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// 1// JUNE/JULY 2016
Pages 10-15
Page 3 Page 8
Free trade: does it really exist?
Page 26
are you ready For new global container rules?
// 2// JUNE/JULY 2016
a smarter way to trade
From the editor
International trade has long been the cornerstone of Australia’s economy.
And all major political parties in their policy statements now recognise the importance of trade to drive economic growth and create jobs.
Strong trade and investment policies are vital in securing Australia’s economic future.
We need policies that will allow business to take up new trade opportunities.
We must ensure business has access to overseas trade markets and the tools and facilities to exploit new trade opportunities.
In this edition – our Election 2016 special – we highlight the key trade policies of the major political parties and identify major differences.
Australia’s lack of competitiveness on the international stage is a major concern.
Put simply, we are not as trade-intensive as most other advanced economies.
McKinsey Australia has noted that Australia is the 12th largest economy, but only the 21st largest trader.
And we are one of three of the world’s 15 largest economies not among the world’s top exporting nations.
Fewer than 5 per cent of all Australian businesses currently export.
And according to several major surveys, many businesses are not considering exporting despite the opportunities in our region.
PwC’s Passing Us By report shows two-thirds of Australian businesses have no intention of exporting into Asian markets in the near future.
The Export Council of Australia, the peak industry body for Australian exporters, cites nine key areas where Government can help Australian businesses grow internationally.
This includes supporting Australian companies to understand and utilise Free Trade Agreements and focusing more resources on addressing market entry barriers to trade.
The ECA has also called for additional funding allocations for the highly successful Export Market Development Grants program to assist exporters to grow their businesses overseas.
Whichever party wins Government on July 2 must support our exporters to ensure they have access to key markets.
Cutting red tape that deters business from trading with many of our key neighbours might be a good place to start.
Tim michaelEditor
@dynamicexport
Director and National Sales ManagerJulie [email protected]
Our team
Think Positive Pty Ltd cannot be held liable for any person(s), company or business acting upon or using the information provided in this e-magazine in any way. Information and content in Dynamic Export e-Magazine is provided to the best of our knowledge. We advise that you should seek independent professional advice to verify that all information is accurate and correct.
EditorTim [email protected]
ProductionVeronica avant
IT ManagerRob Fearn
ContributorsTom Drake, anthony Fensom, David Gray, Kim mauch, ian Smith, andrew Spence
www.dynamicexport.com.au
Advertising enquiries: [email protected]
Editorial submissions: [email protected]
Published by:Think Positive Pty ltdPO Box 221Waverley NSW 2024 australia
We need policies that encourage more Aussie companies to trade
// 3// JUNE/JULY 2016
Free Trade: What is it and how do we know it when we see it?
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feature
finance
election 2016
travel
fashion
feature
australian made
freight
middle east
what's on
Australia’s Top 20 exports revealed
Applying for finance now simpler than ever
Trade policies from the major parties
Virgin Australia rolls out new business class
Australian fashion house to open new LA store
Is your business ready to take on the world?
Get set for new labeling laws
Understanding tariffs for import and export
New export opportunities with Iran
Local & international events
comment
nEws ECA TRADE COURSES
p. 4-5
Continued page 22
DAviD GRAy
Free trade is something of an ideology
rather than a reality. Beautiful in
simple slumbering vision but a bit
more complex and elusive when
wide awake.
In its purest form free trade is the
unrestricted movement of unsubsidised,
unprotected (no tariffs or duties) goods,
services, people and money (capital) across
all national borders. Discussions of free
trade are often accompanied by reverential
whisperings of Adam Smith. Even Ricardo
and Veblen are mentioned along with Keynes
in breathless counterpoint.
To the best of my knowledge free trade
does not exist anywhere in the world today.
There are some parts of the world where
approximations of a free trade system do
come close – where the ideal and the reality
nearly intersect.
This applies to some small pockets of the
European Union with cross border trade
activity.
Any nation that boasts a particularly efficient
sector of the economy or where natural
advantages of one sort or another may exist
will tend to promote the concept of free trade
but only where they have advantages.
However, they are decidedly less
sanguine about free trade in areas where
they do not hold a competitive advantage.
Amongst nations or regions of similar
wage, cost of living and social structure
free trade can potentially work quite well
as it permits each nation to specialise
and focus on what they may be best at
or where natural competitive advantage
exists.
In such scenarios creating success
requires the commercially competitive
pursuit of productive efficiencies, value add
innovation and imaginative organisational
development.
Free trade between nations or regions
where social structures are markedly
dissimilar and wage/cost of living are far
apart tends to work less well. This is due to
the pronounced mismatch, as the poorer
nation only has its cheap labour and or
surplus population to offer.
The richer nation may try to exploit this
in isolation, thus creating an economic
imbalance or distortion that must
later unravel with usually unpleasant
consequences.
Learn more about growing your
business globally
// 4// JUNE/JULY 2016
tRADe coURSeS
ExpAnD yOUR hORizOnS: new ECA international trade courses starting soon
In its 50 plus years of training
through the Australian Institute
of Export, the Export Council
of Australia (ECA) has worked
with a number of companies big
and small to help answer the tough
questions – Are we export ready?
What are incoterms? Where do I find
a logistics expert quickly? and one of
the worst, My buyer seems to have
gone missing, how will I get paid?
ECA’s Educational Pathway takes
businesses from the stage of just
getting started on to conquering new
markets. The Educational Pathway
structure provides an articulated
learning pathway that ensures that
participants gain practical skills and
knowledge of procedures associated
with international business.
The ECA has partnered with the
Centre for Customs and Excise Studies
(CCES) and Charles Sturt University to
deliver international trade education.
This partnership means participation
in the ECA’S International Business
Program can be the first step towards
completing the Advanced Diploma of
International Business Management.
The ECA also offers discounts to its
members.
If you are new to international
Whether you are competing with the world’s best to win international contracts or facing increasing global competition at home, it is critical for business leaders to understand the skills and competencies needed to go global.
Stage 1: Getting Ready to Grow an
International Business
Are You ready to Go Global?
This half-day workshop will cover the
basic fundamentals required to access
and prepare your business for entering
global markets.
BRISBANE
date: Wed, June 22
Venue: Brisbane, CBD
times: 9am – 2pm
Stage 2: Export Process – Nuts and
Bolts
Getting the documentation right
The workshop will cover in detail
how to prepare the following
documentation, including compliance
with Australian Government
requirements.
BRISBANE
date: Tue, June 21
upcoming public workshops For June:
Venue: Brisbane, CBD
times: 9am – 5pm
Pricing Your Product or Service for
International Success
Getting your international pricing
strategy right is crucial to the success
of your business. It is difficult to go
back and renegotiate your price
once this has been set and also you
ultimately cannot risk potentially
not getting paid. This course will
cover International Costing, Risk
Management, Foreign Exchange and
International Sales Contracts.
PERTH
date: Wed, June 22
Venue: Perth, CBD
times: 9am – 5pm
ImPoRt
import Procedures and
documentation Course
The one-day import procedures
course is tailored for anyone involved
in International Trade and is relevant
to companies and people currently
importing or businesses considering or
beginning to import.
business, taking on new challenges
globally and need assistance, or
would like to upskill in new areas,
contact [email protected] to
learn more. • • •
// 5// JUNE/JULY 2016
tRADe coURSeS
upcoming public workshops For July:
Stage 1: Getting Ready to Grow an
International Business
Are You ready to Go Global?
This half-day workshop will cover the
basic fundamentals required to access
and prepare your business for entering
global markets.
PERTH
date: Tuesday, July 26
Venue: Perth, CBD
time: 9am – 2pm
SYDNEY
date: Wednesday, July 27
Venue: Sydney, CBD
time: 9am – 2pm
MELBOURNE
date: Thursday, July 28
Venue: Melbourne, CBD
time: 9am – 2pm
Stage 2: Export Process – Nuts and
Bolts
Pitching for international success
This half-day workshop will equip
you with the tools to confidently
and effectively pitch for international
success.
