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Andrew Watson
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+ About Andrew Watson

Andrew Watson is head of the Export Finance team at Efic

Andrew Watson is head of the Export Finance team at Efic, which provides financial solutions to help small and medium-sized Australian businesses grow their export, offshore investment and onshore export-related business opportunities.

Andrew has over 20 years’ banking experience in a number of corporate banking, commercial banking, rural and regional, and strategy roles, including senior management roles with the Commonwealth Bank group.

5 ways to protect your IP when exporting

Thursday, May 04, 2017

By Andrew Watson

Working with small and medium business (SME) exporters on a daily basis, we get a lot of feedback on some of the key challenges they face when entering new overseas markets. From understanding cultural differences to what currency to trade in, the challenges of exporting can seem daunting, even to an established business.

One issue that continually comes up in our conversations with SME exporters is Intellectual Property (IP). Protecting your IP in the domestic market can seem confusing - open that up to multiple overseas markets and the task can appear overwhelming.

While one approach might be to file IP registrations in every market, it’s an approach that is neither practical, nor cost-effective, for most SME exporters.

Coming up with an IP strategy is an excellent way to maximise your IP protection while minimising costs.

We’ve teamed up with IP Australia to develop the Protecting your IP overseas specialist paper. Here are five steps we’ve addressed to help you develop a robust IP strategy for your export business that could help put you on the right path for export success:

1. Consider your export strategy

Be as clear as possible about which markets offer the best potential for your product – your IP strategy will be driven by your export strategy.

The markets you target may depend on macroeconomic factors, like population size, demographics or disposable income, or it may come down to the markets with the best cultural fit for your product.

For Scott Boocock, inventor of Hegs Pegs, it was a combination of factors that helped him decide which countries he should export his innovative ‘peg with a hook’ to.

“Our strategy for export was to choose countries with over 20 million people, and which had a level of GDP where people would go to the supermarket and actually spend money to buy Hegs Pegs.”

Being clear about which markets you want to target will make it easier when you start looking into the IP arrangements that apply to each jurisdiction.

Another option is to sell the rights to your IP to a third party, allowing them to manufacture and sell your product in particular markets, rather than exporting yourself.

2. Do your research

When exporting to a new country, along with focusing on protecting your own IP, you’ll also need to ensure that you’re not breaching another company’s IP in the process.

While your brand and product range may be unique in Australia, doing some research can help to prevent your company from expensive legal challenges from potential overseas competitors.

Engaging an IP attorney to complete thorough research on your behalf is a great idea, however doing some research yourself at first instance when putting together your export strategy will also help to ensure that there are no nasty surprises.

You should also confirm that your brand and/or product name, and any images that you use, are not considered unlucky or offensive in other languages and cultures.

3. Choose your solutions

You may be surprised to learn that your product may have more than one patentable element.

Given that there are costs involved, this means that you may need to decide which element (or elements) of your product to cover with IP protection.

The answer isn’t always straightforward, something that Scott Boocock from Hegs discovered.

When he first came up with the design for the Hegs peg, Scott protected the hook feature with a patent, as this was an inventive element. But he soon realised that his IP extended much further than that.

“When we did a novelty check on the Heg peg,” says Boocock, “we discovered that it had six patentable elements. We’ve got a patent on the hook, but also on the design, which means people can’t make a peg with bigger or smaller hooks – the whole system is protected.”

A good approach is to prioritise the IP elements of your product, and think about how you might like to use each one in the future. This will help you to decide on the most valuable element(s), which will make it easier to choose the correct IP solution to protect it.

4. Understand the costs

While every market is different, protecting all of your IP across multiple markets could prove to be an expensive exercise, especially if more than one element needs protection.

That’s why you may need to balance the costs involved with the potential costs to your business, should someone copy and sell your product.

Monique File, co-owner of b.box baby goods, says that deciding where to protect your IP is essentially a commercial decision.

“For a new business starting out with limited funds,” she says, “it becomes a question of ‘what do you invest in - protecting your IP or developing your products?’”

While b.box invests a lot in IP protection, commercially it didn’t make sense for it to register trade marks in every single market around the world.

Hegs Pegs founder, Boocock, agrees that the costs of the right IP protection are well worth it.

“The money is not just lost – it’s an actual asset on the balance sheet that you can sell,” he said.

“Every time I go back to the valuation of the company, it’s all based around that patent becoming stronger and stronger, and more valuable as the business grows.”

5. Enlist expert advice

No matter how much research you do, finding the right IP strategy for your business can be a complex process.

Enlisting the help of professionals who specialise in IP protection means you might not only find solutions that you haven’t yet considered, you’ll also likely get the benefit of their expertise and experience.

Finding an IP specialist (such as a registered patent or trademark attorney or lawyer that understands your business, and the markets to which you’re exporting) can help ensure that their recommended IP strategy offers the protection that is most appropriate for your business.

