WA SME exporters look to China

Small to medium sized enterprises in Western Australia are leading the nation in their engagement with China, according to international research released last week.

The Grant Thornton International Business Report has found resource-hungry China, which is a market for more than a quarter of Australian SMEs, is a destination for 36 per cent of WA’s SME exporters.

This exceeds the proportion of SME exporters to China in all other states and territories, outperforming fellow boom state Queensland’s rate of 32 per cent.

60 per cent of WA SMEs identified globalisation as a business opportunity, more than in any other state.

The IBR found Australian SMEs are also capitalising on opportunities provided by the expanding economies of Brazil, Russia, India and China, referred to as the BRIC economies.

This was confirmed by research conducted by Austrade and Sensis, which found that over the past two years the proportion of Australian SMEs exporting to China had doubled.

The Sensis Business Index, released in August last year, revealed about 13 per cent of all SMEs in Australia export their goods and services, while the most common destinations were New Zealand (40 per cent of exporters), the UK (29 per cent) and the United States (27 per cent).

Austrade chief economist Tim Harcourt said Russia and India were important markets for WA SMEs, in addition to China.

“A lot of small technology companies that provide services for the mining sector are doing very well in Russia…while in India, they tend to choose WA universities as their campus of choice, so there are strong student links there,” he said.

Mr Harcourt said that although Brazil was a more important destination for Queensland SMEs, some WA companies stood to benefit from trade with the South American country.

“The thing with Brazil is, the mining companies own the railways, so there’s probably potential there, if not already, for some of the infrastructure in WA’s north-west to work well in Brazil,” he said.

Mr Harcourt said the opportunities available to WA companies were particularly significant in the engineering, construction and mining sectors, although the services sector was a growing market.

“The thing about WA is, there’s no shortage of demand, it’s more the supply side,” he said.

The IBR estimates that the fast-growing BRIC economies will represent about 44 per cent of global GDP by 2050, while international data suggests China’s economic expansion has had the greatest impact of the BRIC economies on privately held businesses internationally during the past two years.

Austrade WA state manager Jenny Matthews said there had been a strong upward trend in the number of SMEs in WA exporting to China, particularly in the areas of wine, food, building construction, mining technology services, education, training and a range of other manufactured products.

“We’re also seeing an increasing trend of companies developing joint ventures in manufacturing in China – not a huge trend but the beginnings of one. Some smaller (SMEs) are doing more of their manufacturing in China, where economical,” she said.