SYDNEY
date: Thursday, July 7
BRISBANE
date: Tues, June 14
Venue: Brisbane, CBD
times: 9am – 5pm
PERTH
date: Thur, June 16
Venue: Perth, CBD
times: 9am – 5pm
Venue: Sydney, CBD
time: 9am – 2pm
BRISBANE
date: Wednesday, July 27
Venue: Brisbane, CBD
time: 9am – 2pm
Getting the Documentation Right
This workshop will cover in detail
how to prepare the following
documentation, including compliance
with Australian Government
requirements.
MELBOURNE
date: Tuesday, July 12
Venue: Melbourne, CBD
time: 9am – 5pm
PERTH
date: Thursday, July 14
Venue: Perth, CBD
time: 9am – 5pm
managing Your International Freight
Risks
This one-day interactive workshop
will cover VITAL areas that companies
need to understand including
Incoterms® 2010, Trade terminology
explained, Common freight costs,
Choosing the right freight forwarder,
Marine insurance for air and sea cargo
and the supply chain as a Unique
Value Proposition (UVP).
PERTH
date: Wednesday, July 20
Venue: Perth, CBD
time: 9am – 5pm
SYDNEY
date: Thursday, July 21
Venue: Sydney, CBD
time: 9am – 5pm
Pricing Your Product or Service for
International Success
Getting your international pricing
strategy right is crucial to the success
of your business. It is difficult to go
back and renegotiate your price
once this has been set and also you
ultimately cannot risk potentially
not getting paid. This course will
cover International Costing, Risk
Management, Foreign Exchange and
International Sales Contracts.
BRISBANE
date: Tuesday, July 19
Venue: Brisbane, CBD
time: 9am – 5pm
MELBOURNE
date: Tuesday, July 26
Venue: Melbourne, CBD
times: 9am – 5pm
SYDNEY
date: Thursday, July 28
Venue: Sydney, CBD
time: 9am – 5pm
ImPoRt
import Procedures and
documentation Course
The one-day import procedures
course is tailored for anyone involved
in International Trade and is relevant
to companies and people currently
importing or businesses considering or
beginning to import.
SYDNEY
date: Wednesday, July 20
Venue: Sydney, CBD
time: 9am – 5pm
// 6// JUNE/JULY 2016
feAtURe
Recently signed free
trade agreements with
South Korea, Japan and
China are expected to
generate much of that
growth as they come
into effect over the coming years.
"Asian markets, particularly China,
are expected to offer significant
growth opportunities for Australian
products, valued for their quality,
as the burgeoning middle class
consumes more imported goods and
focuses on greater health awareness,"
IBISWorld senior industry analyst Jem
Anning said.
The IBISWorld reports calculates
Australia’s top 20 export industries to
be worth $260 billion to the Australian
economy, or 15.7% of GDP.
Food is expected to lead Australia’s
export boom, making up seven of the
top 10 fastest growing industries.
IBISWorld said five of the main
industries in the list include rice-
growing, seafood processing,
grape growing, cider production,
and vitamin and supplement
manufacturing.
Rice exports, mainly driven by rising
demand from Japan, grew by an
Australian exports are predicted to rise between 10 and 35% over the next five years, according to a new report published by research firm IBISWorld.
Study reveals Australia’s top 20 fastest growing exports
annualised 29.5 per cent over the past
five years.
The value of rice exports is expected
to touch $468.1 million by 2020-21, up
from $380.7 million this financial year.
Nearly 97% of the industry is based
in NSW, with major rice growing
regions affected by drought and
flooding over the past five years.
But IBISWorld predicts more stability
in the next five years due mainly
to the development of genetically
modified crops.
And seafood processing is also
forecast to boom, with Vietnam the
main destination.
Seafood exports have risen by 27.3
per cent over the past five years to an
estimated $1.01 billion this financial
year.
“International trade has become
increasingly important for the
Seafood Processing industry over the
past five years,” says Anning.
“Imports accounted for the majority
of domestic demand and exports
// 7// JUNE/JULY 2016
feAtURe
made up an increasingly large
proportion of total revenue over the
past five years.”
Vietnam is expected to receive 62%
of seafood exports by 2021.
IBISWorld says Asia markets are
prepared to pay a premium price
for Australian seafood, which is
considered to be “higher quality.”
The grape growing industry has
also enjoyed substantial growth, with
exports rising 26.6 per cent annually
over five years, to $285.3 million.
The lifting of tariffs by Asian FTA
partners is expected to significantly
boost exports further.
And Australia's cider producers have
enjoyed buoyant growth over the last
five years, in part because the signing
of the FTA with Korea led to a surge in
cider exports to that country.
Exports have risen 25.8 per cent
annually.
The cattle industry is expected
to remain Australia’s biggest food
export, climbing just under 20%
to be worth $1.6 billion, despite
“challenging conditions” plaguing
the industry over the last few years.
Government policy, varying
weather patterns and fluctuating
turnoff rates have all had an impact
on the industry, but a strong demand
from the Middle East and South-East
Asia is expected to help Australia’s
beef stocks bring more in.
By 2021, IBISWorld expects the beef
industry to be turning over $15 billion
dollars annually.
The continuing expansion of
Australian vitamin and supplement
exports into the Asia market is also
expected to continue, driven largely
by major producers Swisse and
Blackmores.
Industry exports have grown 13.2 per
cent annually over five years, to an
estimated $365 million this financial
year.
Meat processing accounted
for the largest segment of non-
mining exports at $14.1 billion this
financial year, followed by aircraft
manufacturing and repairs, and beef
cattle farming, IBIS World said. • • •
according to ibisworld, these are the top 20 industries in australia by export growth:
1. Prefabricated wooden building and manufacturing2. Bauxite mining3. Rice growing4. Seafood processing5. Grape growing6. Cider production7. Health snack food production8. Non-ferrous metal casting9. Beef cattle farming10. Citrus, banana and other fruit growing11. Carbon dioxide production12. Structural steel fabricating13. Aircraft manufacturing14. Toy and sporting goods manufacturing15. Hay and other crop growing16. Mattress manufacturing17. Milk and cream processing18. Meat processing19. Vitamin and supplement manufacturing20. Apple, pear and stone fruit growing
// 8// JUNE/JULY 2016
FINANCE & BUSINESS
Applying for export finance now simpler than everGetting finance secured quickly is often essential when negotiating export finance contracts.
By Tim miChAEl
For many smaller companies,
it can mean the difference
between success and
failure when doing business
overseas.
Loan applications through major
financial institutions typically take
up to 40 days to process – but not
anymore.
Now there’s a new online service
that can approve loan applications
within as little as nine business days.
Launched earlier this year by Efic,
Australia’s export credit agency, the
Small Business Export Loan is aimed
at SME exporters with an annual
turnover of less than $5 million
that need working capital of up to
$250,000.
Applications can only be made
online through Efic Direct, Efic’s new
online application portal.
And with the Small Business Export
Loan, funding does not have to be
secured.
Rather than insisting on tangible
assets as security, Efic focuses on an
SMEs ability to repay the loan.
In a recent interview, Andrew
Hunter, Efic’s Managing Director and
CEO explained to Dynamic Export
how this innovative new service was
developed.
“We spoke to smaller exporters
and they wanted three main things
when applying for finance,” said Mr
Hunter.
“Firstly, they wanted loans that were
completely unsecured, as many
smaller businesses don’t have any
collateral to offer. Their competitive
advantage may be their brand,
intellectual property or technical
// 9// JUNE/JULY 2016
FINANCE & BUSINESS
capabilities.
“Secondly, many SMEs may not
have the financial expertise to deal
with complex finance applications.
“They wanted a product that is
simple and can be applied for online
rather than go through a complex
manual process.
“And thirdly they wanted an early
indication and quick decision on the
availability of funding.
“So we developed the Small
Business Export Loan, which
addresses all three concerns.”
Previously, Efic has been limited
in its capacity to provide working
capital to SME exporters, Mr Hunter
admits.
However, in March last year the
Federal Government introduced
new legislation giving Efic broader
lending flexibility.
