of established education institutions in online learning. So far that has not proven to be the case. Gregor Kennedy, pro vice-chancellor (educational innovation) at the University of Melbourne, says educators were initially concerned about the potential for MOOCS to impact the traditional education structure. “The heat has come out of that rhetoric over the past 18 months. The University of Melbourne was the first Australian university to offer MOOCS to the world. More than 650,000 students have enrolled so far across 14 subjects,” he says.

universities and research and development to enrich Australia, and drive economic development and prosperity,” Lang says. “Cuts to higher education and research programs are not helpful in assisting to maintain Australia’s competitive position in international education markets. “Asian nations in particular see public funding of tertiary education as a high priority.” Educators and researchers want to see our governments take a long-term approach to education and invest in programs that will give Australia a competitive edge. “Only by producing graduates of the highest quality who have relevant skills being sought by employers and funding worldclass research centres, will we be able to hold our own in an increasingly competitive knowledge economy,” Lang says.

‘Very small’ number of students actually graduate But as Kennedy notes, although the volume of students who enrol in these courses is high, the number of programs offered is very small compared to the full suite of courses the university delivers. Although many students enrol, very few complete a MOOC, and those that do are ineligible for an award such as a degree or diploma. Melbourne University’s figures show about half of those who enrol start the course, but only 3 to 10 per cent actually finish the course.

“There are a few famous courses that have achieved enrolments in the tens or hundreds of thousands, usually on topics like robot software engineering,” he says. “However, completion rates are negligible. What is striking is how uneven the course offerings are in terms of coverage. There is nothing on Elizabethan poetry but lots in software engineering.”

Student data collected presents ‘opportunity’ Kay Lipson, director of strategy at Swinburne Online, says the opportunity with MOOCS lies in the massive amounts of data these courses produce, given the high number of students who enrol. “Initially there was no commercial model for these courses, which is still a problem, but universities are trying to commercialise outputs from these courses such as machine marking,” she says. “Education won’t be the commercial product, but ancillary services will be.” Other innovations MOOCS are helping to develop include keystroke, facial and voice recognition software. In the future, it is likely these tools will help to verify the identities of students completing mainstream university courses.

Professor Jason Potts from RMIT University’s School of Economics, Marketing and Finance says the growth of online education in the MOOCS model is “patchy”, and only evaluated globally.

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

FEATURE

Alexandra Cain The emergence of technologies such as 3D printing will have a profound effect on manufacturing, making it easier to produce cost-effective prototypes and develop design ideas. This will transform global industry in coming decades. Here, we explore the opportunity for local export manufacturers in light of these shifting dynamics.

xpressed simply, Industry 4.0 represents the next stage in the industrial revolution, one in which machines are increasingly connected by the internet to allow them to become ‘smart’.

In this scenario, intellectual capital matters. Businesses with emerging and proprietary technologies that will be used to produce goods will be the most profitable part of the supply chain.

Picture a world in which machines in factories will, in an automated fashion, draw on data about demographics and existing product supply to accurately determine product runs. Moreover, goods made by manufacturers will be able to be customised and produced in short runs, with manufacturers easily able to download designs from the internet and tailor them to the specific requirements of the customer.

This will generate significant opportunities for local manufacturers, whose point of difference is ownership of the intellectual capital for products produced in interconnected factories in the supply chain.

In addition, plant in factories will be able to self-diagnose and fix problems, if malfunctions occur. The net effect will be a deeply interconnected supply chain that operates by drawing on rich data sets to increase efficiencies and negate redundancies. 14 |

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Dean of the University of Technology Sydney (UTS) Business School, Professor Roy Green, says Industry 4.0 is about connecting physical and virtual worlds through digital technologies. “It means anyone can be a manufacturer in the global market, either because they are the recipient of designs they receive and produce or they are the designers and they can connect more efficiently to

global networks that would otherwise be impenetrable,” he says. Green says the Industry 4.0 phenomenon is important because Australia is so far away from most of the world. In effect, Industry 4.0 will help to connect us more closely to the global economy. “There’s a shift from large scale mass production to smaller units of production. So in the example of the automobile industry, as mass car assembly winds down, opportunities open up for smaller component suppliers,” he says. This will produce opportunities for local manufacturers to target niches in the global car manufacturing sector. The backdrop for this will be clusters of local manufacturers who work together to profit from Industry 4.0 opportunities. However, there will also be plenty of scope

for businesses to work in isolation, if that’s their preferred mode of working. Green says there will be around 1500 ‘micro-multinational’ small manufacturers in Australia that will be connected to global supply chains. These include firms in the car industry, defence, aerospace and medical technology sectors.

The Industry 4.0 opportunity Siemens Australia CEO Jeff Connolly says Industry 4.0 represents a new way of thinking, where everyone can participate in the global supply chain. “New production environments will emerge as information generated in the virtual world flows into the manufacturing world,” he says.

“Recently, I’ve come to the conclusion that the most powerful tool for someone wanting to work in Industry 4.0 is the human brain. Value will be in our imaginations, design and software.” Connolly agrees with Green that Industry 4.0 means people in Australia can more easily participate in the international manufacturing sector and be part of the global value chains.

It is heavily investing in technologies that make its business more efficient and productive. For instance, its electronics factory in Amberg, Germany is one of the most advanced digital factories in the world where products already talk to the production line.

“The pace of change is exponential. For Australian companies this means constant vigilance and connecting to technologies the rest of the world is embracing,” he says.

“Here, products control their own manufacturing processes. Their product codes tell production machines what requirements they have and what production steps must be taken next. The result is a production quality of 99.99 per cent.”

“It means adopting technologies now to create a sustainable future for all of us.”

Siemens’ approach “With our abundance of resources, skilled workforce and engineering know-how, Australia is perfectly positioned to be a key player.

As one of the largest manufacturers in the world, Siemens has a clear perspective on Industry 4.0 opportunities.

“We can demonstrate the integration between virtual product generation and its actual production,” Connolly says.

Siemens’ customers use the automation technologies produced in Amberg to improve their own manufacturing efficiencies and levels of productivity and safety.

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FEATURE

POSITIONING AUSTRALIA IN THE GLOBAL ECONOMY While Industry 4.0 no doubt produces opportunities for local exporting manufacturers, Deloitte consulting managing partner Robert Hillard cautions against viewing it as a silver bullet for local industry. He acknowledges some of the developments that stem from Industry 4.0, such as bringing manufacturing and intellectual property (IP) closer, are positive for Australia. But many leading manufacturing countries have a natural advantage in emerging industrial trends against which Australia will find it hard to compete. For example, Australian manufacturing facilities that employ its technologies are seeing energy savings of up to 50 per cent, the ability to halve production cycles and increase production flexibility to cater for the move towards customised mass production. “Digitalisation technologies are helping our customers capture incredible amounts of data and – through smart data analytics – the production environment can self optimise performance in real-time,” Connolly says. “The ability for Australian companies to participate is better than ever, but they must begin the journey to Industry

“New production environments wil emerge as information generated in the virtual world flows into the manufacturing world.” 16 |

INTERNATIONAL BUSINESS TODAY – WINTER 2015

4.0 today by continually investing in advanced technologies that improve their competitiveness,” he emphasises.

Global connections So what’s the best way for local manufacturers to tap into Industry 4.0? Green says the first step is for businesses to get as much information as possible about the markets and segments to which they want to contribute. “Then you need to invest in skills to deploy your technologies, as well as the management capabilities to understand the market and mobilise the resources needed to sell into it,” he says. As for what the manufacturing sector is likely to look like in five years’ time as these trends play out across the world, Green says it’s likely fewer people will be employed in traditional manufacturing roles as this sector becomes more automated. But, at the same time, there will be growth in sectors such as robotics and other digital technologies. This will result in a surge in productivity that will boost global commerce. “There will be a contraction in manufacturing but jobs in other sectors will grow and the net contribution to the economy will be positive,” Green says.

For instance, countries such as the United States have a long history of commercialising IP. But, at the moment, Australia is reducing support in this area by declining to provide new funding to emerging businesses through Commercialisation Australia. “We do have some great success stories, for instance Tomcar, Ninja Blocks and Hills Industries. But there’s a real risk we will be left behind because the major manufacturing countries such as Germany and the US have come a long way in this area over the last 12 months,” Hillard says. To better position Australia for Industry 4.0, he says we need to acknowledge a convergence between technology and manufacturing and focus more fully on making investments in science, technology, engineering and mathematics. This will help better position Australia on the global manufacturing stage.

