Australian exporters have become increasingly optimistic about their business prospects over the coming year, with the majority recording increased orders in the past year, and their confidence has reached its highest level since the aftermath of the global financial crisis, according to the DHL Export Barometer 2015.
The DHL Australia survey results revealed exporters’ confidence is at its highest since 2011 as lower exchange rates have made Australian businesses more competitive internationally, in addition to the positive impacts of free trade agreements.
Over the past year, more than half (53%) of the exporters surveyed could increase their orders, with New Zealand and North America being named as the top destinations by the majority of the respondents (57% and 53% respectively).
Looking ahead, two-thirds (66%) of Australian exporters expect their orders to increase over the coming year.
In terms of export destinations, the 15th DHL Export Barometer found the number of businesses exporting to the Americas (North, Central and South) and Asia Pacific is increasing this year. While China is expected to generate the most additional export orders, South and Central America also rank among the top export destinations in the near future. Despite a relatively small export market, 56% of exporters predict orders to increase in these regions over the next 12 months. In South America, export orders are expected to increase by 17% on the last year thanks to a strong trade performance from Pacific Alliance economies in this region, according to the survey forecast.
Australian exporters are also more optimistic towards ASEAN economies with 53% of the exporters planning to export to that area in the next year, up 13% from last year, matching expectations to export to the UK. Despite the weak Greek economy, Europe and the Middle East were only slightly behind at 50% and 51% respectively.
Gary Edstein, Senior Vice President, DHL Express Oceania, said: “The 2015 DHL Export Barometer shows Australian exporter confidence is on the rise. This year, two-thirds of exporters predict an increase in sales over the next 12 months, an increase of 5% from last year and a significant improvement following the GFC when fewer than half of Australian exporters had an optimistic view of the coming year.
“The expectation that company performance will improve has also increased significantly since last year, with 58% of the exporters predicting higher profitability in the next year. Correspondingly, an increasing number of exporters think the number of employees and wages paid are likely to grow.”
The barometer also revealed a generally supportive attitude of Australian exporters towards the free trade agreements (FTAs), with the perceived and expected benefits continuing to grow. For example, 49% of the exporters have positive expectations towards the new FTA with China (ChAFTA) while the agreement with Japan has been even more beneficial than exporters expected, with actual positive impacts cited by 41% compared to the anticipated 35% in 2014.
Of the established FTAs, the agreement with the USA is the most popular with 59% of the exporters reporting a positive impact on their business in comparison to 55% the previous year and 46% in 2013. New Zealand’s Closer Economic Relations agreement also provided a positive impact for the majority of exporters (56%), a 9% increase on the previous year.
The optimism towards future FTAs is increasing, with over half (51%) predicting a positive impact, should an agreement be signed with the EU, compared to 46% last year. Interestingly, confidence in the much discussed Trans Pacific Partnership (TPP) is growing, with 46% (up from 37% last year and 26% in 2013) expecting a positive benefit.
Another positive aspect contributing to the increasing exporter confidence this year was the weakening dollar allowing Australian businesses to compete more effectively internationally, despite the increasing costs of raw materials. Last year, the strong dollar was considered by exporters to have the greatest negative impact on sales. Today, four out of five exporters (80%) say they both import and export – a jump from 74% in 2013 and 2014.
As the exchange rate fluctuates, exporters are responding by implementing a wide range of strategies, with many focusing on improving service levels to add value. China is still viewed as the biggest international competitor, however the perceived threat has dropped in the past year amid growing concerns about the threat from the USA (up from 31 to 34%), India (up from 15 to 19%), New Zealand (up from 11 to 13%) and Latin America (up from six to 9%).
With online commerce continuing to grow, Australian exporters are increasingly turning to a greater number of social media channels to stimulate sales. This is the second year the DHL Export Barometer has examined social media use among exporters as the social revolution becomes more prolific, particularly in the South East Asian markets. While only a slight increase was shown in the number of companies using social media to stimulate export sales from last year (37 to 38%), the average number of social channels has increased.
Figures show 71% of Aussie exporters are now using Facebook, 39% using LinkedIn, 32% active on Google+ and 30% tweeting with customers on Twitter. Despite the popularity of the Instagram community among its 200 million plus users, it appears that exporters haven't yet committed to the image led platform for sales generation, although this channel has achieved the largest growth this year (from 18% to 29%).