“We are very pleased with the initial
response to the new service,” says Mr
Hunter.
“To date we have 20 applications
in the pipeline and we are receiving
two or three new applications a day.”
Mr Hunter says banks often reject
an SME’s application for funding,
simply because the business may
not be in a position to offer collateral.
“In many of those cases, the banks
refer the clients to us,” he says.
“The bank not only wants to retain
the client but also wants the client
to achieve export success and grow
their business, to potentially become
a bigger client.
“We try to assist those SMEs that
don’t have the traditional security
that Australian banks value – like real
estate.
“Their real value may be their
intellectual property, design,
technical capability or experience in
a particular market.
“We like established exporters who
have been into a market before and
have had some experience, who
aren’t just competing on price – and
have a product that is unique.
“We want to be confident that if the
Australia dollar goes up to .85 cents
(against the US dollar) or down to .65
cents, they are not just a low margin
business. They must have a strong
technical capability in what they do.”
Mr Hunter, a former senior
executive with Macquarie Group,
says Efic seeks businesses that have
a competitive advantage into the
country to which they are exporting.
“We prefer businesses that can
survive some of the currency
fluctuations that are inevitable in the
business of exporting.”
In the past three years since Mr
Hunter has been at the helm, Efic has
provided more than $330 million in
funds to SMEs.To find out more phone: 1800 093 724 or visit: www.efic.gov.au
“We’re really proud of that,” he says.
“Over the next three years we will
try to grow the business so that we
can be doing between $200-$300
million worth of finance for SMEs
every year.”
Just five years ago Efic was lending
only $40-$50 million a year.
“It’s all about focus,” says Mr Hunter.
It’s all about having a plan and
having the right products.”
Efic also only had full-time staff in
Sydney to assist SMEs, but now has
expert staff in Melbourne, Adelaide,
Brisbane and Perth.
“That’s why our SME business is
growing,” says Mr Hunter.
“That is our core focus and where
we are dedicating our resources.”
Efic offers a range of loans,
guarantees, bonds and insurance
products to assist SMEs win
business, grow internationally and
achieve export success. •••
‘We are receiving two or three new applications a day’
// 10// JUNE/JULY 2016
ELECTION 2016
export council oF australiaECA delivers formula for export successthe export council of Australia has thrown down the gauntlet to Australia’s major political parties to adopt its vital recommendations aimed at increasing current trade levels.
ElECTiOn 2016
ECA CEO, Lisa McAuley says trade and
investment are key drivers of jobs, innovation
and long-term prosperity for Australia.
Speaking at a special pre-Federal election
function in Sydney this month, Ms McAuley
said Australia boasts 45,000 exporters that export nearly
$320 billion worth of goods and services to the rest of the
world.
“However, just 1% of these exporters accounted for
roughly 90% of all Australian goods exports,” she said. “This
is much more concentrated than the international average,
where the top 1% of exporters account for just 53% of goods
exports.”
Ms McAuley told guests at the Australia’s Trade Future
event that local firms now have more opportunities in
international markets than ever before.
“This is in the context of international demand for what this
country produces and a growing array of liberalising trade
agreements, particularly in Asia.
“The challenge for Australia is to capitalise on these
opportunities.
“Increasing Australia’s level of trade will ultimately play
an important role in improving productivity, fostering
innovation and sustainable economic growth.”
To meet this challenge governments need to encourage
more export capable companies and build a skills base to
succeed internationally, Ms McAuley said.
“There is an ecosystem that sits around trade, but one
of the biggest barriers we see in Australia is that the
ecosystem is not functioning as effectively as it could.”
Government can help Australian businesses grow
internationally by:
• Supporting Australian companies to understand and
utilise Free Trade Agreements
• Addressing Non-Tariff Barriers: Focus more resources on
addressing market entry barriers to trade.
• Addressing Australia’s competitive landscape to facilitate
trade: Focus on improving freight movement efficiency and
infrastructure
• Connecting the dots between Innovation and
Globalisation: but tie this more closely to trade support
programs and strategies that will assist companies in
launching their cutting edge ideas.
• Continuing deregulation: Maintain a continued focus
on the deregulation agenda in
Australia by creating a Single
Window for Trade.
• Supporting Export Market
Development Grants: additional
funding allocations for EMDG are
necessary.
• Developing a National Brand
strategy: Australia needs a strong,
cohesive branding strategy.
• Promoting Australia's
capabilities: trade promotion
and Austrade’s role are crucial in
supporting businesses through
international networks. Adequate
funding should be provided to
ensure Australian companies can take advantage of the
opening up of global markets.
• Growing Services Exports: Services exports have the
potential to be a growth engine for the nation.
Minister for Trade and Investment, Steven Ciobo and
Shadow Minister for Trade and Investment, Senator Penny
Wong were key speakers at the event, organised by the
ECA and Australian Chamber of Commerce and Industry.
“We believe these are all important issues to take away for
consideration,” Ms McAuley said. • • •
Lisa McAuley… ‘more trade opportunities than ever before’
// 11// JUNE/JULY 2016
ELECTION 2016 - COALITION
coalition trade policyGovernment to focus on creating new export opportunitiestrade and investment is a central component in the federal Government’s economic plan to drive jobs and growth.
ElECTiOn 2016
Creating export opportunities is critical for
Australia’s future growth as the economy
transitions from the mining and resources
boom, says Trade and Investment Minister
Steven Ciobo.
“The Coalition has a strong record in this area,” Mr Ciobo
says.
“Removing trade barriers lays the groundwork for our
transitioning economy.”
Mr Cibo says Australians will see key benefits from
greater access to overseas markets as the result of
recently signed free trade agreements with key trading
partners Japan, South Korea and China.
The Government, he says also played a key role in the
signing of the Trans-Pacific Partnership (TPP) Agreement in
February 2016 – the most significant trade and investment
agreement finalised in more than two decades with
member countries accounting for around 40 per cent of
global GDP.
Other achievements include:
• The recently announced strategic partnership
agreement with Singapore
• Agreement between the 163 members of the WTO
in December 2015 to eliminate more than $15 billion
of agricultural export subsidy entitlements, which for
decades have threatened the livelihoods of Australian
farmers;
• The relaunch of FTA negotiations with Indonesia
• Continuing negotiations for a FTA with India
• Working toward the launch of FTA negotiations with the
European Union (EU) – a market that accounts for more
than 12 per cent of Australia’s total trade.
“These achievements will boost opportunities for
Australian exports, enhance market access for the
Australian services
sector, cut costs
for Australian
businesses and
consumers and
open up greater
investment
opportunities,” Mr
Ciobo says.
The Government
has created an
FTA portal to help
businesses take
full advantage of
FTAs with China,
Japan and Korea. The portal provides comprehensive
tariff information and product specific Australian and
international trade data to help businesses assess how
their products meet the requirements of the FTAs.
An additional $1.8 million was allocated in the recent
budget to expand the portal and expand Austrade’s Open
for Business website.
Also, the government has announced the
establishment of five Landing Pads to connect Australian
entrepreneurs to global innovation hubs and promote the
commercialisation of Australian ideas.
Mr Ciobo says the government is also firmly committed to
the Export Market Development Grants program to assist
exporters grow their business internationally.
“The Coalition will continue to pursue free trade
agreements as well as regional and multi-lateral
agreements,” Mr Ciobo said.
“We are focused on making sure we have a strong plan to
maximize opportunities for Australian exporters.” • • •
// 12// JUNE/JULY 2016
ELECTION 2016 - LABOR - WONG
laborlabor pledge to cut red tape for exportersA Shorten Labor Government has vowed to cut red tape that is now providing a barrier to many Australian exporters and potential exporters.
ElECTiOn 2016
Shadow Minister for Trade and Investment
Penny Wong says complexity regarding
rules of origin is discouraging Australian
businesses from trading internationally.
“Labor will tackle red tape by working
with Australia’s trading partners to
achieve readily understood and more consistent rules of
origin,” Senator Wong said. “This will determine whether
Australian goods qualify for preferential access to key
export markets.”