PEOPLE

THE RISE AND RISE OF OZFOREX How did a simple information website become one of the world’s largest global payments businesses? OzForex CEO Neil Helm writes that empowering other businesses helped fuel massive growth. From humble beginnings, OzForex has recently become one of the world’s largest online international payments companies. In the past decade we have expanded into several key markets, and now have more than 200 staff with offices in Sydney, London, Toronto, San Francisco, Hong Kong, and Auckland. Our export experience is interesting in that we do not only export our own services; we also empower other business to grow through importing and exporting. We believe we help our clients move funds from one country to another, and pay and receive money from foreign suppliers at far more competitive rates than those offered by banks. Since OzForex began in 1998, we have saved our clients hundreds of millions of dollars in estimated foreign-exchange margins and payment fees. The last few years have seen our business list on the ASX, as well as undergo rapid expansion – with global expansion and key partnerships playing a significant role in this growth. We have learnt a few lessons along this journey, and hope these lessons may be useful for other exporters and businesses planning to go global. 1. Being physically present in other markets is critical You can’t do business solely over the internet, even with highdefinition teleconferencing. As a financial services provider, to conduct our business in the United States we had to have a physical presence in the US and apply for licenses in each state.

With our US expansion moving so quickly our first US foreign exchange team members on the ground really took a leap of faith. We had no established office, but they believed in the company’s philosophy – even if it was delivered over a cup of coffee in Starbucks. 2. Localising your message is important If you have customers overseas, it is crucial to employ local marketing teams to tailor the delivery of the message to each local market. Cultural issues can present challenges, so rely on local knowledge and forge local relationships and connections. 3. Offer round-the-clock support You can’t close down for the Australian weekend if customers overseas are still awake and trying to transact. We’ve used our global presence to our advantage here: our IT and phone systems allow our Australian customers to be serviced by the London office when Sydney closes, then Toronto or San Francisco when London closes. 4. Develop a global team Our Australian staff have the opportunity to work in our overseas offices. This helps maintain corporate culture and harmony, while helping train new staff recruited locally. It also helps staff understand the individual business environments and cultural values of the different markets in which we operate. Overall, expanding overseas has been a challenging, yet richly rewarding journey we encourage others to take.

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

PEOPLE

GRAEME TUDER: FROM A SMALL RURAL VILLAGE TO THE WHOLE WORLD

GRAEME TUDER, MANAGING DIRECTOR AND FOUNDER OF MINING TECHNOLOGY COMPANY MICROMINE IS AN INNOVATOR, EXPORTER AND AUSTRALIAN EXPORT HERO. Kristina Koprivica

Graeme Tuder wins at the Export Awards 2014

ack in 1986 Graeme Tuder saw an opportunity to develop software by applying offshore oilfield technology ideas to mineral exploration techniques.

Graeme left Australia to travel the world and, aged 22, he worked as a surveyor on seabed mapping in the Persian Gulf and lived on a pipeline-laying barge.

This concept helped Micromine grow from a small company with one product and only two staff, to a global mining software solutions provider with sales and support centres at 16 locations around the world.

Through his tireless travel, relationship and business development, Micromine has grown year-on-year. By 2005 the company was exporting to more than 90 countries with distribution channels in Brazil, Canada, China, Indonesia, Kazakhstan, Mongolia, Russia, South Africa, Turkey, Ukraine, United Kingdom, United States and Uzbekistan. Micromine now has 22 offices based in all mining capitals of the world.

Graeme was raised in a small town in northern Victoria and left home at 17. His rural upbringing from liberal minded parents, who encouraged independent thinking, prepared him for a life of risk and decision-making. At the age of 21, Graeme became the then-youngest licensed surveyor in Australia. He embarked on a career in seabed mapping, geophysical and hydrographical studies, and bathymetric surveys for the offshore oil industry in the Middle East, North Sea, West Africa, New Zealand and South East Asia.

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Family comes first Graeme’s daughter Claire describes him as an inspiring and innovative, but still down-to-earth man. “His vision and ability to accurately predict global trends have driven the company to the forefront of mining software innovation, which is ironic given he sometimes has difficulty operating his mobile phone,” she said.

“Pursuing export opportunities meant Dad was regularly away. He was always home for milestone events, but often overseas more than he was in Australia.” Both Claire and her brother Tim now work for the company. Tim has worked for Micromine since 2007 in the Beijing, Perth and London offices. Claire started working at the Perth office in 2012.

Breaking down barriers In the early years Graeme made a commitment to study the countries he visited to learn more about their society and economy. “One of the greatest attributes of successful exporters is their ability to talk intelligently to their international colleagues,” he says.

Graeme Tuder with tellurometer Melbourne in 1963

“People are very pleased when a foreigner is knowledgeable about the country they are visiting and is culturally aware.”

Products are translated into several languages including Turkish, Mongolian, Indonesian and Spanish. They are also translated to languages with different alphabets including Russian, Mandarin and Mongolian.

In the early days of building export sales, travel and accommodation were expensive and even three-star hotels were out of the question. Graeme regularly stayed at the kind of premises that even junior staff in the company would not be asked to stay at nowadays.

Additionally, the products are modified to suit local cultural issues and regulatory requirements.

His trick was to arrange to meet a prospective client in the foyer or coffee shop of a five-star hotel. It is important, particularly in Asia, to be seen to be successful when engaging with prospects.

Building an export culture Micromine is a culturally diverse organisation. Graeme has always employed the best applicant for a job irrespective of their background, race or language. At the Perth headquarters, more than 75 per cent of staff are not Australian-born. This cultural diversity assists the company’s export drive. If Graeme needs advice on a country, there is likely to be someone on staff who can assist and provide an overseas contact in that country. Micromine's success lies in its ability to predict requirements of the marketplace and develop innovative software solutions. Its decision to develop an exploration package for geologists in the mid1980s when others were concentrating on mining or surveying products quickly established it as an innovative and market-driven company. It was one of the first to embrace modern flexible programming languages, it was with a totally Windows-based product and has won an Australian Design Award for technical excellence. Slowly but surely, the company has developed its own representation internationally. The guiding theory was it is far better to sell and support the product in a local language. To complement its regional offices, Micromine also has a network of resellers and channel partners.

Micromine has found one of the best ways to promote itself is through hosting a dinner and seminar in a region, often in conjunction with the local geological society or mines department, where staff present products and openly talk with guests. This breaks down barriers and provides a forum for dialogue. This approach has been particularly successful in areas such as Russia and Central Asia, where English is rarely spoken and regional issues are paramount.

Strong benefit to Australian trade Micromine has actively contributed to the positive image of Australian exporters through the provision of industry-leading solutions and services. It is proud to represent Australia within the global mining community and present itself as a quality provider of Australian goods and services. In 2014 Graeme celebrated 51 years in the workforce. He has confidently delegated to staff and provided them with the freedom to do things in their own way. He has shown great trust in appointing young and often relatively inexperienced – yet enthusiastic – local staff to run regional offices. Graeme calls his staff the ‘Micromine Family’ and it is this personal approach to global business that – above all other skills, experience and traits – makes people want to work for and with him. A testament to the successful approach he has to his talented staff is the very first Micromine employee hired more than 27 years ago is still working for the company. Many staff have been with the business for more than 15 years. INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

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THE US: STILL THE LAND OF OPPORTUNITY

AFTER STRUGGLING THROUGH ‘THE GREAT RECESSION’ THAT FOLLOWED THE GLOBAL FINANCIAL CRISIS OF 2007/2008, A NEW SPIRIT OF OPTIMISM IS RE-EMERGING – WHICH IS GREAT NEWS FOR LOCAL EXPORTERS. Ian Smith, managing director of United States Connect

ith all the talk of Asia, it is easy to forget the United States is still the largest economy in the world with a gross domestic product (GDP) of US$16.98 trillion in 2013.

It is also the largest consumer market, with retail sales of more than US$5 trillion. While the American economy is still in renewal mode, there are signs the country’s economic recovery is sustainable. Consumer spending, which still makes up 70 per cent of GDP, is growing at a healthy 3 per cent per annum. Unemployment is below 6 per cent and even manufacturing is growing. 2015 marks the 10-year anniversary of the Australia-US Free Trade Agreement (FTA). This was a milestone in Australia's trade and investment relationship with the US. According to the Department of Foreign Affairs and Trade, the FTA has led to growth in bilateral trade of 38 per cent since it came into force. It is little wonder the ‘States’ are on the radar of Australian exporters. The most recent Australian International Business Survey ranked the US as the top market for Aussie exporters. 20 |

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So what are the hot sectors in the US right now? What trends are driving the economy, and what opportunities do these present for Australian companies?