For more information, download our free Protecting your IP overseas special paper to help you learn more about protecting your intellectual property when exporting.

This is a sponsored article by EFIC.

Important:

This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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3 steps to exporting success

Thursday, December 08, 2016

By Andrew Watson

For small businesses, expanding overseas can be a daunting process. It can be difficult to source the information you need to succeed and to ensure your business is capable of delivering in international markets. In particular, there are three barriers to export success facing the the small businesses we work with. These are: planning effectively for export, building networks to get ahead overseas, and managing finances and cashflow. Let’s discuss each of them.

1. Planning for export 

The decision to export, or enter into an export-related contract, is a great opportunity for many businesses to grow and expand sales, but knowing how to plan appropriately is critical. While there will always be things that take small businesses by surprise on their export journey, you can set your business up for success by taking the following steps: 

  • Develop a robust export strategy, and stick to it

When you start exporting, you may find that a lot of different options come across your path that aren’t part of the plan, including potential markets, buyers, or partners. It can be easy to get side-tracked, and while it’s important to consider your options carefully, stay focused and stick closely to your export strategy.

  • Consider the positioning of your product or service in a new market

When considering if your product or service will succeed overseas, you need to think about your positioning, which includes price points, quality and competition.

  • Build an experienced and flexible team

You need to know you have the expertise and resources to support you when you win a big export contract, but in the early years of exporting, the flow of work may fluctuate. Getting the right team, with the ability to be flexible, will be key.

2. Building networks 

Networks can encompass everything from friends, peers and other companies operating in similar markets, to professionals such as lawyers and accountants, mentors and advisers, government contacts and, critically, market partners. Establishing broad and deep networks is a critical success factor in exporting and operating in a global supply chain. There are some simple things you can do to build your networks:

  • Attend trade shows

Trade shows or expos both in Australia and in overseas markets are a great way to meet potential partners and customers by showcasing your goods and services.

  • Attend industry events and conferences

Industry events are an excellent way to meet peers and learn about their experiences, as well as connect with potential customers. Organisations which provide support for exporters, such as Austrade and Efic, also host regular events providing information and advice for SMEs.

  • Schedule face-to-face meetings

Travelling overseas and meeting local potential partners is vital. If you don’t know where to start, Austrade has on-the-ground representatives in a wide range of markets who can help you with introductions by setting up appointments with buyers that are a good fit for you.

3. Managing your finances

There are a number of differences between exporting and operating in Australia, which will have an impact on your finances. Understanding all the costs associated with exporting will help you make an informed decision on whether your business is ready to start an export project. There are some crucial considerations to bear in mind:

  •  Keep your financial health in check 

As your business grows, you need to make sure you work with an accountant who understands the fundamentals of your business and where you are looking to go. Your accountant will help you stay on the right track with your financials as you expand into new markets or enter into an export supply chain.

  • Develop a financial plan

When you enter into exporting, you need to be prepared for all finance eventualities. For example, export can mean a longer cash flow cycle, a greater risk of non-payment and exposure to foreign exchange risk. Putting together a detailed financial plan can help you determine if your export plan is viable.

  • Understand your cashflow requirements 

One of the most common problems encountered by growing businesses is when their growth rate outstrips their capacity, which can create pressure on working capital. By developing detailed cashflow projections into the future, you can ensure you are able to plan and manage your cashflow accordingly to avoid problems.

Disclaimer: This is a sponsored article by EFIC

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3 Aussie exporters succeeding overseas

Friday, December 02, 2016

By Andrew Watson

There’s no doubt that exporting can help small and medium-sized companies expand their business, diversify their revenue and increase their profits.

However, what we find exciting about working with lots of exporters across different industries is hearing their individual export journeys.

How they started, the challenges they faced, what they struggled with, their first export contract – each has a unique story to tell.

It’s really inspiring to see their passion and commitment to their business, often over long periods of time.

Here are three Australian exporters who have achieved export success recently:

Worldpoly: a family business taking on the world

Worldpoly, based in Victoria, is a specialist manufacturer of polyethylene pipe butt welding equipment.

This equipment is designed to align two lengths of polyethylene pipe, heat them and then force them together, creating a joint that is intended to last 100 years. Worldpoly started in 1959 when Tom Hall made the first polyethylene pipe in the Southern Hemisphere. 

Now under the leadership of Tom’s son Rob, Worldpoly exports to over 108 countries, accounting for about 70 per cent of its total business.

“We ultimately want to have a machine operating in every country in the world, and we’re well on the way to that,” says Worldpoly Marketing Manager, Nikita Hall. 

In keeping with their focus on international markets, Rob saw an opportunity to establish a new distributor in South Africa, which would help to open up the Sub-Saharan Africa market.