Senator Wong said a Labor Government would work
with key Asian trading partners to implement reforms that
encourage more trade by reducing costs and becoming
more efficient.
A regular Trade Barriers Analysis would be conducted to
identify barriers to Australian exports, including non-tariff
“behind the border” barriers.
“A Shorten Labor Government will negotiate high-quality
international trade agreements that reduce tariffs, quotas
and ‘behind the border’ barriers to trade,” Senator Wong
said.
Labor would seek to boost exports by adopting a
strategic approach to promoting trade and exports.
“We will work to find new pathways for multilateral
trade reform, to strengthen the role of the World Trade
Organisation and to revive progress on key objectives
of the Doha Round, including freeing up global trade in
agriculture and eliminating market-distorting subsidies for
farm goods,” Senator Wong said.
Senator Wong said Labor would also end the secrecy
surrounding trade negotiations.
The party is “committed to new levels of transparency”
to build community
confidence and
ensure government is
accountable, she said.
Labor would improve
consultation and
transparency by:
• Disclosing the
Government’s goals at
the commencement of
negotiations
• Providing public
updates on each round
of negotiations
• Engaging in more intensive consultation with a wider
range of stakeholders
• Engaging in more intensive consultation and briefings
with parliamentarians
• Releasing draft texts during negotiations where this is
feasible
• Tabling the text of proposed agreements in Parliament
before signing the agreements.
“As the Australian economy transitions out of the mining
boom we need to find other sources of growth and jobs,”
Senator Wong said.
“We will realise the export potential of sophisticated
Australian services industries such as education, tourism,
and financial and professional services.
“We will pursue trade and investment policies that
support Australian jobs and living standards by opening
up new markets, driving exports into those markets, and
attracting new investment.” • • •
// 13// JUNE/JULY 2016
ELECTION 2016
laborhow Australia can remain competitive on the world stageIf Australia is to remain an advanced industrial economy we need to produce high-tech, high-value-added products, says Shadow Minister for Industry and Innovation, Senator Kim Carr.
ElECTiOn 2016
The choice is not whether we need
manufacturing – the choice is about what
kinds of manufacturing we should do,” says
Senator Carr.
Australia’s food and primary industries are
a great example of our export potential, he
says.
Producers can tap into increasing demand from the
rapidly expanding Asian middle class for safe premium
food products.
But it’s not just in the food and primary industries where
Australia excels, he says.
“We have strengths in the material sciences with carbon
fibre, biotechnology and biopharmaceuticals, and even
steel, with BlueScope’s Colorbond range and Bisalloy
Steel’s high-tensile steel plate.
“There are many examples where Australian companies
can and do produce high-tech, high-valued-added, export
competitive products.
Senator Carr says Governments should give strong
preference to locally made products when developing
procurement policy.
“Procurement policy and industry policy are intrinsically
linked,” he says.
“Government procurement, in particular, is an important
mechanism in advancing Australian industry.
“Australian firms have to compete in an open market.
That’s true.
“But it’s also true that government, though its purchasing
power, plays a leading industry development role. This
doesn’t have to conflict with our trading obligations.”
Senator Carr says there are provisions in the
Commonwealth Procurement Guidelines that allow the
Government to engage directly with Australian industry,
while still ensuring the principle of value for money is
maintained.
“And there are exemptions from procurement rules from
trade treaties,” he says.
He cited the purchasing of
motor vehicles for government
fleets or for defence-related
procurement as a prime example.
“The question for Australian
governments is whether we
want to compete and advance
Australian industries, or whether
we want to get left behind.
“For Labor, the answer to that
question is simple. Labor is in the
business of fighting for Australian
jobs and we have a strong
preference for backing Australian
business.”
Senator Carr says Australia can’t compete with China by
cutting wages.
“We don’t want to get locked in a race to the bottom on
wages.”
But like Germany, Sweden and the UK, Australia can
compete by producing high-value-added products for
discerning markets where quality matters.
“We know it is difficult to compete on price with low-wage
countries producing for mass markets, but we also know
that Australia can compete in discerning markets where
quality matters.” • • •
Senator Kim Carr … backing Australian business
// 14// JUNE/JULY 2016
ELECTION 2016
nick xenophon team
manufacturing is vital for future trade viabilitytrade is the lifeblood of our economy – and government should be taking a more strategic approach, says Senator nick Xenophon.
ElECTiOn 2016
As leader of the newly
formed Nick Xenophon
Team party, Senator
Xenophon says a “hard-
headed” approach
is needed that supports a diverse
economy – including Australia’s
manufacturing industry.
“I am not against the expansion
of trade or negotiating free trade
agreements,” he says.
“But no country can be an innovation
leader without the ability to apply
innovation in manufacturing.”
Manufactured goods account for over
two-thirds of world merchandise trade.
While many countries around
the world (including high-wage
industrial countries) are expanding
manufacturing output, creating new
manufacturing jobs, and boosting
manufactured exports – Australia’s
manufacturing sector is in crisis,
Senator Xenophon says.
“We are at a tipping point. Over
200,000 manufacturing jobs have
disappeared since 2008, and the rate
of job loss has accelerated sharply.
“Manufacturing employment fell 6
percent in 2015 alone, and there’s more
bad news ahead.”
Senator Xenophon says despite the
decline, manufacturing is still vital to
Australia’s economy.
Manufacturing still employs hundreds
of thousands of people – 870,000 as at
August 2015 – and is a cornerstone of
innovation.
But Australia is well behind its
counterparts – and now has the
smallest share of manufacturing
in total employment of any OECD
country.
“All successful manufacturing
nations, the United States, Japan,
Germany, South Korea, and others
have negotiated trade agreements
which expand trade but still enable
them to use government procurement
and other active government policies
to develop globally competitive
manufacturing industries,” Senator
Xenophon says.
“But that hasn’t been the story in
Australia.
“As the Productivity Commission
has revealed, predictions of growth
and jobs from Australia’s free trade
agreements have rarely been delivered
because the economic models
employed exaggerate the benefits,
ignore many of the costs and assume
away unemployment effects.
“The Australian National University’s
study of the outcomes of the US
Australia
free trade
agreement
after 10 years
showed the
preferential
agreement
diverted
trade away
from other
countries.
“Australia and the United States
have reduced their trade by US$53
billion with rest of the world and are
‘These FTAs are more like ‘import agreements’ than export agreements’- SenATor nick Xenophon
// 15// JUNE/JULY 2016
ELECTION 2016
greensGreens call for greater transparency with trade dealsthe Greens say government should be doing more to give preference to local goods and services over imported products.
ElECTiOn 2016
Government is a significant
purchaser and is uniquely
positioned to be able to be able
to help shape industry policy through
its procurement policy, Greens Senator
Peter Whish-Wilson said in a recent
statement to Dynamic Export.
“Unfortunately, this choice is under
attack from a number of trade
agreements, including the Trans-Pacific
worse off than they would have
been without the agreement. That
study concludes that “deals that are
struck in haste for primarily political
reasons carry risk of substantial
economic damage.
“The Coalition Government has
claimed that Australia’s FTAs with
Japan, South Korea and China
will lead to tens of thousands of
additional jobs.
“Yet the government’s own
economic modelling, by the
Canberra-based Centre for
International Economics, estimates
that by 2035 those three FTAs will
have produced a total of only 5,400
additional jobs. That’s less than 300
jobs a year.”
The same study indicates that the
three North Asia FTAs – with Japan,
Korea and China – taken together
will boost total Australian exports by
only 0.5 per cent, Senator Xenophon
says.
However imports will be boosted
by 2.5 per cent.
“These FTAs are more like
‘import agreements’ than export
agreements,” he says.
Senator Xenophon wants
government to adopt a much more
hard-headed approach to trade and
industry policy.
“I’ve long been arguing for greater
parliamentary scrutiny of our trade
agreements, urging assessments
of the costs and benefits by
independent bodies such as the
Productivity Commission,” he says
“That’s very much what the Nick
Xenophon Team will be about in the
next Parliament.” • • •
Partnership and other recent bilateral
agreements.