Hot sectors Health An aging population is driving demand for healthcare products and services including pharmaceuticals, medical devices and diagnostics. By 2050, more than 32 million Americans will be over the age of 80, and the 80-plus generation’s share of the population will have doubled to 7.4 per cent. In addition to this the Health Care Reform Bill is aiming to have 9.1 million people join a health fund by the end of 2015. You can see why there is so much international interest in US healthcare. Clean technology Renewable energy accounted for nearly 40 per cent of all new domestic power capacity installed in the States during 2013, with biofuels responsible for around 10 per cent of US fuel supply. US President Barack Obama has made a strong commitment to expanding clean energy, and set a goal to double the amount of

renewable power by 2020. This has led to a spike in private sector investment in clean energy research and development, which now totals close to US$60 billion per annum. Information communications technology The US is home to the most advanced software and information technology industry in the world. According to a recent report by MoneyTree on venture capital investment in the States, internetspecific companies captured US$11.9 billion in investment funds during 2014. This was the highest level of investment in online businesses recorded since 2000. Annual investments into the software industry also reached the highest level since 2000, with US$19.8 billion flowing into 1799 deals in 2014. Investment in software companies accounted for 41 per cent of total venture capital investments during 2014.

Key trends Here are some of the major trends that will shape the US economy in coming decades.

INTERNATIONAL BUSINESS TODAY â&#x20AC;&#x201C; WINTER 2015 |

BUMPER PLACES

Majority becomes minority Demographics are changing rapidly in the US, with so-called minorities representing large consumer groups that cannot be ignored. At present, 16 per cent of US adults aged between 25 and 49 are Hispanic. The number of Latinos in the US is actually larger than the entire population of Canada. These major demographic shifts will impact on how companies segment the market, their marketing strategies and product or service mix. E-Commerce is king While the retail sector suffered badly during in the aftermath of the financial crisis, e-commerce achieved double digit growth and continues to expand at an amazing rate. According to the US Department of Commerce, online sales totalled US$263 billion in 2013 – up 16 per cent from the previous year. Online channels are forecast to account for more than 20 per cent of total US retail sales within the next decade. Amazon. com is the largest online retailer in the world with more than 244 million active customers across the globe. Net sales increased 22 per cent in the 2013 calendar year to US$74.45 billion.

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Re-shoring production There has been a definite shift to ‘re-shoring’ manufacturing among US companies in recent years – that is, bringing manufacturing back from overseas to the US. This has been driven by the growing cost of production in countries like China, quality issues, supply chain inefficiencies, demand requirements and, in some cases, a desire to protect intellectual property. Even with slight increases to the minimum wage, which is currently set at around A$8 per hour, this trend is set to continue. Re-shoring will remain most popular in industries where raw materials are cheap, such as natural gas, or where products change rapidly – like fashion and technology – as well as in sectors where freight is not a concern. Australian companies should be aware of this trend, particularly in light of the push towards ‘Buy American’, as it may open future opportunities for joint ventures or to contract manufacture. Opportunities abound for Australian exporters in the US. The idea is to develop a coherent strategy, start small and draw on the expertise of people with deep experience in this lucrative but challenging market.

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Postcard from…

Have you ever been overseas on business and had to take a client out to dinner, only to find you have no clue where to go, let alone what to order when you get there? Maybe you’ve had a few hours to spare and spent it watching BBC in your hotel room instead of seeing the sights?

ach issue we focus on a different global city, bringing you the latest on where to go and what to do. This issue, let’s explore Chicago with Ian Smith, founder and managing director of United States Connect, the one-stop-shop for exporters who want to learn how to do business in the US. Ask the average Australian about Chicago and most would still describe it as a working-class industrial city known for Al Capone, Michael Jordan, the Blues Brothers and, more recently, the 44th President of the United States – Barack Obama. The truth is the ‘Windy City’ is a thriving global metropolis with a population of more than 9.6 million, and a gross regional product exceeding US$500 billion.

If you have a few hours to spare in Chicago where should you go? Once you have been to Chicago I can guarantee you will want to come back as it offers diverse cultural experiences, world-class museums, amazing food, renowned architecture and some of America’s best attractions. To learn about the city, I would first take a river architectural tour and find out why Chicago is home to the first skyscraper; why it 24 |

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The Cubs are not only the oldest active US professional sports club but also one of the most hapless, not having won the World Series in 106 years. Despite enduring the longest championship drought of any major North American professional sports team, they still manage to pack the place week after week, such is the loyalty of their fans.

What restaurants would you suggest? Chicago has one of the most vibrant and dynamic food scenes in the world with 25 Michelin-starred restaurants, so you don’t have to go far for a good meal. For those on a budget, you can opt for some local favourites such as Chicago-style pizza, either a deep-dish from Pizzeria Uno or a stuffed pizza from Giordano’s. Another delicious choice is ribs from one of the city’s oldest neighbourhood restaurants, Twin Anchors. If you are looking to treat yourself, I recommend Michelin-starred Alinea or the Girl & the Goat, which was established by Chicago local and winner of the TV show Top Chef – Stephanie Izard.

Where would you suggest visitors go for nightlife? No matter what your musical taste is, you'll find it playing live in Chicago every night of the week. has the only river in the world that runs backwards; and how it reinvented itself after the Great Fire of 1871. It is also a great idea to visit the Art Institute of Chicago. This Chicago icon was recently voted the top museum in the World by TripAdvisor, and is home to celebrated collections of modern and contemporary art, architecture, design and photography. A visit to Millennium Park is also essential; this is Chicago’s premier green space. Don’t miss the world famous ‘Bean’ sculpture and the two 50-foot towers that reflect the faces of Chicago. Finally, don’t overlook the ‘Magnificent Mile’. No trip to Chicago is complete without checking out the shopping. It has 290,000 square metres of retail space, 460 stores, 275 restaurants, 51 hotels and attracts more than 22 million visitors annually.

Are there any local specialities you can recommend? One of my favourite Chicagoan experiences is sitting in the bleachers of Wrigley Field, a baseball stadium built in 1914, and watching the Cubs baseball team while eating a Chicago-style hot dog and drinking a Pabst Blue Ribbon beer.

The city has more than 250 incredible venues, ranging from intimate neighbourhood clubs to historic music halls. One of my favourites is the Green Mill Jazz Club. This is the longest, continuously running jazz club in the country. It is a former speak easy, which dates back to 1907 and was Al Capone’s venue of choice. I also like Buddy Guy's Legends, which is owned by the iconic guitarist. This nightclub keeps the blues tradition alive on Chicago's south side. Kingston Mines, a north side late-night blues hangout, has two stages and has been rocking for more than 50 years.

Any other advice for visitors in town for business? Given the size of the market and its strategic location, it is little wonder 31 Fortune 500 companies and more than 1500 foreignowned firms call Chicago home. If you are looking at your US market entry strategy make sure you include ‘Chitown’ in the equation.

BUMPER PLACES

GERMANY: EUROPE’S EXPORT STAR IT IS A NATION RENOWNED FOR ITS EXTENSIVE LOGISTICS NETWORK AND ENCOURAGES FOREIGN INVESTMENT, MAKING IT AN ATTRACTIVE DESTINATION FOR AUSTRALIAN EXPORTERS. Thomas Bozoyan, Germany Trade and Invest in Berlin and Werner Kemper, Germany Trade and Invest in Sydney

rnst & Young’s European Attractiveness Survey 2014 has confirmed Germany’s reputation as one of the most appealing business locations in the world.

International decision makers rank Germany first within the European Union (EU) and fourth worldwide in the most attractive business location category. A substantial 40 per cent of the 800-plus international managers surveyed consider Germany to be Western Europe's foreign investment magnet. This means there are plenty of opportunities for Australian exporters to build profitable trading relationships in this market. Let’s take a closer look at the German economy.

foreign investment in Germany favours the principle of freedom of foreign trade and payment. There are no restrictions or barriers to capital transactions or currency transfers, real estate purchases, repatriation of profits or access to foreign exchanges. Germany’s geographic location at the crossroads of European markets helps support its position as an important conduit for imports and exports. More than half the EU population lives within 500km of Germany’s borders. More goods pass through Germany than any other European country, and almost all of Europe is accessible within three hours by air or 24 hours by road.

