Presentation to the Export Summit Sydney, NSW, Australia
Note: the views expresed are those of the author alone and cannot be attrivbuted to the Australian Trade Commission or the Australian Government
1. Introduction
Thank you for the invitation to address the export summit. I would also like to thank the people from Overseas Trading who have given me great assistance since I joined Austrade in April this year. I find it to be a good magazine and it also has a fine reputation as a vital source of information for Australian exporters.
In my remarks today, I would like to do four things.
Firstly, I want to outline some views on the information age and its impact to the future of business and the world economy.
Secondly, I want to provide some evidence of how australia is faring in the information economy stakes.
Thirdly, I want to illustrate how australian exporters are doing relative to other businesses.
Fourthly, I want to tell you about what austrade is doing to assist exporters in the information age.
2. The importance of the information age
Whilst ’California, here I come’ was the catch-cry of those hungry for success on the California goldfields in the 1840s, on a visit to Northern California earlier this year I could not help to feel that I was witnessing a similar phenomenon. However this time it is an Internet rush not a gold rush. In the Internet rush in Silicon Valley in the late 1990s, we are witnessing the same incredible expansion and increases in personal wealth that occurred in the gold rushes in the 1840s. We are also experiencing a fundamental change in the structure of industry and the global economy.
The Internet is the most famous symbol of the information age. The information age is a shorthand reference to a whole range of technological phenomena impacting information exchange, business systems, commercial transactions and simple communications.
The impact of the information age has been compared to the building of the railroads in the nineteenth century. The Internet has brought isolated markets together and has given smaller companies a national presence in the large us market and has reduced distribution and transaction costs. The Internet has affected the consumer to business relationship by providing more information to consumers about the choices available to them. Similarly, electronic commerce has affected business to business relationships by lowering purchase, sales and marketing costs, reducing inventories, lowering cycle times and enabling firms to improve customer service. At the same time e-commerce has enabled firms to gain new sales opportunities.
The information age has spawned an enormous amount of literature on the changes that are occurring in business systems and the economy.
Two influential commentators are Bill Gates and Alan Greenspan.
Bill Gates says:
“If the 1980s were about quality and the 1990s were about reengineering, then the 2000s will be about velocity. About how quickly the nature of business will change. About how quickly business itself will be transacted. About how information access will alter the lifestyle of consumers and their expectations of business. Quality improvements and business process improvements will occur far faster.”
Bill Gates, Microsoft founder and CEO in Business@the speed of thought.
Through the technological advances in financial markets and communications, Dr Alan Greenspan, chairman of the federal reserve board, exercises remarkable influence over the global economy. Users of Sydney Airport may have noticed an electronic billboard on arrival that says the words “Greenspan praises Australian Economy”. In fact you see it beore any sign that says “Welcome to Australia”. That is a sign of his influence.
Greenspan’s speeches and testimonies to congress, that receive so much media and financial market attention, are typically literred with references to the information age.
A typical example follows:
“The synergies in laser, fiber optic, satellite, and computer technologies with older technologies have increased the return on capital and accelerated the rate of growth of productivity over the past five years.” (Greenspan, 1999)
Now, these changes in business systems described by gates have clearly influenced the macro-economy and affected Greenspan’s way of thinking and ultimately, his decision-making at the federal reserve.
3. How is Australia faring?
The information age, of course is strongest in the USA. However, Australia, Scandinavia and parts of Europe are also faring reasonably well. [see (OECD (1999) and US Department of Commerce (1999)].
The information age is part of the for Australia’s relative economic strength despite the severity of the Asian financial crisis. The ’new Australian economy’ has spurred considerable interest amongst economic commentators. In an article in the Business Review Weekly (BRW), HSBC Chief Economist John Edwards was interviewed saying that the new Australian economy might ultimately be more sustainable than Robert Menzies’ golden age:
“There is no doubt that we are in a unique period, with a continuation of productivity and economic growth likely to deliver the longest and best-balanced expansion in our history.” HSBC Chief Economist John Edwards [in Skotnicki) (1999) p81)]
Australia is currently enjoying one of the fastest rates of economic growth in the industrialized world. We are experiencing a productivity boom, and benefit from a low inflationary, stable economic environment. Part of this is due to the advances in the information economy but part is due to the structural reform that has taken place in the 1980s and 1990s. This is also borne out in BRW surveys of the top 500 companies with service and information age companies starting to come to prominence [see Gome (1999)].
4. How are Australian exporters responding?
How does the information economy affect exporters?
In principle, the Internet provides a great opportunity for australian exporters as it breaks down the “tyranny of distance” between Australia and the rest of the world.
Now Australian businesses can put their wares on a homepage for the entire world to see. At the same time, the information economy can break down the ’tyranny of distance’ within Australia. Electronic networking can assist remote regions in Australia in the same way that the railways assisted the economic development of country towns and aviation opened up outback Australia.
What do the statistics say ?
According to the business longitudinal survey compiled by the Australian Bureau of Statistics (ABS), Australian exporters are more engaged in the information economy than the average Australian company.
Exporters have a higher tendency than the average Australian company:
- To use computers (94 to 60 %),
- Be electronically networked within their business (67 % to 40 %),
- To have Internet access (63 to 20 %).
