Australia’s food, beverage and agriculture businesses are well positioned to capitalise on the growing demand for food security from the Asia-Pacific region, with China continuing to play a key role.
It is well known that population growth and the rise of the middle income group in the Asia-Pacific region are key drivers behind the demand for better quality food and related products. However with a significant level of investment needed, businesses require the financial flexibility to meet customer demand and address challenges as they arise.
To ensure businesses are maximising the opportunity to develop new export markets in Asia or grow their existing offshore operations, there are some key factors to consider.
The first is to identify the market that is most suitable for your business. To put in place an effective export and trade strategy, businesses must pursue their niche. In the food, beverage and agricultural sector, a good example of this is the success in exporting milk powder and related products, where Australia and New Zealand genuinely has a competitive advantage. We have seen some companies leveraging this niche to create strong and sustainable Asian export opportunities.
Finding the right partner is also critical to successfully implementing an Asian trade strategy, and businesses are increasingly partnering with well-connected offshore companies to support their Asian growth plans.
Risks and challenges
There are a number of regulatory and risk issues businesses must account for when formulating their international trade strategies, including:
1) Regulation: Dealing with the regulatory environment associated with international trade can be a daunting prospect, and current and proposed regulatory changes can factor into financial decision making. The impact of Basel III is a good example of where incoming regulation can impact the cost of capital for a business, and trade finance is one way businesses can offset this.
2) Safety: Minimising risk is important for a successful global trade strategy, and CommBank is working with industry participants to develop a best practice approach to risk. For example, businesses have traditionally used a Letter of Credit (LoC) to maintain the integrity of international trade transactions and with this no longer necessarily being the case, there is still some debate as to the best practice methods to mitigate risk.
CommBank has a deep understanding of the international trade environment and can assist your business to target opportunities in Asian markets through its comprehensive trade, risk management and transaction banking solutions.