Europe’s global logistics hub Germany provides easy access to domestic and international markets with its state-of-the-art transport networks spanning road, rail, sea and inland waterways.

Dominant player Germany is the largest market in Europe. It makes up 21 per cent of the European GDP, and is home to 16 per cent of the total European Union population. The German economy is highly industrialised and diversified, with equal emphasis placed on services and production.

It also boasts a dense network of both national and international airports, of which there are 22. These assets combine to make Germany a global logistics hub. Accounting for around a quarter of the European logistics market, Germany is a critical part of the continent’s economy.

The German market is open for investment in practically all industry sectors, and is free from regulations restricting day-today business. For instance, German law makes no distinction between Germans and foreign nationals regarding investments or the establishment of companies. The legal framework for

Among the highlights of the country’s network infrastructure is Europe’s second-largest port for container port traffic, Hamburg, and Europe’s largest port container terminal – Bremerhaven – plus more than 250 inland ports.

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Aerial view of Hamburg port on a summer day

QUALITY OF INFRASTRUCTURE IN EUROPE 2013 RANK COUNTRY 1 Germany 2 France 3 Switzerland 4 Netherlands 5 UK 6 Spain 7 Luxembourg 8 Austria 9 Iceland 10 Belgium Source: World Economic Forum 2013

Industry in particular has significantly grown its R&D expenditures in recent years and increasingly more companies are establishing international research facilities in Germany.

Frankfurt is the world’s seventh and ninth largest airport in terms of cargo and passenger volume respectively. The nation’s highway system is one of the densest in Europe; it has 37,877km of railway track that almost measures long enough to circle the entire world. Germany’s railway network can accommodate trains travelling at speeds of up to 300 km/h, and is the fourth largest rail network in the world. In the north, Germany’s seaports are an important conduit for trade with the United Kingdom, Scandinavia and the Baltic states. In the west, an extensive network of roads, rail links and inland waterways feeds into France and the Benelux countries. To the south, Germany has strong commercial ties with Switzerland and Austria – and direct road, rail and water links with the Balkan states. Turning east, Germany’s borders with Poland and the Czech Republic bring the Slovak Republic and Hungary within reach – and make the more distant markets in Turkey and Russia readily accessible.

An innovation leader Research and development (R&D) is considered to be one of the most important areas for development of the German economy. Enormous sums are invested in the development of new technologies and innovations. With a total R&D spend of more than €79 billion (2012), Germany is touted to be Europe’s largest research location. Since 2005, R&D expenditures have steadily increased at a compound annual growth rate of 5 per cent.

German-made products continue to be export hits worldwide. Offering innovative and competitive products of the highest quality, it is not surprising that since 2000 Germany’s average export quota has totalled nearly 36 per cent. The quota level climbed to an all-time high of 41.5 per cent in 2012. In 2013 the quota reached 40 per cent. This development corresponds with another record: export figures in 2013 were on a similarly high level as in the record-setting year of 2012. In 2013 German export levels reached almost €1.1 trillion and imports amounted to €896 billion, with the trade balance reaching its highest recorded value at more than €98 billion. Germanproduced goods from the chemical, automotive and machinery and equipment industries are in particularly high demand worldwide.

Manufacturing a key industry German companies represent 10 per cent of European manufacturing companies, and 30 per cent of total EU turnover in the sector. Increasingly, foreign companies are placing their faith in Germany as a vital production site location and are benefiting from the country’s excellent business framework and superior productivity rates. Exports are driven by Germany’s backbone of highly innovative small and medium-sized enterprises. These constitute 99.6 per cent of all companies, employing almost 80 per cent of all employees in Germany. Many of these smaller businesses are world leaders in their different niches. Together with internationally leading large companies – including Bayer, BASF, Daimler, Volkswagen and Siemens, to name a few – they make up Germany’s manufacturing industrial base. INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

BUMPER PLACES

Postcard fromâ&#x20AC;Ś

N I L R E B

Berlin is renowned as one of the many cultural hubs in Europe, a place to which artists and entrepreneurs flock. If you visit for business or pleasure, here are some must-see attractions, restaurants and cultural icons. Katja Mossner, the German-Australian Chamber of Industry and Commerce, and Ingo Henning, from the Association of German Chambers of Commerce and Industry

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If you have a few hours in Berlin, where should you go? Berlin Mitte – central Berlin – is a popular tourist destination where you can catch a glimpse of the main sights. If you enjoy touring a city on foot, start your walk at the Victory Column (Siegessäule) on 17th of June Street and continue towards the Brandenburg Gate. Turn onto Unter den Linden and walk on towards Alexanderplatz. On route, you will pass the Reichstag building, Federal Chancellery and expansive Tiergarten – the oldest public park in Berlin. Extend your walk to Potsdamer Platz, dominated by the well-known Sony Center, which has cinemas and shopping. While in Berlin Mitte, visit the Gendarmenmarkt, Memorial to Murdered Jews of Europe and East Side Gallery.

What restaurants do you suggest? Every suburb has unique restaurants, but driving from one side of Berlin to the other can take hours so stay close to home. Some Italian pizza places are known as “punk”. These places are in Prenzlauer Berg or Kreuzberg (il casolare) and offer the best pizza in Berlin. If you prefer, west of the city Savignyplatz is a good place to find an exclusive restaurant and a bar for pre-dinner drinks.

What local specialities do you recommend?

In terms of nightlife, where would you suggest visitors go?

Berlin has so many international influences you can find every kind of cuisine. The most original culinary contributions come in the form of street-food, the most common one being the Döner Kebap sandwich.

There is always a new club opening or new party at a secret location.

Turkish immigrants introduced the specialty back in the 1950s, before adjustments were made to suit German tastes. You can enjoy kebap in almost every suburb, along with different kinds of meat and salad including onions, cabbage, tomatoes and a range of different breads and sauces.

People say the Berghain (electro music) is a must-see, but there are also smaller places like “zur wilden Renate” (Friedrichshain) or the Lynchner Strasse in Prenzlauer Berg, where you can walk around to find everything from rock music to cocktail bars and sushi restaurants.

Is there any other advice for visitors who have a few hours to spare?

A few years ago, a new shop called Mustafas gemüsekepab opened in Kreuzberg. You have to line-up for half an hour, but the mixture of herbs they use with their vegetables is worth it.

People say the real Berlin can only be experienced in Wedding and Neukölln – two of Berlin’s most multicultural, edgy and arty suburbs. Try to see as many different sides of Berlin as possible.

A typical former East Berlin street food is the Ketwurst. There are only a few places where you can still get this Berlin equivalent of a hotdog.

To gain a really good impression of Berlin, ride a tram, walk for hours or talk to bus drivers.

On Friedrichstrasse there is one seller that keeps the taste of the original from the 1980s. Virtually no Döner Kebap shops close before 3am.

They may not always seem friendly but they, like the rest of the city around them, will always be frank.

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

EXPORTER

GIANT AMBITIONS FOR AUSSIE ANIMATRONICS BUSINESS

THE CREATURE TECHNOLOGY COMPANY IS EXPLORING AN IMPORTANT NEW EXPORT MARKET ON THE BACK OF ITS SUCCESS IN CREATING THE SOCHI OLYMPICS’ MASCOTS. Marc Warshall, finance director of The Creature Technology Company

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he Creature Technology Company has always had its sights set on global markets because of the nature of our work. We build giant animatronic puppets used in shows like King Kong Live on Stage, which had a phenomenal run at Melbourne’s Regent Theatre. We also built the mascots for the 2014 Sochi Winter Olympics and the creatures for Dreamwork’s arena spectacular version of its successful How to Train a Dragon movie. We have also built creatures for the global Walking With Dinosaurs arena show,

which has travelled the world, attracting a total audience of more than eight million. Another highlight has been creating an animatronic Statue of Liberty for New York’s iconic Radio City Music Hall, for a show with the Rockettes – a global focus is in our DNA. Our work is truly giant in nature, so potential clients often contact us after they have seen examples of our work around the world. YouTube videos of the Walking With Dinosaurs shows have given us great

We’re currently moving into the theme park market, and working on our first project for one of the world’s largest theme park businesses.

international exposure. The Sochi Olympics also helped raise our profile and every day we have received enquiries about our work. Our breakthrough came with the Radio City show. Madison Square Gardens contacted us out of the blue, and we recognised it was a great opportunity – and turned ourselves inside out by creating a really special Lady Liberty. But it wasn’t until we became involved in last year’s Winter Olympics Opening Ceremony that we really arrived on the

world stage. Often the start of a project involves a feasibility study, for which we do charge a nominal amount to ensure the client is serious. We did this for the Sochi Olympics organisers, who wanted their mascots to be created as enormous animatronic creatures; we really worked to tight timelines on this job to pull it off. We’re currently moving into the theme park market, and working on our first project for one of the world’s largest theme park businesses. If that job goes well, we are hopeful this will lead to other work, which

will help underscore the sustainability of our business, given theme parks are permanent businesses while shows come and go. Last year, The Creature Technology Company won the Australian Export Award – Creative Industries; Governor of Victoria Export Award for Innovation Excellence; and Governor of Victoria Export Award – Creative Industries.