In fact, the majority of exporters have internet access regardless of whether they are large or small.
However there is evidence that full embrace of electronic commerce still has a way to go amongst exporters.
In fact the same ABS survey shows this. Of some 18,000 exporters surveyed by the ABS, 11,000 (or 63 %) had Internet access. However, only 8.6 %of those exporters marketed their products on-line (whilst transacting off-line) and a mere 2.3 % marketed and transacted on-line.
What is happening in practice ?
In practice, the Internet can drastically affect the fortunes of individual exporters.
A number of case studies familiar to austrade can be used to illustrate the impact of the internet impact.
For example, Threadgold & Company, a dairy producer in Torquay, Victoria experienced a la rge increase in business as a result of having their company details listed on Austrade’s world direct website. The web has opened up an international market of potential consumers of Threadgold products.
Similarly, Vetafarm, a bird care product supplier of Wagga Wagga, NSW, has been able to sell to the United States, Russia and the United Kingdom through its own website and a US bird-related site even though its product does not sell well in Australia. Small food and beverage companies like Bush Tucker Australia Pty Ltd are benefiting from the Internet.
Managing Director – Bradley Field – “Since setting up our website we’re getting orders and inquiries from all over the world. Just recently I had two orders on the same day, one from France and one from around the corner”.
Alternative traveller, a travel company based in Darwin, has gained custom through the use of personalised e-mail and other marketing techniques.
This shows the diversity of products on the Internet – it not just software and knowledge based products.
5. How Austrade is helping exporters
Austrade is helping exporters get on line. Once a business has established a website (or even if it hasn’t), it can improve its on line visibility by being listed on Austrade’s web site ’Australia on Display’. ’Australia on Display’ showcases Australian goods and services. They are marketed globally on line and through the Austrade network. It currently has over 7,000 companies listed (covering a wide range of industry sectors), with 1500 pages of content. There are around 6,000 searches made on Australia on display per month. The growth in usage of Australia’s Internet resources has been considerable, with a substantial upward trend in user sessions (or visits) to Austrade on line (currently at around 40,000 a month).
Austrade is also assisting australian businesses targetting the lucrative American market through ’Access USA’ (which is part of Austrade on line).
Exporters can also link their website to industry sites to ensure they are listed on search engines. For example, being listed on the Australian Wine Centre’s site, Auswine.com.au is beneficial to Australian winemakers. The site sells wines from all over the world including Australia, NZ, USA, France and Spain. Antarctica is the only continent that has yet to buy wine from the Australian Wine Centre web site since it was launched in mid 1997 (clearly we will have to wait until the penguins develop their palates).
Austrade can also help exporters get on to on-line markets and closed business systems as the on line auction markets expand.
With further changes in the on-line economy expected, Austrade is thinking about how its own role will change in the information age. For instance, in past days when information about foreign countries was scarce, Austrade was the main source of information to Australian businesses. In the information age, where there is an overload of information available on the net, Austrade will synthesise and shape the information to provide strategic advice to its clients. Other roles could involve management of internet portals, management of on-line communities, increased consulting advice and the leverage of on-line opportunities through market systems. An important factor in Australia’s success in the information age will be how we grow and benefit from our stock of knowledge capital. With a levelling up of information through the Internet and advancement of information technology, relationships will become more rather than less important in the world of international business. Austrade is aiming to ensure that australian exporters benefit from the growth of Australia’s knowledge capital.
6. Conclusion
In summary, the examples mentioned above show that individual exporters in Australia can gain from the information economy. The evidence to date shows that whilst there is a long way to go, exporters are more connected to the information economy than the average Australian company. Australia’s historical ’tyranny of distance’ means that there is much to gain from the Internet and e-commerce. Whilst, Australia is not as engaged in the information economy as say, the United States, it is in the major league of industrialised economies in terms of Internet usage, e-commerce and computer networking. Australia’s comparative advantages of sophisticated telecommunications infrastructure, highly skilled multicultural workforce, political and economic stability, growing service sector and sound financial system will enhance the capacity of australian exporters to connect to the global economy.
References:
- Austrade On line & Internet names Australia (1999)
“Get business on the Internet” Melbourne. - Commonwealth of Australia (1997)
“Putting Australia on the new silk road?”, Department of Foreign Affairs and Trade, Canberra. - Economist 1999
“The new economy”, The Economist, July 24th 1999, London. - Friedman, T (1998)
“The lexus and the olive tree”, Farrar, Straus and Grioux, New York. - Gates, W (1999)
“Business @ the speed of thought “, Collins-Hemingway. - Gome, A (1999)
“Information age makes its mark”, Bus iness Review Weekly, August 6 1999, Melbourne. - Greenspan, A (1999)
“Humphrey-Hawkins testimony to US Congress”, February 1999, US Congress, Washington. - Harcourt, T (1999)
“How did you survive the Asian economic crisis” Overseas Trading, August 1999, Sydney
Organisation for Economic Co-operation and Development (1999)
“The knowledge economy: a set of facts and figures.” OECD, Paris. - Skotnicki, T (1999)
“Heading for a new Golden Age”, Business Review Weekly, July 9, 1999, Melbourne. - US Department of Commerce (1999)
“The emerging digital economy ii”, Washington, D.C.