“These trade deals seek to explicitly
prevent government’s ability to
preference local build for almost
everything other than defence
procurement.
“The Greens support the
development of multi-lateral
trade deals that are governed by a
transparent and democratic rules
based system.”
Senator Whish-Wilson says the
current spate of trade deals are
overseen by an arbitration system that
does not follow fundamental legal
principles such as open hearings and
the development of case law.
“However, the Greens’ do not believe
that the benefits of trade deals ‘trickle
down’ equally, he says.
“Government should be aware of
the disproportionate effect that trade
deals can have on some communities
and should structure taxation and
social services to provide assistance
to workers and industries that are
adversely affected.”
The Greens say Australia needs
to become smarter and more
sophisticated in its industry policy.
This includes developing value-
add industries.
The Greens have released an
innovation policy that includes
a suite of measures that would
support the development of value-add
industries.
These include establishing an
Innovation Commissioner, increasing
funding to improve the uptake of STEM
(science, technology, engineering
and mathematics) in schools and
universities and reversing the cuts
to the Entrepreneurs’ Infrastructure
Program.
“Australia is rated 17th in the world on
the Global Innovation Index.
“This is not good enough, as we fall
to 72nd in the world when it comes
to turning research into commercial
outcomes.” • • •
// 16// JUNE/JULY 2016
tRAveL
The new Business Class is now available on the
airline’s flights from Australia to Los Angeles,
with Abu Dhabi to follow soon.
The business class cabin features 37 individual
and private suites, arranged in a 1-2-1 configuration,
guaranteeing direct aisle access to all passengers.
Each seat converts into the length of a queen size bed.
The reverse herringbone cabin layout, maximises
privacy.
A generous side console area provides space to work,
multitask and store personal items.
other features include:
• An 18-inch HD in-flight entertainment screen that
Virgin claims is the largest on any aircraft flying between
Australia and North America.
• Special bedding consisting of triple-layer seat
cushions, memory foam mattress toppers and high-
grade cotton pillows.
• New improved entertainment seatback system with
intuitive user interface.
Passengers can choose from new menus designed by
leading Australian chef Luke Mangan.
Also, a cocktail and canapé service has been introduced,
with Bellini, Kir Royal or Mimosas served prior to the first
meal, alongside a Luke Mangan-designed canapé plate.
The B777-300ER also comes with an onboard bar and
lounge area, which will be opened after the first meal
service. This area will be hosted by the cabin crew, and
offer a selection of snacks and drinks.
And guests can choose to have a continental breakfast
at the bar prior to the full breakfast service.
Virgin Australia Group chief executive John Borghetti
said: “Virgin Australia is committed to product innovation
and delivering a superior customer journey on the ground
and in the air.
“With competition increasing from Australia to North
America and the Middle East, we believe this will be the
best business class on the Pacific, with the product also
being introduced to Abu Dhabi later this year.
“With our new Boeing 777 Business Class cabin and
refreshed Premium cabin, Virgin Australia will be the
number one choice for premium travellers.”
The airline also unveiled major improvements to its
Premium Economy cabin on the Boeing 777-300ER.
The cabin, renamed Premium, now features 24 seats with
more legroom than any other Australian airline.
All five of the airline’s Boeing 777-300ER aircraft are
expected to be refitted by the third quarter of 2016. • • •
Virgin australia has launched its new international business class cabin, with the first seats having been fitted onto one of its B777-300eR aircraft.
virgin Australia unveils new ‘luxury’ business class
// 17// JUNE/JULY 2016
Known for high quality fashion items under $200,
BNKR Online is a destination for those who want the
look without the expensive price tag.
Adelaide-based Australian Fashion Labels was
founded in 2007 by husband and wife team Dean and
Melanie Flintoft. Its labels include C/MEO Collective, Finders
Keepers, Keepsake, TY-LR, Jaggar and The Fifth.
The Flintofts launched BNKR Online in 2011, which now has
a customer database of 150,000 subscribers.
The rapid success of BNKR Online led to the opening
of the flagship BNKR Retail store in the South Australian
capital, Adelaide in 2014, providing shoppers with a one-stop
destination for face-to-face fashion advice.
Co-owner Melanie Flintoft said increasing online sales in
the US was confirmation that Australian Fashion Labels’ first
international bricks and mortar store would succeed in LA.
“Currently our US BNKR online sales are seeing incredible
growth. Figures are increasing by 30 per cent every month,”
Melanie said.
An Aussie fashion house with a strong online following will officially open a bricks and mortar store in downtown Los Angeles this weekend.
alannah James
Australian fashion house to open store in lA
fAshion
“We know that the LA market loves our product and we are
excited to offer them within our retail store.”
Each of the labels sold by BNKR service a different style in the
same young demographic.
Melanie said the LA store would continue the model of assisting
with styling, sizing and helping shoppers with outfit inspiration.
“This LA store is truly incredible and we are able to give the
customer the full experience from the minute they walk in,” she
said.
“We’ve already received huge interest from LA locals. Our
amazing network of bloggers and influencers cannot wait to
have an Australian shopping destination at their fingertips.
“It’s a huge novelty for LA to have access to the leading
Australian brands all in one place.”
The LA store is in a historic building on the corner of Broadway
and 9th Street and is steps away from other fashion leaders Acne
and ALC.
A Grand Opening event has been planned for this Saturday. • • •Source: The Lead, South Australia
// 18// JUNE/JULY 2016
FAShION
in a May 4 presentation
to the Queensland
Japan Chamber of
Commerce and Industry,
Shoichi Miyasaka, CEO
Uniqlo Australia, told the
Brisbane business audience
that there were both cultural
and strategic factors behind
the Japanese brand’s
international success.
“Uniqlo’s concept is life
wear – every product must
be functional, but created as
parts for people’s life, based
on our ‘SPA’ business model
of controlling planning,
production and sales,”
Miyasaka said.
“While we don’t own
any factories, we send
our people out from
every Tuesday morning to
Thursday night to check
every production line, and
if we find any defects we
stop the line until we find
a solution. If we identify
that the problem can’t be
easily solved, we stop doing
business with that factory
– that’s how we control the
quality of our products.”
Japanese apparel retailer Uniqlo has arrived in Australia, with ambitions to become the top global retailer by 2020. But the trade is not all one-way, with Australian companies also recently making inroads into Japan’s notoriously competitive retail market.
anthony Fensom
Uniqlo makes a global fashion statement
Miyasaka also pointed to
the necessity of product
innovation, including its
air-conditioning “AIRism”
innerwear, which blends
three different fabrics, and its
heat-generating “HeatTech”
developed with Japanese
textile manufacturer Toray.
The Japanese company
also puts a focus on
customer service, with each
store manager trained to
think and act like “a small
company CEO” as part of its
culture of “zen-in keiei,” which
translates as “everyone as a
business leader.”
“At Uniqlo, even floor staff
need to think like a business
owner, as the customer
sees each staff member as
a representative of Uniqlo,”
Miyasaka said.
Uniqlo’s non-conventional
thinking is also seen in its
choice of a global flagship
store in the high-fashion
Tokyo district of Ginza – an
area where mass market
brands like Uniqlo previously
would have looked out of
place. The company has
converted the ground floor
into a product showcase,
using innovative store design
to help bring customers even
to the top of the 12-story
building.
Since its first store in
Hiroshima, Japan in 1984,
Fast Retailing Co.’s Uniqlo
has grown to encompass
more than 1,700 stores in
17 countries and regions,
including 10 across Australia’s
east coast. But the Japanese
giant has plans to become
// 19// JUNE/JULY 2016
ChINA
even bigger.
“Our boss (CEO Tadashi
Yanai) is a dreamer, but
he never gives up until he
achieves his target. He has
committed to us becoming
number one in the world
by 2020 – we are currently
ranked fourth behind Zara,
H&M and Gap, but we are
trying to go beyond them,”
including in Australia,
Miyasaka said.
