It appears the international marketplace is chewing up many Australian businesses and spitting them out. According to some of the country’s most prominent family business leaders, it’s never been harder for Australian companies to crack the export market.
Ross Brown of 120-year-old family business Brown Brothers winery says the high Australian dollar has had a hugely negative impact on businesses selling their goods overseas. He paints a bleak picture of the Australian export market of the past five years.
“The last four years have been very difficult. At Brown Brothers, we’ve had a significant amount of our export market decimated by the high exchange rate. Our international market makes up less than 10 per cent of our business; in the past it’s been up to 40 per cent,” he says.
The problems Brown Brothers faces are affecting the success of family businesses across the board. PwC research revealed that international sales only accounted for 5 per cent of Australian family business’ total sales in 2012. That’s a staggeringly low figure next to countries like Italy and Singapore, whose family businesses attribute over 40 per cent of their revenue to overseas exports.
Hofmann Engineering, a second generation family business in Perth, has been exporting for more than 30 years. Managing Director Erich Hofmann says Australian businesses are struggling and the government needs to do more to help. He calls for more Fair Trade Agreements to be pursued by the Abbott Government, and sees July’s free trade agreement with Japan as a step in the right direction.
“The government should definitely assist wherever possible; this downturn we’ve got at the moment is the worst we’ve ever seen. The amount of companies that are going out of business at the moment is scary,” Hofmann says.
Erich’s father founded the business in the family backyard in 1969 and it has grown to become one of Australia’s largest heavy engineering companies, providing specialist-engineering services to mining companies and aerospace firms in Asia, Europe, Africa and Canada.
“Australian family businesses have the added challenge of having to really showcase the value in their products so that the customer will pay a little more, simply because the Australian dollar is so high,” he says.
Despite the negative impact of the exchange rate on family business, diversified agribusiness and food producer, Craig Mostyn Group, has had great success operating internationally.
Executive director Andrew Mostyn says it’s crucial that Australian businesses and the government focus on targeting Asia in order to keep the country’s export market thriving.
Mostyn says family businesses are in a particularly advantageous position to crack the goldmine that is the Asian market. He proposes that family-run organisations dominate the business world in Asian countries and that Australian family businesses would do well to seek them out and make connections with them.
“The relationships you can build as a fellow family business are incredibly strong, much stronger than dealing with a public company. You can form business partnerships that can last for generations,” he says.
Mostyn and other business leaders say that this kind of ‘linking of arms’ between family businesses is a key strategy to exporting success. It’s no longer just down to individual businesses making the leap into overseas markets. It’s about promoting “brand Australia” and advocating for the success of fellow family-run companies.
It’s attitudes like this that inspired the creation of the Australian First Families of Wine (AFFW), of which Brown Brothers is a part. The group of heritage family wine companies travel the world promoting Australian wine with great success.
With access to the right resources and government support, Australian family business has the capacity to conquer the overseas market. As Leanne De Bortoli, of third-generation AFFW affiliated wine company De Bortoli says, family businesses should, in fact, see more success than public companies.
“We’ve got heritage, reliability and trustworthiness. If family businesses utilise these skills in their approach to exporting and play up those advantages, they should be hugely successful overseas.”