As the Australian dollar remains at competitive levels following the recent reduction to the cash rate, opportunities for exporters are increasing. This is reflected in the export data: according to Trading Economics, exports in Australia grew by 4% month-on-month in March 2016 to $26.5 million.
Australia’s recent free trade agreements with China and South Korea also open up opportunities for our exporters in developing markets.
One successful Australian exporter making forays into developing markets is vitamin business Blackmores. At its recent results it announced in-market sales to Asia have increased by 64% to $98 million for the half year (2016).
Blackmores operates in 16 markets outside Australia, most of which have different regulatory environments, which means that for almost all markets, except Singapore, the company needs to change the formulation of some of its products to meet specific regulatory requirements. Most markets also have different labelling requirements the business must address.
“We have to reformulate a significant number of our products to meet local regulations and also consumer demand. For instance we manufacture one product in Korea, rather than Australia. We have to manufacture this product in Korea because there's a monopoly on one of the ingredients we use in this product so we're not allowed to import that from anywhere else,” explains Osborne.
The product, Super Slim Cut, a weight management product, uses a natural ingredient extracted from a wild mango. Clinical evidence for the product’s efficacy was developed in Korea, so that product is manufactured specifically for the Korean market, and it is exported to some other markets.
Blackmores has many other examples of products it manufactures for a specific market. For instance, it manufactures Liver Protect, to meet the needs of consumers in Hong Kong where fatty liver is a common disease. A Malaysian collagen tonic sold only in Asia is made for the ‘inner beauty’ market. The company also advertises the relevance of its multi-vitamins to support the nutrition of Muslims during Ramadan.
Peter Osborne, Director Asia for Blackmores International
Considerations for other markets
When moving into another market, there are various considerations, including consumer preferences and the regulatory environment. In some markets regulations are very clear about how businesses can operate. But in other markets this is not always so clear, which introduces complexity into the operating environment. Cultural differences must also be taken into account.
Pregnancy products are a good example, in Blackmore’s case. One of its popular products in Australia is called Pregnancy and Breastfeeding and provides nutrition to women when they're pregnant.
In Australia the product has an image featuring a pregnant woman. But in a number of Blackmores’ markets it’s not culturally sensitive, or even legal, to show an image of a pregnant mother. In some markets the business can’t call the product Pregnancy and Breastfeeding, instead calling it Nine Months or Nine Plus.
Says Osborne: “Cultural context is really important in emerging markets. For instance in markets with a Muslim population we have products that are halal-certified. It's really useful to get local advice about cultural contexts.”
Advice for exporters
It takes persistence and patience to pursue opportunities in emerging markets and it’s especially important to be very flexible and open to adapting the product and the business strategy so that it’s appropriate for that market.
“You also have to be prepared to get things wrong and make some mistakes and it’s important to learn from that experience. I think it’s easy when going into emerging markets to pull out at the first sign of a challenge. But you really need to go into these markets with a long-term view, have a plan and a strategy that you can flex, depending on what happens in the markets. Be persistent and prepared to make mistakes and learn from them,” Osborne advises.
Among the number of resources exporters can use to help along the way are:
There are also bi-lateral chambers of commerce and other groups that may provide advice. When going into another market, take advantage from all the resources and support you can to help.
- Seek help from agencies like Austrade.
- Take into account cultural sensitivities, regulatory differences and consumers’ preferences.
- Don’t let one failure discourage you – maintain a long-term focus.