EXPORTER

TRUFFLES NO TRIFLING VENTURE

A SMALL TRUFFLE COMPANY IN A REMOTE LOCATION IS CHANGING THE WAY ITS DELICACY IS PRODUCED AND MARKETED AROUND THE WORLD. Alf Salter, The Truffle & Wine Co

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he Truffle & Wine Company, based 300 kilometres south of Perth in the beautiful and remote Western Australian town of Manjimup, is making a name for this little-known corner of the earth. It is producing and selling truffles, one of the world’s great earthly delights. Having recently won 2014 Regional Exporter of the Year along with the WA Premier’s Award for Excellence, the company has an inspirational success story. It is now the largest single producer of black winter truffle, the Périgord truffle, in the world and exports to more than 25 countries. It produces 60 per cent of Australia’s total truffle production and markets them for smaller growers. Truffle & Wine Company bought its United States distribution business in 2014, and this European season sold European truffles in both the US and Asia. The company has also developed a new ultra-premium wine business that sources the best grapes from Australia and beyond. For instance, the 2014 pinot noir grapes came from Oregon in the US. The wine will be sold in some of the best restaurants in the world to compliment its truffle offering.

Humble beginnings This has been no overnight success for Truffle & Wine Company. A small group of investors purchased land and planted 21 hectares of oak and hazelnut trees – the host trees for the truffle fungus – and 10 hectares of vines some 18 years ago. While the first truffle was found in 2004, it took another six years for yields to grow to commercially viable levels. The business will produce more than 5000 kilograms of saleable truffle in the 2015 season, which starts in mid-May and runs through to the end of August.

Overcoming obstacles The European truffle business has been secretive, and the last thing the Europeans want is an upstart from Australia joining the industry. As a result it has been challenging to overcome cultural preconceptions and the tyranny of distance, given Manjimup is so far away from Paris and truffles are very perishable products. But thanks to Truffle & Wine Company's great logistics manager, we can deliver truffles to any major city in the world within two days of harvest. Entering the European market has also meant changing the way European chefs use truffle. Truffle & Wine Company had thought Northern Hemisphere chefs would have an insatiable appetite for Australian truffles.

However, black winter truffle is traditionally used with winter cuisine. Australia's truffle harvest occurs in the middle of the Northern Hemisphere summer, when temperatures are 30°C to 40°C – and many top-end restaurants close for their summer holidays. Truffle & Wine Company had to conduct a massive education program to convince chefs truffle could be used just as successfully with summer cuisine as in winter. This continues to be a major marketing effort, but the best chefs are adventurous and adaptable – and acceptance of Australian truffles is increasingly associated with exceptional product quality and service.

People on a path to success Truffles are sold in the Northern Hemisphere as much as one might sell potatoes. Truffle & Wine Company is the only business in the world to have created a luxury brand for this product. Every aspect the business adopts is based on its “simply exceptional” challenge. Truffle & Wine Company's success is based on growing respect for products, service and chef clients. We have developed a distribution network with people who share values. A strategic plan guides everything we do and maintains “simply exceptional” focus. Success is never achieved without motivated and competent staff and Truffle & Wine Company staff are the backbone of the business, and integral to its ongoing success.

DOING BUSINESS

Avoid a cross-cultural faux-pas and save the deal BEING CULTURALLY SENSITIVE IS AN IMPORTANT SKILL WHEN DOING BUSINESS ABROAD. Carla Campbell-Redl, Oncall Interpreters & Translators

hen United States President John. F. Kennedy stated, ‘Ich bin ein Berliner! (I am a Berliner!) in his speech in West Berlin in 1963 he made one of the best-known cultural and linguistic faux pas. While he wanted to indicate solidarity with Berliners, he didn’t realise the expression had a double-meaning, ‘I am a doughnut!’. Afterwards, Berlin cartoonists had a field day with illustrations of talking doughnuts. The global business world can be a minefield when it comes to ensuring appropriate linguistic communication, and also respecting the cultural nuances of the local market. Some common faux pas that are easy to make include: • Eating beef at a dinner hosted by a prospective Indian business partner. To Indians, cows are sacred and should not be eaten. • Refusing a vodka on arrival in Russia, where such behaviour is considered rude. • Stomping into the home of a Korean business contact in snow-covered boots, where footwear is always removed at the entrance to the home. • Not giving your business card when one is handed to you in China. • Sitting on the edge of a table in front of a Maori business partner, which is also considered bad manners. While navigating cultural niceties is challenging, there are resources business people can draw on to help ensure they display suitable behaviour. For instance, there are quick reference guides online that provide useful tips on how to act in a particular country or market. Although it’s important to remember that some of these reference tools are more useful than others. Our CEO, Hulus Hulusi, has built up a wealth of knowledge when it comes to proper behaviour when visiting international markets. ”Don’t be fooled into thinking you can become something you are not,” he said.

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“On your first or even hundreth visit to another country or region where you hope to do business or are already selling, you should always expect the unexpected and select your opportunities wisely. “Partnering with a good local agent is one of the recommended ways to ensure success in penetrating a new market as well as having written material independently proof-read by a local expert.” So can you correct a cultural faux pas once you have made one? That will depend on the circumstances. There are different steps you can take to rectify any issues straight away: 1. Apologise as soon as possible 2. Contact a neutral cultural expert – this is important as they should be able to provide advice and guidance on not only rectifying, but also addressing any potential future faux pas 3. Consider compromises or changes you may need to make in your strategy to restart negotiations 4. Adapt your approach to include appropriate cultural and linguistic support for future business endeavours 5. Don’t be put off As long as you follow these tips it’s likely you will be able to save the relationship and continue a profitable business dialogue.

DOING BUSINESS

Secrets to export success finally disclosed A RECENT ROADSHOW ORGANISED BY EXPORT FINANCE AGENCY EFIC REVEALED SOME TIPS OF THE TRADE, AND HOW COMMITTED SMALLER EXPORTERS ARE TO EXPORT MARKETS. Andrew Watson, executive director of Efic

e recently spent two weeks travelling around the country holding a series of small-to-medium enterprise (SME) briefings, with the aim of providing smaller exporters with information and insights to help them win business, grow internationally and achieve export success. During the events around the country we met hundreds of business owners, who are active exporters or considering exporting. We heard from a range of the country’s most successful exporters about the ups and downs of their personal export journeys.

Small exporters ‘creative’ and ‘confident’ From everything we have learnt, it is clear Australia’s smaller exporters have three things in common: They are creative, confident and optimistic. They are also successfully showcasing some of the very best of Australia’s products and services around the world. The energy and enthusiasm for export was evident at every event we hosted. However, we also heard about some of the uphill struggles successful companies have faced along the way and how they overcame those challenges. ‘Trial and error’ was one of the themes that emerged at the events. Many small exporters spoke of mistakes made in the early days, often due to poor planning and preparation. They sometimes selected the wrong markets to enter or rushed to push out a product in a new market before it was ready or had even been properly tested. Transformation was also discussed. Some businesses spoke of how when they had first shifted to export, it required a total change of culture for which they were unprepared. Exporting is not just a case of shipping your product to a different country, it involves understanding and adapting to a new culture, partnership, set of regulations, method of logistics and way of marketing your product. Starting on the export path is exhilarating, but there are a lot of things to think about and master.