“I think the key to our success in exporting is an almost complete lack of fear of selling in foreign countries,” says Rob Hall, Managing Director of Worldpoly. 

Using our Small Business Export Loan, Worldpoly was able to send machines to this distributor, creating a business partnership with the potential to grow substantially – a great result.

FCT Flames: a world leader in flame technology

Another successful Australian exporter that continues to rise to the challenge is FCT Flames.

Based in Melbourne, FCT Flames specialises in the design, manufacture and operation of flame effects for ceremonial and sporting events. 

FCT has produced some of the most watched man-made flames in history, like the spectacular cauldron at the Sydney 2000 Olympic Games, the ‘Rings of Fire’ from the opening ceremony of the Athens 2004 Olympic Games and the cauldron for the London 2012 Olympic Games.

In recognition of this experience, FCT won the contract to supply the cauldron burner for the 2015 opening ceremony of the 28th South East Asian Games in Singapore.

As usual with these large-scale events, the games organisers required a performance bond to be in place to guarantee the burner’s installation before granting the contract.

Our bonding facility helped FCT to secure this contact and again deliver an experience that was extremely well received.

HEGS Australia: an innovative new design

A third successful exporter is HEGS Australia, the South Australian manufacturer of ‘HEGS’ - pegs with hooks that are designed to allow clothing to dry without marks.

“We first started manufacturing in China, and then I added all the interest we would pay for it sitting on a boat coming from China, and then realised we could do it cheaper here, in Australia,” says founder Scott Boocock. As part of its export growth strategy, HEGS Australia has distributors in the United States, Canada, Mexico, South Africa, England, Scotland, Ireland and China.

Recently, the company needed to increase its production capacity after winning three large export contracts into South Africa, China and the US.

Within the HEGS production cycle, there is often a delay between when HEGS Australia pays its suppliers to when revenue is received from buyers.

This financing gap can be up to three weeks, which puts significant pressure on cashflow and makes it more difficult for HEGS Australia to fulfil large new orders.

Our Export Working Capital Guarantee allowed HEGS Australia’s bank to approve the additional working capital that it needed to cover the upfront manufacturing and pre-shipment costs for these large export contracts.

Helping HEGS Australia scale-up quickly to fulfil these large orders helped it to enhance its reputation with overseas distributors and continue its overseas expansion.

Disclaimer: This is a sponsored article by EFIC

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4 export risks (and how to overcome them)

Wednesday, November 16, 2016

By Andrew Watson

Exporting can be risky business. Operating in an unfamiliar foreign market will always throw up new challenges to navigate, however established a business may be in its domestic market.

The difference between success and failure when doing business overseas is being prepared. There will always be risks when entering a new market, but identifying those risks ahead of time and putting measures in place to manage those risks can help to minimise their impact on the success of your business overseas.

Export risks can be quite different depending on which country your business is exporting to. However, there are four common risks all Australian small business should be aware of when doing business in international markets:

1. Political risks

An uncertain political environment can hamper export operations in a number of ways. A trade embargo could affect delivery of goods, while civil war or political violence could affect the safety of your staff and partners. Political instability could result in payment defaults, confiscation of property and assets, and blockages in transfer of earnings.

2. Legal risks

Legal requirements and processes can vary significantly across different markets, so conduct research and receive legal advice to understand your legal position. Some common areas of difference include: local contract law, patent registration and IP requirements, product liability laws, dispute resolution processes and operational health and safety laws.

3. Operating risks

Exporters need to become familiar with the operating environment of new markets, as this can be very different to the Australian operating environment. Some important things to look out for are industrial relations policies and practices, permitting rules and import requirements.

4. Currency risks

Adverse movements in exchange rates are an inherent risk of doing business overseas and can lead to a loss of earnings or profit. You can protect yourself by quoting only in Australian dollars, or taking out a foreign exchange facility which allows you to lock in exchange rates and hedge your currency exposure.

While there are no quick short cuts to avoiding risks when exporting, as with any other business risk, you should follow a robust process of risk management to ensure your business is in the strongest possible position to cope with whatever you come up against.

Here are four key steps to take to manage export risk:

1. Do your homework

The first thing you need to do is identify the potential sources of risk in your chosen export market. Efic’s Country Profiles are a good place to start. The World Bank publishes a range of data on individual country risks, and the Australian Department of Foreign Affairs and Trade (“DFAT”) continually monitors the effects of political changes on Australian businesses.

2. Seek advice

Your bankers, lawyers, insurers and accountants will be able to give you advice about the risks you may encounter in overseas markets. It’s also a good idea to try and find someone who has dealt in the country before so you can learn from their experiences – you may be able to find such an organisation through your industry association or business chamber.