Miyasaka described
Uniqlo’s key attributes as
“quality, store construction,
layout, customer service
and functionality” as well
as price point – “we have to
be affordable, otherwise we
can’t reach as many people
as we wish.”
Uniqlo has joined other
Japanese retail chains in
expanding to Australia,
including hamburger chain
Mos Burger and apparel and
homewares retailer Muji.
But having conquered
Japan’s demanding
consumers, Uniqlo may
be showing Australian
retailers how to succeed
too, including cosmetics and
restaurant chains.
Since expanding to Japan in
2013 by paying $235 million
for 75 per cent of Domino’s
Pizza Japan, Brisbane-based
Domino’s Pizza Enterprises
has grown the Japanese
franchise to become the
nation’s second-largest
pizza chain. After opening a
record 48 new stores during
the first half of fiscal 2016,
the company plans to open
its 500th store in the world’s
third-biggest economy by the
end of the year.
The company reported
EBITDA growth of nearly
55 per cent in the first half,
helped by the record store
openings, new designs and
product offerings, along with
record online sales.
“We are confident that by
capitalising on the strong
global platforms available
such as OneDigital, Pulse
and GPS Driver Tracker that
we will continue to see great
results from this market,” CEO
Don Meij said.
“This will also be aided by
strong food innovation and
transparent and engaging
store designs that will
continue to play a big role
in the organic growth and
outlook of this market.”
At the other end of the
market, family owned
cosmetics company Perfect
Potion has grown from a
single store in Japan’s ancient
capital of Kyoto to currently
having 10 stores, including
the major cities of Tokyo,
Osaka and Nagoya.
According to Managing
Director Salvatore Battaglia,
small businesses can succeed
in Japan by maintaining
their values, instilling the
right operating, training
and recruiting systems and
developing a team culture.
Australian restaurateurs have
also found an enthusiastic
reception in Japan, including
Luke Mangan’s “Salt” and Bill
Granger’s “Bills,” while Global
Sky’s Winetree has recently
opened two “Terra Australis”
restaurants in Tokyo with an
Australian theme.
While Uniqlo is set on
conquering the world,
Australian retailers can
certainly learn much from
their Japanese rival in
carving out their own piece
of international business
success. • • •
“At Uniqlo, even floor staff need to think like a business owner’
Anthony Fensom is a senior business writer and communication consultant with more than a decade’s experience in the financial and media industries of Australia and Asia.
// 20// JUNE/JULY 2016
tom drake
for many entrepreneurs, it’s not enough to create a flourishing local business – they want to grow their businesses internationally. If going global interests you, are you willing to cope with the many challenges that come with doing business across the world?Here are seven questions to ask yourself to see if you’re ready to go global:
SPECIAL FEATURE
is your business ready to take on the world?
1. Will your product sell as well?
High demand for your product in
your country does not mean that
your product has universal appeal.
You have to do some research to get
the answer. It’s not about making an
educated guess, either. It’s about
gathering enough information to be
able to predict with a high level of
certainty that your product will do well
elsewhere.
How do you conduct this research?
Start with academic research –
reading books, checking out websites,
and speaking to people who come
from the country you’re interested in
marketing to. Then, go visit the country
in person.
There is a huge difference between
armchair research and actual
experience. Even if you do hire a firm
to do preliminary research for you,
you should still pay an actual visit.
Sometimes statistical information
is not that accurate as it may be
based on a limited sample. Personal
experience with the culture and
exposure to social norms will give
you a good idea about whether your
product will sell well.
2. Do you understand the
differences in marketplaces?
A foreign market may not do
business in the way that you’re
accustomed to. Make sure that there
is a high enough level of compatibility
between the business environments
and industries for your product to
be well-received. You also need to
consider practical issues like working
with different currencies to make or
collect payments, which might require
solutions like OFX, a trusted name for
money transfer, to handle payment
processing. In short, find markets
similar to your own rather than
experiment with untested markets
to see what might happen. The more
compatible the market, the easier it
will be to make a transition.
3. Will you err on the side of
conservatism?
// 21// JUNE/JULY 2016
SPECIAL FEATURE
Sometimes we make decisions
based on pessimism or optimism. If
possible, look for more information
before you make a final decision.
The reason to err on the side of
conservatism is that it can be very
expensive and time consuming setting
up a business in another country.
There is the famous joke about
Bata Shoes sending two salesmen
to a rural village in Africa. They both
sent telegrams home. One salesman
wrote, “No market here. The people
don’t wear shoes” – the other one said:
“Great market here. The people don’t
wear shoes.”
4. Do you have
enough available
resources?
Do you have
enough capital,
staff, and business
connections to
expand your
business? If you
are doing well
locally but don’t
have surplus
resources, then
you will overextend
your resources
when building a
business overseas.
Not only will
your overseas
venture collapse,
but you will also
compromise your
local business,
which will have
too few resources
to continue to
function well.
5. Can you overcome language
barriers?
The marketing that works so well in
your country may fall flat in another
country. Your ads won’t translate. Your
pitches will sound odd. Your effort to
create humorous ads may be met with
total incomprehension. What’s more,
you can’t send your best salespeople
there either—because they won’t be
able to speak a word. It’s not just the
denotation of words that matter, but
also their connotations.
Language barriers aren’t
insurmountable, but they can be
awkward if you don’t work with an
excellent linguistic service.
6. Do you understand the culture
well enough to avoid embarrassing
mistakes?
Even if you can overcome the
language barrier when starting
a business overseas and can
successfully get your marketing
messages across, you also have to
navigate cultural values. What may
appear to be insignificant to you may
be significant to another culture.
An example is the difference
between working in northern Europe
and southern Europe. In northern
Europe, you will be respected if you
start a negotiation by cutting the small
talk and getting straight to the point; in
southern Europe, you are considered
brash and impatient if you start a
meeting without small talk.
7. Can you beat the local
competition?
Although you may consider the
quality of your products superior to
your competitors, the local people
may think otherwise. In many ways,
you may have to alter your product
to suit their tastes. You will have to
solve your sales challenges with some
creative thinking. • • •
Best Practices
If your business is going to be
successful in another country, you
need to understand the culture at a
deep level. If you don’t, you won’t know
how to negotiate and close contracts,
and you won’t have a clue about best
practices.
Tom Drake is the founder and writer
behind Canadian Finance Blog
www.canadianfinanceblog.com
// 22// JUNE/JULY 2016
comment
Free Trade: What is it and how do we know it when we see it?
nEws
From page 22
DAviD GRAy
Similarly, other than
cheap labour the rich
nation holds most or all
other technical, social,
political and economic
advantages and may fall into the trap
of lowering productivity of output to
chase the arbitrage of increasing ROI
purely through lower cost labour.
Any form of government
manipulation of exchange rates,
subsidy or tax incentive or indirect
assistance to an industry sector,
company or product is a deviation
from the principle and practice of
free trade.
Other restrictions to free trade are
of an administrative-logistical nature
and do not involve tariffs or other
financial measures.
Typically these involve ploys such
as an onerous import administrative
requirement process that can
“red-tape” delay by many weeks
or even months the movement of
imported goods from the ports and
warehouses.
Other similar anti-free trade
measures include requirements
that all imported goods must pass
through a complex monopolised
local multi-layer distribution process
which has the effect of pricing the
imported product out of the market
and over which the exporter has little
or no control.
Lastly, corruption which
is frequently a standard
business procedure in many
developing economies whether
it be “contributions” at the senior
government level or to lower level
operatives is similarly a restriction
or impost on trade and thus restricts
freedom and creates economic
distortions.
Corruption has a particularly
corrosive backwash effect as it saps
the will and focus of the exporter to
produce the best product with the
best service.
Why bother to be the best or
even commercially competent
when clandestine palm greasing
can produce outcomes that would
otherwise require commercial
discipline along with sound
management practices to achieve.
Moreover, free trade can often
have a Jekyll and Hyde appearance.
Western business heading to a
developing economy determined to
spray cash in all directions will think
trade is remarkably free. Exporters
on the other hand will discover a
more complicated and nuanced
local interpretation of free trade.