Finance and cashflow prove a challenge Access to finance and managing cashflow was something almost every one of our small business panellists highlighted as a

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challenge. Growth for a business is positive, but the scale of growth that often comes with exporting, such as winning a new large contract, can be painful. Export often requires significant financing and commitment upfront, while the promise of revenue and profit comes much later. This is a challenge for a business of any size, but particularly for a smaller exporter that often depends on a limited reserve of working capital to keep the business running day-to-day, and doesn’t have additional capital ready to invest in delivering on new export contracts. At Efic, we work with a large number of smaller exporters and understand these challenges. We know the struggles exporters face, particularly when it comes to accessing finance. It is tremendous to see so many Australian companies going overseas or winning contracts in export-related supply chains, and we hope to be able to help as many exporters as possible to succeed. For more information: Phone: 1800 093 724 or 02 8273 5333 Website: www.efic.gov.au

ADVERTORIAL

NEW LENDING FLEXIBILITY OPENS DOORS FOR SME EXPORTERS By Andrew Watson, SME Executive Director at Efic

Australian small to medium enterprise (SME) exporters have three things in common – they are creative, confident and optimistic. Australian SME exporters continue to win contracts against global competitors. However, many find it difficult to access the finance they need to secure these opportunities. This is a topic that often comes up in our conversations with SMEs, and something that consistently holds them back from competing internationally. The good news is that recent legislative changes have improved this situation, and allow us to help more SME exporters access the finance they need to succeed overseas. Making a significant contribution SMEs are a significant contributor to the Australian economy, accounting for over 70 per cent of the domestic workforce and 60 per cent of our nation’s total income.

While Steele’s bank was supportive of these contracts, it required further tangible security before it would approve additional funding needed to meet the significant upfront research and material costs.

In response to the recent legislative changes, we have introduced the Export Contract Loan, a flexible loan product with a streamlined application and approval process.

This lack of tangible security, such as ‘bricks and mortar’ collateral or inventory, is something that holds many exporters back from receiving the finance they need to fulfil important contracts.

This product will make it easier for SME exporters, and those in export supply chains, to access the finance they need when their bank is unable to help.

This is especially the case where an SME’s competitive advantage is intangible intellectual property, something banks often find difficult to value and therefore lend against.

Helping more SMEs A number of clients have already benefited from our new Export Contract Loan, one of which was Steele Environment Solutions – a Victorian technology advisory and research firm.

Fortunately, we were able to support Steele with a $300,000 Export Contract Loan, allowing it to pay its upfront costs and fulfil this high-profile research and development contract.

Steele’s loan was approved just a few days after the product was launched, providing it with the additional working capital it needed to fulfil two significant export contracts to United Kingdom-based companies.

Bright future predicted for Australian SMEs The success of innovative companies like Steele highlights the opportunities that are available for Australian SMEs to grow on the global stage.

The first of these contracts involves Steele designing a waste treatment process that could be used to clean-up toxic and hazardous waste storage sites by treating, and then disposing of, the contaminated waste material.

The March 2015 results of our SME Exporter Sentiment research shows that, for those SMEs surveyed, exports now make up 16 per cent of their total revenue with this forecast to grow by a further 4 per cent in the next 12 months.

The second contract involves providing a ‘to scale’ demonstration of Steele’s chemical process technology for treating and packaging both toxic and hazardous wastes.

We’re excited to support even more SME exporters with a loan that is tailored to their needs. This will help them win more export contracts and grow internationally.

Once Steele has designed these waste treatment processes, it has a strong chance of using this technology to secure a significant pipeline of supply contracts in the UK and the United States.

For more information: Phone: 1800 093 724 Website: www.efic.gov.au

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

DOING BUSINESS

Understanding incoterms HAVING A WORKING KNOWLEDGE OF INCOTERMS IS ESSENTIAL FOR ALL TRADERS. HERE IS AN OVERVIEW OF SOME OF THE MOST COMMON TERMS IN THE SYSTEM. FOR A COMPLETE LIST OF THESE TERMS, PLEASE REFER TO THE ICC INCOTERM RULES PUBLICATION. Dianne Tipping, chair, Export Council of Australia

pplying Incoterms to sale and purchase contracts makes global trade easier, and helps partners in different countries understand each other. When companies enter into contracts to buy and sell goods, they are free to negotiate specific terms including price, quantity and the characteristics of goods. Every contract contains what is referred to as an Incoterm, or a international commercial term that denotes points at which shipper, carrier and consignee’s risk – and responsibility – starts and ends. Parties to the transaction select the Incoterms, which determine who pays the cost of each transport segment, who is responsible for loading and unloading goods, and who bears the risk of loss at any given point during an international shipment. Incoterms also influence the customs’ valuation basis of imported merchandise. Parties to a contract are often unaware of the different trading practices in different countries. This lack of knowledge can lead to misunderstandings and disputes. The incorporation of Incoterms in international sales contracts reduces this. The International Chamber of Commerce (ICC) originally published a set of international rules for interpreting trade terms in 1936. They have been amended a number of times. The 2010 edition has been prepared to take account of changes in international trade practices and transport techniques that have occurred in the last two decades.

Trade term interpreting rules for modes of transport • EXW – Ex Works • FCA – Free Carrier • CPT – Carriage Paid To • CIP – Carriage and Insurance Paid To • DAT – Delivered At Terminal • DAP – Delivered At Place • DDP – Delivered Duty Paid

Trade term interpreting rules for sea and inland waterway transport • FAS – Free Alongside Ship • FOB – Free On Board • CFR – Cost and Freight • CIF – Cost, Insurance and Freight 38 |

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Rules for any mode of transport EXW - Ex Works “Ex Works” means the seller fulfils an obligation to deliver goods made available at the seller’s premises and packed appropriately to the mode of transport of the buyer. The seller is not responsible for loading goods onto the vehicle provided by the buyer, or for clearing the goods for export – unless otherwise agreed. The buyer bears all costs and risks involved in taking the goods from the seller’s premises to the desired destination. This term thus represents the minimum obligation for the seller. FCA - Free Carrier “Free Carrier” means the seller fulfils an obligation to deliver, when goods have been handed over and cleared for export, to the charge of the first independent carrier at the place or point named by the buyer. If the buyer indicates no precise point, the seller may deliver within the place or range stipulated where the carrier shall take goods into his charge. When, according to commercial practice, the seller’s assistance is required in making the contract with the carrier (such as in rail or air transport) the seller may act at the buyer’s risk and expense. CPT - Carriage Paid to “Carriage Paid to ...” means the seller pays freight for carriage of the goods to a named destination. Any risk of loss or damage to goods, as well as any additional costs due to events occurring after the time goods have been delivered to the carrier, is transferred from seller to buyer when the goods have been delivered into the carrier’s custody. CIP - Carriage and Insurance Paid to “Carriage and Insurance Paid to ...” means sellers have the same obligations as under CPT, but with the addition that sellers have to procure cargo insurance against the buyer’s risk of loss of or damage to the goods during carriage. Sellers contract for insurance and pay the insurance premium. DAT - Delivered at terminal “Delivered at terminal” means the seller delivers when goods, once unloaded from the arriving means of transport, are placed at the disposal of the buyer at a named terminal, port or other destination. “Terminal” includes any place, whether covered or not, such as a

quay, warehouse, container yard or road, rail or air cargo terminal. The seller bears all risks involved in bringing the goods to and unloading them at the terminal, port or other destination. DAP - Delivered at Place “Delivered at Place” means the seller completes delivery when goods are placed at the buyer’s disposal on arrival, and the means of transport are ready for unloading at the named place of destination. Sellers bear all risks involved in bringing goods to the named place. DDP - Delivered Duty Paid “Delivered Duty Paid” means the seller fulfils an obligation to deliver when goods have been made available at the named place in the country of importation. Sellers have to bear any risks and costs including duties, taxes and other charges of delivering the goods there with clearance for import. While the EXW term represents the minimum obligation for sellers, DDP represents the maximum obligation. This term should not be used if the seller is unable to directly or indirectly obtain the import licence.

Rules for sea and inland waterway transport FAS - Free Alongside Ship “Free Alongside Ship” means the seller fulfils the obligation to deliver when goods have been placed alongside a vessel on the quay or in lighters at the named port of shipment. This means buyers have to bear all costs and risks of loss of/damage to goods from that moment on. The FAS term requires sellers to clear the goods for export. FOB - Free on Board “Free on Board” means the seller fulfils the obligation to deliver when goods are loaded on board at the named port of shipment. This means buyers have to bear all costs and risks of loss of or damage to goods from that point on.