3. Make an assessment

While it’s impossible to predict the occurrence of specific risks, it’s possible to make a reasonable assessment of the likelihood and impact of most scenarios that could affect your business. You should also rank the likelihood and importance of different risks to identify critical areas of focus.

4. Develop risk management strategies

As with any other business risk, you need to identify the steps you can take (or measures you can put in place) to avoid or mitigate the risk and its impact. Ensure your risk management strategy is as clear and as simple as possible, and that everyone in the business is aware of what they need to do. It’s also important to regularly monitor the risks that have a potential to affect your business, as the likelihood of impact may change over time.

Risk is an inherent part of doing business overseas. Different countries will have different risk profiles and it is important that you fully understand the risks associated with the markets you are operating in, and plan for them. A solid risk management strategy will help you mitigate risks and minimise the impact they are likely to have on your business.

Disclaimer: This is a sponsored article by EFIC.

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6 innovative ways to grow your export business

Thursday, November 03, 2016

By Andrew Watson

Many Australians face the challenge of successfully growing their export business. From understanding a new market, to finding critical financial support, the key is often thinking innovatively about the way your business operates.

When we think of innovation, we often tend to imagine ground-breaking new inventions and revolutionary technologies. Yet most innovations are an evolution, rather than a revolution.

A change to your process, delivery model, or even your marketing can be just as effective as a new product in creating a lasting competitive advantage, increasing margins and helping you unlock profitable new markets.

Here are six ways Australian SME exporters are driving growth through innovation.

1. Product and service innovation: Adapt your products and services

Adapting your products and services to the needs of an overseas market is a proven route to export success. But exporting also provides an opportunity to capitalise on innovative product features with unique appeal offshore — features often seen as unimportant in the domestic market.

For example, Astec Paints is a manufacturer of innovative paints and acrylic renders since 1978. Their high-performance products are designed to cope with the extremes of the Australian climate and include elastomeric membranes that are intended to stretch and shrink like rubber, without cracking or flaking. These elastomeric products are designed to withstand the stresses of earthquake tremors and has underpinned the company’s recent export growth in Japan.

2. Delivery innovation: Collaborate and look to digital technologies

Finding an innovative way to distribute your product or service can mean the difference between success and failure as an exporter. Collaborating with an established overseas partner is one way to gain a head start in a new market, with immediate benefits for both businesses.

Digital technologies have also made it easier than ever before to reach out to overseas customers directly, either in collaboration with a partner, or on your own. 

For example, Sydney-based digital marketing company Stackla partnered with established social media platform providers, developing strong relationships. In just four years, the company has been able to win many new clients across Europe, North America and Asia Pacific.

3. Business model innovation: Refine your existing strengths

New business models have the power to overturn established players and reshape entire industries. Australian innovators like 99designs and Freelancer.com have been said to have revolutionised their business categories, and as a result, have managed to build a global presence in a very short time by sidestepping traditional distribution channels.

But sometimes the most effective business model innovations are refinements of existing strengths, rather than revolutionary new methods of doing business. Analyse your existing business model and identify the areas where you add the most value for your customers.

For example, Melbourne-based Marand Precision Engineering responded to a downturn in car manufacturing by adapting its business model to create a new offering for clients in the fast-growing mining sector - a fully automated workshop to maintain the rolling stock that miners rely on to transport their commodities to market.

4. Process Innovation: Streamline systems

Process innovation can yield immediate results by reducing your costs, and improving customer service and speed to market.

Look for opportunities to automate and streamline your internal systems to increase efficiency and drive down costs. For example, connecting an online ordering platform directly to your accounting, stock control and order management systems can help you to reduce data errors, cut administrative overheads, and speed up delivery.

5. Marketing Innovation: Tailor your approach

An essential element of export success is the ability to adapt your marketing approach to appeal to customers in different locations. The first step is to analyse the distinctive tastes and buying behaviours of key customer segments in each destination, then adapt your brand and marketing accordingly. Digital platforms also make it easier to gather insights into the behaviours of different market segments.

For example, when entering the Chinese market, Australian winemaker Cassegrain adapted everything from bottle shapes and sizes to labelling and packaging to create a product with unique appeal to Asian buyers, helping protect the brand’s future as the market matures.

6. Financing Innovation: Consider alternatives

Securing finance for new export initiatives is a key challenge for many SMEs. But innovative finance methods are becoming increasingly popular and creating new opportunities for Australian export businesses, for example, crowd-funding.

Considering alternative funding sources could help you build your global presence without sacrificing equity or control.

The increased focus on innovation now means there’s more help available for SMEs looking to innovate, with business incubation groups, government centres and other providers offering support and financing assistance. Australia’s export credit agency, EFIC, is one organisation helping Australians receive the finance solutions they need to grow their business internationally.

Disclaimer: This is a sponsored article by EFIC.

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