Attempts by some Governments to
stymie free trade, discreet or heavy
handed, are not always sinister per
se. Some governments are under
intense local political pressure to
protect local industry or maybe the
nation is struggling with a severe
balance of payments problem and
lack foreign currency.
To all practical effect, free trade is
a relative term. While examples of
across the board 100% free trade
are very hard to find, so too are
examples of 100% “un-free” trade.
From an Australian export
perspective, free trade is where
an exporter can sell their products
based purely on the merits of price-
performance-quality.
When the customer places a
procurement order the exporter
can ship the goods, via a shipping
agent, to the overseas customer and
then will receive the item(s) within
a few days through normal internal
processes.
Payments for the exports are
made in a straightforward manner
through normal commercial banking
channels. Singapore would be a
good Asia-Pacific example of a free
trade nation state.
David Gray is principal consultant at BizTechWrite, a leading supplier of language translation, technical documentation and export support services. Contact: [email protected]
// 23// JUNE/JULY 2016
AUSTRALIAN MADE
Changes to food labelling laws to boost consumer confidence
The new financial year is fast approaching and with that
comes changes to Australia’s food labelling laws. From July
1 this year, a new country of origin information panel will
be introduced, which will be compulsory for most Australian food
products.
The panel will feature the iconic green and gold Australian Made,
Australian Grown (AMAG) kangaroo logo for products made or
grown in Australia.
For 30 years the AMAG logo has been helping businesses
show consumers that their products are genuinely Australian.
The logo, and its various descriptors, is one of the most powerful
nation brand symbols in the world. Locally it enjoys an almost 100
percent recognition rate, with consumer trust at nearly 90 percent,
according to Roy Morgan Research.
As a result of the new mandatory food labelling, the Australian
Made Campaign (AMCL) will, as of July 1 no longer be able to
license new food products to use the logo.
Businesses have a two-year period to transition to the new
labels, which become mandatory on July 1, 2018. AMCL will
continue to administer and promote the logo on all other types of
products.
AMCL Chief Executive, Ian Harrison, says a tighter system
for food labelling, coupled with a better understanding of that
system by consumers, will give Aussie shoppers more confidence
in what they’re purchasing.
“The Australian Made, Australian Grown logo has been helping
Australian farmers and manufacturers sell genuine Aussie
products to consumers all around the world for three decades. It
makes good sense to build on that,” Mr Harrison said.
“We anticipate the widespread use of the AMAG logo on food
products will have a 'halo effect' on other product categories,
lifting the profile of all other goods carrying the logo.” • • •
For more information visit: www.business.gov.au/foodlabels
// 24// JUNE/JULY 2016
FREIGhT
for companies new to import or export many of the terms and acronyms used in international freight can seem a bit like "double dutch."
For anyone shipping
to or from Australia
one of the crucial
areas to understand
(and many don't) is
Incoterms – so you don't
take on any undue risk or
get hit with hidden costs!
Incoterms® 2010
Give one of CargoHound’s freight experts a call on 1300 883 243 or email
ian Smith, CEO of CargoHound, Australia’s first online marketplace for international freight.
www.cargohound.com
ian smith
carriage?
• Who will pay for
carriage?
• Who will bear risk of loss
or damage to goods?
• Who is to be responsible
for what? i.e. Sharing of
tasks, costs and risks
The Incoterms® rules
describe mainly the tasks,
costs and risks involved in
the delivery of the goods
from sellers to buyers.
Obligations dealt with
include clearance for
export and import, packing
of goods, arranging and
paying for carriage and
insurance, delivering and
taking delivery of the goods,
packaging, loading and
unloading. Incoterms are
not law, they are rules.
They do NOT deal with
transfer of ownership (title),
breaches of contract,
exemptions from liability or
the like.
Freight experts
CargoHound offers a
comprehensive reference
guide to assist exporters
to better understand
Incoterms. • • •
are a series of pre-
defined commercial
terms published by the
International Chamber of
Commerce (ICC).
Incoterms® are used to
define where ownership,
risk and the responsibilities
of buyers (generally
importers) and sellers
(generally exporters)
transfer throughout the
shipping process.
Before goods are shipped,
the seller and buyer need
to decide:
• Who will arrange for
incoterms: it pays to learn what this means
// 25// JUNE/JULY 2016
FREIGhT
understanding tariffs for import and export
The Harmonised Commodity
Description and Coding
system is generally referred
to as the “Harmonised
System” (HS). It is a multi-purpose
international product classification
nomenclature developed by the World
Customs Organisation (WCO) and is
used to classify traded products.
The Harmonised System comprises
approximately 5,000 commodity
groups, each identified by a six-digit
code, arranged in a legal and logical
structure. It is supported by well-
defined rules in an attempt to achieve
uniform classifications around the
kim mauch
Before you can think about importing or exporting a product, you need to understand how it is classified for customs tariffs and duty in each market of interest.
world.
The system is used by more than
200 countries as a basis for their
customs tariff and for the collection of
international trade statistics and duty
revenue.
Australia uses an eight-digit code to
classify goods for export. The first six
align with international classification
standards, while the last two digits
are specific to Australian exports. The
classifications are not static and are
subject to change. It is very important
to keep up-to-date with any changes
as they occur.
The Australian Harmonized Export
For more information on tariff classification call one of CargoHound’s freight experts on 1300 883 243 or email [email protected].
Kim Mauch is Co-Founder of CargoHound, Australia’s first online freight marketplace.www.cargohound.com
Commodity Classification (AHECC) is
usually updated every January and
July and up-to-date versions of the
classifications can be found at the ABS
Website.
Warning: Failure to properly classify
your product could lead to incorrect
taxation on your exports and the
potential loss of the product.
Customs and Border Protection
provides a formal AHECC Advisory
Service. This service has been
developed specifically for clients
who require assistance with the
classification of goods for export.
Import
Goods imported into Australia require
classification under the Customs Tariff
Act 1995. Importers need to self-
assess the correct tariff classification
of goods they import. Penalties may
apply for incorrect or misleading
information.
Australian Border Force (formerly
Australian Customs and Border
Protection) has a range of information
and resources that will assist you to
classify goods including a free tariff
advice service.
Warning: Importers need to self-
assess the correct tariff classification
of goods they import. Penalties may
apply for incorrect or misleading
information. The penalty on imports
can be much higher than exports due
to the duty component. • • •
// 26// JUNE/JULY 2016
FREIGhT
Each container must be accompanied by a
shipping document signed either electronically
or in hard copy by the shipper on the bill of lading
listing the verified gross mass of a container
before being loaded onto a ship.
The International Maritime Safety Committee (MSC), a
global body responsible for shipping safety, approved the
new rules in May 2014.
A subsequent amendment was then made to the Safety
of Life at Sea (SOLAS) convention regarding mandatory
container weight verification.
The move followed concerns that “mis-declared” weights
contributed to major maritime casualties such as the
breakup and subsequent beaching of the MSC Napoli on
the southern UK coast in 2007 and the partial capsizing a
feeder ship in the Spanish port of Algeciras in June, 2015.
The new requirement making container weight verification
a condition for vessel loading will become legally binding
on July 1.
However, Ports Australia, the trade group representing
Australian ports and maritime authorities, has expressed
concern that the Australian Maritime Safety Authority
(AMSA) may not have the necessary resources to
adequately enforce the new rule.
AMSA says it will follow International Maritime Organisation
(IMO) advice for a “practical and pragmatic approach” to
enforcing compliance with new container weight rules for
three months after they take effect on July 1.
“AMSA will initially take an educative approach to achieve
compliance with SOLAS container weight amendments
from the July 1 implementation date,” the authority said in a
statement.
But Ports Australia CEO David Anderson recently told Joc.
com that AMSA’s enforcement may not be sufficient.
A more “deliberate” approach to enforcement may be
needed, he says.
“We believe that AMSA should make allowance for
a reasonable transitional period to bed in compliance
new global container rules in force soon: is Australia ready?From July 1 this year, new weight rules will apply to any shipping container leaving from any port in the world.