CFR - Cost and Freight “Cost and Freight” means sellers must pay costs and freight necessary to bring goods to the named port of destination. However, the risk of loss of or damage to goods, as well as any additional costs due to adverse events after the goods have been delivered on board the vessel, is transferred from seller to buyer when goods are aboard in the port of shipment. CLF - Cost, Insurance and Freight “Cost, Insurance and Freight” means sellers have the same obligations as under CFR, but with the addition that sellers have to procure marine insurance against a buyer’s risk of loss of or damage to goods during the carriage. Sellers must contract for insurance and pay insurance premiums. Buyers should note that under the CIF term sellers are only required to obtain insurance on minimum coverage. The CIF term requires sellers to clear goods for export. INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

GOVERNMENT

Regulations on military exports to be tightened AUSTRALIA HAS BEEN BEHIND TECHNOLOGICAL DEVELOPMENTS WHEN IT COMES TO TRADE IN ARMS. BUT THAT’S ABOUT TO CHANGE. by Claire S. Willette, Department of Defence

s a member of numerous international counter proliferation regimes, Australia has an obligation to regulate the export of items, which have military or weapon-of-mass-destruction applications.

Australia’s export controls, administered by the Defence Export Control Office (DECO), supports international efforts to stem proliferation of conventional, chemical, biological and nuclear weapons through regulating the export of military and dual-use items. As such, Australia currently regulates the physical export of military and dual-use items, but technological advances have created loopholes that require new tools to ensure we carry out these obligations. One of the ways we do this is by requiring organisations that export a controlled military item to hold a licence, under the regulations of the Customs Act 1901. At the moment, no licence is needed if instructions are emailed about how to produce or enhance a military item. In addition, no brokering permit is required if an Australian or person in Australia, arranges for weapons to be sent from one destination outside of Australia to another destination outside of Australia. These two examples clearly contain loopholes that need to be closed. Closing the gaps To fulfil regime commitments regulating the ‘intangible’ export and brokering of goods and associated technologies, we reviewed current regulations and have identified that we need better controls on the supply, publication and brokering of intangible technology. Through this process the Department of Defence has worked with the Strengthened Export Controls Steering Group. This is a government-appointed committee charged with developing and testing existing laws, and recommending any changes that need to be made for more effective legislation.

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As a result, Defence Trade Controls Act 2012, received Royal Assent on Thursday 2 April 2015. It includes a 12-month implementation period, which will allow us to work closely with stakeholders as they establish internal compliance arrangements in response to the amended laws, before offence provisions take effect on 1 April 2016. Being prepared If these laws affect you, the first thing you will need to do is review the technology with which you are dealing. Identify whether it is controlled under the Defence Strategic Goods List (DSGL). If it is, review whether it meets control thresholds. Then, think about whether you are planning on exporting, publishing and/or supplying this controlled technology. Having a controlled technology or good involved in a project does not necessarily mean that export controls apply. After that review your role in this process and consider what your personal level of responsibility is. If you are managing this for your organisation, think about where management of the regulatory requirements will best sit. It is also important to identify a point of contact at the Department of Defence. We can provide significant implementation support through outreach and engagement sessions. This is in addition to detailed guidance, tools and training that is available. You can find information on Australia’s export controls and training material, on DECO’s website: www.defence.gov.au/DECO

DO THE LAWS APPLY TO YOU? Do you work with dual-use or military end-use goods, nuclear material, dangerous chemicals, microorganisms, toxins, highend electronics, computers, telecommunications, information security technology, sensors, lasers, underwater vehicles, UAVs, aerospace and propulsion equipment or marine and aircraft navigation, and avionics? If so, the Defence Trade Controls Amendment Bill 2015 may apply to you.

SPOTLIGHT ON

Australia and Thailand has had a free trade agreement in place since 2005, which has helped support a substantial increase in two-way trade between the two countries. The Thailand-Australia Free Trade Agreement is important for Australia, given Thailand is the largest economy in South East Asia according to the Department of Foreign Affairs and Trade (DFAT).

HERE’S A SNAPSHOT OF AUSTRALIAN/THAI TRADE STATISTICS.

Value of major Australian exports to Thailand (2013, $m)

Value of major Australian exports from Thailand

Thai snapshot (2013 figures)

(2013, $m)

GDP: US$380.5 billion GDP per capita: US$990.1

Crude Petroleum 1632

Goods vehicles 2837

GDP growth: 1 per cent

Passenger motor vehicles 1547

Population: 68.2 million Gold 445

Aluminium 383

Coal 288

Trade with Australia: $1.6 billion

Heating and cooling equipment Iron, steel and aluminium structures 355

Fast Facts Thailand is a kingdom and the present king is HM King Bhumibol Adulyadej

The vast majority of tariffs on Thai goods exported to Australia will drop to zero by 2020

FOR MORE INFORMATION, PLEASE VISIT THE DFAT WEBSITE: WWW.DFAT.GOV.AU INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

STAFF PROFILES

INTRODUCING OUR NEW STAFF

THE EXPORT COUNCIL OF AUSTRALIA (ECA) WELCOMES MARKETING, RESEARCH AND EXPORT SPECIALISTS TO ITS GROWING TEAM. Niels Strazdins Kristina Koprivica

Tanya Yakovlev

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CA recently welcomed three new team members, who are already making strong contributions to the council’s good work.

Latest recruit comes from former Yugoslavian region Kristina Koprivica has joined ECA from Serbia as our new marketing and events coordinator. She will work closely with Richelle Ward, our special projects and media manager. Kristina graduated from the Faculty of Philosophy at Serbia’s University of Novi Sad with a degree in journalism in 2013. During her studies Kristina won a full scholarship to participate in a year-long exchange at the University of Maine, United States. The US Department of State’s Bureau of Educational and Cultural Affairs awarded her the scholarship, allowing Kristina to focus on journalism and new media. Following her graduation, Kristina worked at the Novi Sad School of Journalism, a non-profit organisation that focuses on public advocacy in human rights promotion and democratic reform, as well as educating media professionals. In the beginning of 2015 Kristina moved to Australia to start working for us.

Aviation researcher takes off to ECA Niels Strazdins has joined ECA as research manager. In this new role, Niels will work on some exciting new projects planned to roll out over the next few months. Niels graduated from Macquarie University with a Master of International Business as well as a Master of International Relations in 2014. Australia is the seventh country he has called home, having moved to Sydney and joined aviation research and analysis firm CAPA Centre for Aviation. This was after he spent two years in corporate banking with HSBC in London. He first joined ECA in 2013.

A native of Toronto, Niels holds a bachelor degree in Business Administration from York University. He has studied languages at the Freie Universität Berlin and GoetheInstitut Düsseldorf in Germany; Université de Nice in France; Universidade de Lisboa in Portugal; and Dongseo University in South Korea.

Highly educated export specialist joins the rank Tanya Yakovlev has taken on the role of Western Australian state representative for the ECA. Tanya will assist in delivering one and two day short courses to Perth based businesses and small businesses in importing, exporting and payments – and drive growth in ECA membership across WA. Tanya has worked with Australian corporate export and import clients for 10 years. She began her career in financial markets, and excelled in her role as a corporate foreign exchange dealer in Melbourne. She moved to Perth two years ago and assists companies in the food and beverage, wine, mining, oil, gas and information technology sectors to participate in international trade shows. Tanya has bachelor degree qualifications in finance and international relations. She has also completed a graduate diploma of teaching, diploma of financial planning and financial services, plus qualifications in fitness training. Outside of work, Tanya loves working on her new food truck business venture with her partner, Giuseppe. She loves food, cooking and eating but also likes to stay fit and healthy. She enjoys the laidback, outdoor beach culture WA offers.

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

TIM’S TIPS

Tim’s Tips AIRPORT ECONOMIST TIM HARCOURT LOOKS AT WHY SUCH STRONG TIES EXIST BETWEEN SOUTH KOREA AND AUSTRALIA.

outh Korea has long played an important role in Australia’s economic and diplomatic history. In 1989 from the East Asian capital of Seoul, then-Australian Prime Minister Bob Hawke launched the APEC concept and the first-ever APEC meeting was held in Canberra in November the same year. When I interviewed Bob Hawke, he paid tribute to the efforts of the Republic of Korea in helping to set up an Asia-Pacific community in response to global economic tensions, resulting from the end of the Cold War. Since then the Republic of Korea and Australia have become close trading partners and important partners in international diplomacy. Bilateral merchandise trade between the two nations remains strong.

Signs of recovery for steel On a visit to Seoul, I was able to gain a better feel for Australia’s trading relationship with Korea. Speaking with Matt Gurr and Jaewon Rim, Rio Tinto’s representatives in Seoul, steel was clearly an important industry for the country. The steel sector is starting to recover from the financial crisis of 2007/2008. Gurr expects better times ahead for Hyundai and other Korean chaebols, the local business conglomerates, after some steel-price slashing. A recovery in industrial production will help Australian exports in those sectors.

