Australian Businesses Are Charging Ahead With Global Expansion

DigitalCFO Newsroom | 1 September 2022

Despite economic challenges, 69 per cent of Australian SMEs plan to be operating outside Australia by 2027.

  • 42 per cent of Australian SMEs operating across borders reported being profitable
  • For SMEs trading overseas, the region where they have seen the biggest growth in sales and
    revenue was Southeast Asia

Australian businesses have ambitious plans for international expansion, as new data from global fintech Airwallex reveals more than two thirds of small-to-medium Aussie businesses (69 per cent) plan to be operating outside Australia by 2027.

Airwallex’s inaugural Australian Business Growth Index found a third of SMEs surveyed (34 per cent)
currently have operations overseas, but this is projected to more than double in the next five years.

The independent research, which surveyed more than 200 Australian small-to-medium enterprises
(SMEs), found that businesses already operating in international markets are experiencing
commercial success. Of these businesses, two in five surveyed (42 per cent) reported being profitable
and more than half are breaking even (52 per cent).

“Aussie businesses are bolstering their position to weather the current economic challenges,” said
Sam Kothari, Head of Growth for ANZ at Airwallex. “International expansion is now being used as a
strategy to remain resilient and viable by tapping into new markets and widening the pool of potential
customers.”

Moving overseas has unlocked new customer segments for SMEs and broadened their overall market
share, with 80 per cent saying the volume of new customers they’ve gained from moving into new
markets has been “significant”.

The research also found that despite sustained economic hardship, including rising inflation and
disrupted global supply chains, 96 per cent of SMEs who are already operating overseas, and 99 per
cent of those planning to do so in the next twelve months, recorded growth last year.

“Australians are innovators, and there is growing global demand for the products and services they
provide,” added Sam. “We have seen this firsthand; Airwallex is the chosen partner to many
Australian businesses looking to alleviate the global roadblocks associated with setting up shop in
international markets, including opening accounts overseas, high FX fees and managing employee
expenses. We see ourselves playing a central role in opening the door for Australian businesses to
access borderless opportunities all around the world.”

For SMEs trading overseas, the region where they have seen the biggest growth in sales and revenue
was Southeast Asia. Almost two in five respondents (39 per cent) said this market had been their
biggest generator of revenue outside of Australia in the past year, closely followed by the U.S. (29 per
cent).

These markets were echoed in terms of where the most beneficial prospects lie, with a quarter (26 per
cent) of SMEs operating or planning to operate overseas identifying Southeast Asia as the most
lucrative in the year ahead.

The U.S. followed closely behind Southeast Asia, with 25 per cent of businesses with an international
footprint or ambition naming the States out as the next most attractive market in the near future,
surpassing China (18 per cent) and EMEA/UK (15 per cent).

Case studies

Sustainability sells – the reusable water bottle business sweeping the world up
memobottle is one Australian-founded business which is enjoying commercial success in overseas
markets, with 50 per cent of its revenue now being generated abroad, mainly in the Southeast Asia
region.

In the past twelve months, the reusable water bottle movement has on-boarded distributors in
Indonesia and Singapore, and exhibited at trade shows in the U.S. and Europe.
memobottle Director and co-founder Jonathan Byrt cites the business’ focus on international markets
as crucial to its success during the pandemic period.

“Having a global presence during this tumultuous 24 months has allowed us to switch marketing and
revenue focus between regions. Being in multiple markets unlocked opportunities for the business
which have allowed us to grow and expand. Our operations in China and the U.S. kept our revenue
steady while Australia and Europe battled with sustained lockdowns and geopolitical events,” said
Jonathan.

“The majority of sales from a recent product launch (65 per cent) came from customers in the States.
If we had all our eggs in one basket, this wouldn’t have been possible.”

In orbit around the world – Orbitkey has their eyes on global dominance

Melbourne-founded Orbitkey has established a strong presence in the U.S. in recent years, which
has become its dominant market above Australia, representing almost a third of its total sales (31 per
cent). The business now has its sights on Asia, where it has a small but growing presence. For
Orbitkey’s co-founder and Managing Director Rex Kuo, Orbitkey was always destined to scale
beyond its home market.

“As a product design company that prides itself on user-centred design and innovation, our products
are designed for a global audience – not just Australians. We see great value and potential in the
Asian market, where demand is growing exponentially from existing customers –- all of the signals are
clear that expansion in this market looks lucrative,” said Rex.

“It’s not just demand that makes Southeast Asia such an attractive business proposition. Cheaper and
more competitive payment gateways are becoming more easily accessible than ever before,
eliminating a large proportion of high transaction and currency conversion fees that were associated
previously whilst doing B2C commerce in the region.”

“We’re investing the revenue that was previously swallowed up by high transaction costs to maximise
the opportunities for our growth in Southeast Asia, including locating a third-party logistics (3PL) in
Hong Kong which has made shipping to countries in Asia cheaper than ever before.”

“All of these components are coming together to make Southeast Asia one of the most dynamic
business environments in the world. 9 per cent of our total sales come from the region as present but
this will surpass into double digits in no time.”