// 27// JUNE/JULY 2016
FREIGhT
and for shippers to continue to acquaint themselves
with the essentials of compliance,” he told Joc.com. “We
are particularly concerned that this continuing level of
uncertainty not lead to disruptions.”
Following meetings with AMSA Mr Anderson told Joc.
com he had the impression the agency did not have the
resources for full enforcement.
Also, it did not seem as though AMSA was taking an
aggressive posture toward compliance, he said.
“Auditing was mentioned, but the overall impression was
that AMSA will be waiting for reports of non-compliance,
whether from the stevedores or from incidents at the
terminals or on the ship. This approach may encourage
a business as usual approach from some elements of
industry.”
Mr Anderson said AMSA should consider a sampling
approach to get a scope of the scale of the problem, and
indicate how the regulator would deal with non-compliance.
Any non-compliance and action taken “would likely impact
on how seriously industry is going to take the attempt by
the IMO to introduce greater rigour to the regime.”
In a circular to members, Rod Naim, CEO of Shipping
Australia, said the shipper’s obligation to provide a VGM of a
container on the shipping documentation has always been
a SOLAS requirement and the real problem has been a lack
of enforcement.
Shipping Australia welcomed AMSA’S and IMO’s approach
for the smooth introduction of the new VGM requirements.
In a recent industry newsletter Mr Naim said Shipping
Australia stands by the advice already provided to shipping
lines.
“To ensure their cargo is carried to their destinations
without delay, they should advise their global customers
that containers shipped before July 1, but arriving at a
discharge port for transhipment after July 1, 2016 should
have a compliant VGM declaration.” • • •
// 28// JUNE/JULY 2016
feAtURe
A small distillery on a remote island at the bottom of the world is preparing to take its award-winning gin to the world.
andrew spence
Aussie bush gin set to take on world
Kangaroo Island Spirits this week took
out the Champion Gin Trophy at the
Australian Distilled Spirits Awards for
its Old Tom Gin.
The accolade, handed out by the Royal
Agricultural Society of Victoria in Melbourne,
comes as the remote distillery prepares to
install a second still to give it the capacity to
enter the export market.
Kangaroo Island Spirits owners Jon and Sarah
Lark have been distilling at Cygnet River for
more than a decade.
Jon, whose brother Bill founded renowned
Tasmanian whisky distillery Lark, said
the second still would have the ability to
“significantly more than double” production,
which currently sits at about 7000-litres a year.
“We’ve intentionally remained small over the
years because we wanted to maintain control
of our product but we’ve just been receiving
// 29// JUNE/JULY 2016
feAtURe
so much interest, particularly in export, that we are about
to install a 300-litre pot still and within 12-months we’ll
have that running off solar power and have the only solar
distillery in the country,” he said.
Kangaroo Island Spirits has up to five gins using local
botanicals and traditional processes in its range at any one
time. It also produces vodka and liqueurs.
Jon said although the most significant sales were through
the cellar door, wholesale
was rapidly expanding with
a great deal of interest from
high-end bars, restaurants
and independent bottle
shops across Australia.
He said the artisan distillery
had received international
inquiries from the United
States, United Kingdom and
from Asia.
“I’d particularly like to go
into Spain because Spain consumes more gin than the
UK but a lot of people don’t realize that and certainly Asia
makes a lot of sense from here as well,” Jon said
Kangaroo Island, Australia’s third largest offshore island,
is about 150km southwest of the South Australian capital
Adelaide.
Known for its natural beauty and wildlife, it is a tourism
icon drawing more than 40,000 international visitors
every year with the majority coming from
Italy, Germany and North America.
“We’ve been here 10 years and we’re going from strength
to strength and this award is going to help us no end in
getting to that next stage,” Jon said.
“Also, Kangaroo Island has developed a fairly significant
food and wine industry and we’ve been a part of that.“
Kangaroo Island Spirits took out the national award for its
“Old Tom” gin, a traditional
gin flavoured with native
plants.
It boasts a distinctly
Australian flavour enhanced
by the inclusion of foliage
from the coastal Daisy bush
(olearia axillaris), native
Juniper (myoporum insulare)
and locally grown Lemon
Myrtle and Aniseed myrtle.
Jon said “Old Tom” was
a slightly sweetened gin,
which took its name from an
English gin tradition from the
18th century.
“We’ve made an Old Tom style of gin using that process
but we’ve added local botanicals and we’ve aged it for six
weeks in reconditioned French oak barrels to give it some
character.” • • •
‘i’d particularly like to go into Spain because Spain consumes more gin than the Uk’
Distinctly Australian flavour … Jon and Sarah Lark founders of kangaroo island Spirits
‘We’ve intentionally remained small to maintain control of our product’
// 30// JUNE/JULY 2016
MIDDLE EAST
The federal government will provide $5.3 million over the next four years for the re opening of its trade office in Iran.
new export opportunities with iran
The office, which closed in
2010, will be located within
the Australian Embassy in
Tehran and operated by
Austrade.
It will seek trade opportunities for
Australian businesses and foster
closer commercial and investment
ties.
Trade Minister Steven Ciobo, who
announced the re-opening earlier
this year, says Iran has significant
economic potential for Australian
exporters.
“It is a large regional economy with
a GDP of around US$400 billion,
a population of 80 million people
and has some of the world’s largest
reserves of oil and gas,” he said.
The government is now confident
Iran’s nuclear industry is being
developed for peaceful purposes and
international sanctions were recently
lifted.
Australia’s trade with Iran was
about $350 million a year under
sanctions, and this is expected to rise
significantly following the signing of a
nuclear deal in January.
Mr Ciobo says the new trade office
will support Australian business to
capitalise on export and investment
opportunities in agriculture, resources,
healthcare, education and water
management.
“The recent lifting of sanctions has
created opportunities for Australian
business in
areas we
excel: mining
equipment,
technology
and services
sectors and
the supply
of our
agricultural
commodities
such as
barley and
wheat,” Mr
Ciobo said.
“Austrade
has also
identified opportunities for commercial
co-operation in the health and medical
and education and skills training
sectors.”
Iranian universities are seeking
greater student mobility and
research collaboration with Australian
universities. There are currently about
3,500 Iranian students studying
in Australia, with about 1,000 new
enrolments each year.
Water management is a critical
resource issue for Iran and Australia
is very well placed to provide policy
and research advice in this regard. This
industry sector is expected to be a
major area of opportunity for Australian
technology and service companies.
Mr Ciobo met with Iranian Foreign
Minister H.E. Dr Mohammad Javad
Zarif and a delegation in Canberra
earlier this year to discuss the re-
opening of the trade office.
Austrade is now working, in
conjunction with the Department of
Foreign Affairs, to ensure Australian
businesses are well positioned for the
opening up of the Iranian economy.
Austrade will provide support to
Australian businesses immediately
from its office in Dubai, and will
establish a permanent presence within
the Australian Embassy in Tehran from
the second half of this year.
Austrade officials visited Iran in
November last year after a visit by
Foreign Minister Julie Bishop, earlier in
the year. • • •
// 31// JUNE/JULY 2016
eventS
June 17
July 26-28 July 4-7 July 18-22
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australian trusted trader information session, melbourne
Food tech Qld hong kong Fashion week (spring/summer) 2016
medical science & health services mission, Vietnam 2016
pitching for international success
gpce iFt Food expo children & baby maternity expo 2016
level 16, Crowe Horwath181 William St, Melbournewww.eca.org.au/eventsTo register your interest contact: [email protected]
Brisbane Convention & exhibition CentrePh: 03 9261 4500www.foodtechqld.com.au
Hong Kong Convention & exhibition Centrewww.hktdc.com
Hanoi & Ho Chi Minh CityContact: [email protected]
Geelong Conference Centre,Geelong, VIC8.30am-12.30pmwww.eca.org.au/events
General Practice Conference & exhibitionPerth Convention & exhibition CentrePh: 1800 814 611www.gpce.com.au
McCormack Place,Chicago, Illinois, uSwww.am-fe.ift.org/
Shanghai, ChinaContact: [email protected]