Jim Lim, Korea’s regional manager for MLA told me: “We’ve maintained our market share, as we’ve been able to campaign on the fact that Australian beef is clean and safe – and we have a reputation as a supplier [that is] reliable and trustworthy.” Lim warns it will be tough for Australia to maintain its market share once US supplies return to normal, but he does see room for expansion. “Korea still only eats around one-fifth of the amount of beef that Australia eats on a per capita basis. There’s plenty of room to move, especially as Koreans in rural areas move from pork to beef as their incomes improve.” In the financial services sector, ANZ and Macquarie Bank have a significant presence in Korea. John Walker of Macquarie Bank says the financial crisis gave Korea an opportunity to transform the way it operates. “Modern Korea’s first economic phase in the 1980s was ‘perspiration’, as it worked up a sweat [for] establishing itself as an industrialised country,” he says. “Then it moved into a phase of ‘aspiration’ as it joined the OECD. Now [it’s in] a phase of ‘inspiration’ as it transforms … to deal with a new world with the challenges of climate change.”

Agribusiness trade beefed-up In agribusiness beef is an important commodity in the AustraliaKorea trading relationship. The BSE crisis boosted Australia’s beef exports to Korea after imports from countries, such as the United States where evidence of the disease was found, were stopped during the scare. BSE is a bovine disease that can be passed to humans who consume meat from infected creatures. US imports have now returned to Korea and volumes of grain-fed beef to Korea have increased by 15 per cent year-on-year in 2014, according to Meat and Livestock Australia (MLA). 44 |

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For Australian exporters trading in resources to beef, financial services and even car parking – Wilson Parking has set up in Seoul – Korea is going to be an important economic market for Australia in years to come. Tim Harcourt is the JW Nevile Fellow in Economics at UNSW Business School and the author of Trading Places – The Airport Economist’s guide to International Business.

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Crowther Blayne is an Australian leader in business-to-business online and print publications for a variety of industries worldwide. Crowther Blayne publications provide businesses with the broadest possible audience and target the most relevant decision-makers. By providing a platform of the highest quality, products and services are presented in the best possible light to the marketplace. If you have a specific enquiry about our services, or simply want to get in touch, please contact: Trish Riley | Business Development Manager | P: 1800 222 757 | trish@crowtherblayne.com.au | crowtherblayne.com.au

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

INTERNATIONAL CALENDAR MAY 4-9 May Beef Australia 2015 Wandal, Australia 6-8 May SIAL Shanghai Shanghai, China 6-9 May HOFEX 2015 – Asia’s Leading Food & Hospitality Tradeshow Hong Kong 11-15 May Exponor 2015 Antofagasta, Chile 12-15 May Seoul Food & Hotel Seoul, South Korea 24-29 May NAFSA Annual Conference and Expo 2015 Boston, USA 21-23 May Food & Hotel Vietnam – April 2015, HCMC Ho Chi Minh City, Vietnam

JUNE 2-4 June Oil & Gas Asia 2015 Kuala Lumpur, Malaysia 2-5 June CommunicAsia 2015 Marina Bay Sands, Singapore 11-14 June Guangzhou International Food and Ingredients Fair 2015 Guangzhou and Changsha, China

JULY 3-5 July BroadcastAsia Singapore

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AUGUST Building & Construction Mongolia 2015 Ulaanbaatar, Mongolia Power & Renewable Energy Mongolia 2015 Ulaanbaatar, Mongolia Mining Mongolia 2015 Ulaanbaatar, Mongolia 27 Aug - 4 Sep UECA Mission to Latin America 2015 Argentina, Peru and Mexico

SEPTEMBER 9-12 September Electric Power & Renewable Energy Indonesia 2015 Building & Infrastructure Indonesia 2015 Construction Indonesia 2015 Mining Indonesia 2015 Jakarta, Indonesia 14-17 September Exposibram 2015 Minas Gerais, Brazil 17-20 September Food & Hotel Malaysia 2015 Kuala Lumpur, Malaysia 19- 20 September AFU Education Exhibition Myanmar 2015 Yangon, The Republic of the Union of Myanmar 20-23 September Fine Food Australia Trade Show Sydney, Australia 21-25 September Perumin – Extemin 2015 Arequipa, Peru 22-26 September West Africa Education Exhibition 2015 Accra, Ghana and Lagos, Nigeria in West Africa

OCTOBER 1-4 October Australia Future Unlimited Education Exhibition Taiwan 2015 Taipei, Taichung and Kaohsiung, Taiwan 15-17 October Oil & Gas Myanmar 2015 Yangon, Myanmar

TRADE MISSIONS SIAL Shanghai When: 6-8 May Where: Shanghai, China Medical Mission to China 2015 When: 12-15 May Where: Shanghai and Suzhou, China

16-19 October Electric, Power & Renewable Energy Indonesia 2015 Jakarta, Indonesia

Natural Australia: International Mission to China Beauty Expo 2015 When: 19-21 May Where: Shanghai, China

31 October Eco Expo Asia 2015 Hong Kong

Medical Mission to China When: 12-15 May Where: Shanghai, Suzhou, China

NOVEMBER

Hong Kong Trade Development Council (HKTDC) Food Expo 2015 When: 11-16 August Where: Hong Kong

4- 7 November Oil & Gas Indonesia 2015 Jakarta, Indonesia 17-19 November Communicast Myanmar 2015 Yangon, Myanmar 26-28 November Mining Myanmar 2015 Building & Construction Myanmar 2015 Yangon, Myanmar

Indonesia NOW Business Mission 2015 When: 1-5 September Where: Jakarta, Indonesia UECA Mission to Latin America 2015 When: 27 August to 4 September Where: Argentina, Peru, Mexico

DECEMBER 3-6 December Machine Tool Indonesia 2015 Manufacturing Indonesia 2015 Jakarta, Indonesia 27 to 28 December Electric, Power & Renewable Energy 2015 Yangon, Myanmar

INTERNATIONAL BUSINESS TODAY – WINTER 2015 |

COURSES

WANT TO UPDATE YOUR KNOWLEDGE IN THE NEW YEAR? Australian Institute of Export courses and publications can help you.

COURSES

Face-to-Face Export Procedures Course ECA/AIEx member price: $660 Non-member price: $760 Duration: Two days Face-to-Face Import Procedures Course ECA/AIEx member price: $540 Non-member price: $440 Duration: One day Face-to-Face International Payments & Understanding Documentary Credits ECA/AIEx member price: $540 Non-member price: $440 Duration: One day Online Export Procedures Course ECA/AIEx member price: $250 Non-member price: $330 Delivery: Online Online Import Procedures Course ECA/AIEx member price: $250 Non-member price: $330 Delivery: Online India Cross-Cultural Intelligence Course ECA/AIEx member price: $65 Non-member price: $80 Delivery: Online

PUBLICATIONS

COURSE DATES 12/13 May Export Procedures Course Sydney, NSW

22 July Import Procedures Course Brisbane, QLD

13 May Import Procedures Course Adelaide, SA

5 August Export Procedures Course Perth, WA

3 June International Payments & Understanding Documentary Credits Melbourne, VIC

12 August International Payments & Understanding Documentary Credits Brisbane, QLD

10 June Import Procedures Course Sydney, NSW

19 August International Payments & Understanding Documentary Credits Adelaide, SA

16 June Import Procedures Course Perth, WA 17-18 June Export Procedures Course Melbourne, VIC 17-18 June Export Procedures Course Brisbane, QLD 14 July International Payments & Understanding Documentary Credits Sydney, NSW

Export Handbook

Cost: $137.50 Export Handbook E-Book

Cost: $55

14-15 July Export Procedures Course Adelaide, SA

Import Handbook

Cost: $104.50 Import Handbook E-Book

Cost: $44

8-9 September Export Procedures Course Sydney, NSW 15-16 September Export Procedures Course Melbourne, VIC 16 September Import Procedures Course Adelaide, SA 16 September International Payments & Understanding Documentary Credits Perth, WA 6 October Import Procedures Course Perth, WA

22 July Import Procedures Course Melbourne, VIC

International Trade Procedures

Cost: $55 ICC UCP 600

Cost: $55

For informaiton please visit www.aiex.com.au or call 02 8243 7440 48 |

INTERNATIONAL BUSINESS TODAY â&#x20AC;&#x201C; WINTER 2015

EXPORTERS.

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Blair Beven 02 9235 7610 export@ajpark.com