Some Weekend Australian interview action

An interview I did about 6 weeks ago popped up in the papers last weekend. In the Australian. It’s titled Australian businesses run by women hit China barrier. Read at your own risk.

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Aussie Women in the Global Arena – Our New Report (Part Three)

Here concludes the trilogy of findings from our latest Women in Global Business report. There are two sets of findings I want to highlight.

China’s rise: The international markets most frequently identified by the Australian businesswomen we surveyed as the most important market were China (34%), the USA (23%), and the UK (7%). China was more frequently cited as most important (36%) for the more experienced organisations (those operating internationally for over five years). China has jumped considerably since our first survey (from 18% to 34%). This year we also asked about the most important region and Asia was ranked #1 by just over half (52%) the women.

For more on China, see p.32 of the report.

The challenges of global expansion: Australia’s businesswomen have confronted, and overcome, a number of hurdles in their internationalisation efforts. Among the most substantial barriers we identify are: the high $A, difficulty locating a suitable distributor, red tape issues in establishing foreign operations, a lack of resources to cover the investment timeframe (especially relative to the costs), and a lack of alternative sources of capital.

Women running their own international organisations consistently rated these impediments as higher than the senior female employees (the exception was on the currency risk front). This is symptomatic of the large differences in access to resources, networks and information for these two groups of women.

This second annual survey allows us to track the progression of a subsample of the women from the first survey. Almost two thirds (63%) of the women who had indicated an intention to expand the number of countries in which their business operated had achieved this goal in 2014.

Doing business abroad has not got easier however. As these women expand their businesses into new locations, they continue to encounter issues that hinder growth. On almost all of the 31 issues we track across the survey, the respondents report the barrier to be causing more or similar hindrance to 12 months earlier. The only two to drop noticeably are cultural differences and the perceived risks of losing money selling products or services abroad.

The barrier that has most consistently increased is lack of alternative sources of capital. In this second annual survey we specifically investigate financing challenges which emerged from the inaugural survey as particularly salient for Australian businesswomen in the international arena. We find that most internationalised women‐owned organisations rely primarily on personal savings and reinvested profits to fund expansion. Only 21% of the owner-operators had attempted to borrow to fund internationalisation, and of these attempts, only 27% were successful. Only 10% of respondents regarded ease of accessing finance as easy or very easy, while 55% rated it difficult or very difficult.

Almost two fifths (39%) of the internationally engaged owner-operators felt that gender made a difference to their access to finance. This number was considerably higher (52%) for female owner-operators who were yet to internationalise. This does point to an often underplayed constraint to ongoing international expansion of women-owned Australian organisations.

Our report identifies a number of opportunities to nurture and assist Australia’s businesswomen in their international efforts. We offer promising evidence of the positive impact of mentoring in reducing barriers and building confidence, and a clear appetite for greater access to mentors. Programs such as WIGB are ideal mechanisms for increased sharing of information, contacts and lessons from successful counterparts, the building of skills and capacity, networking, and as a forum for offering specifically targeted policies and interventions.

To read more, see the report.

Who’s #2? Who’s #2?

It would be remiss of a blog about International Business to not comment upon a major milestone that occurred (or at least was acknowledged) this week.

China has usurped Japan as the world’s 2nd largest economy behind the US.  This is rightfully being hailed as yet another step on China’s rise to the #1 spot (typically forecast as happening by 2030).

A few issues worth noting:

– This is simply in nominal terms (i.e. converted at prevailing exchange rates).  Allowing for cost of living (what we typically refer to as Purchasing Power Parity) China’s GDP was almost twice as large as Japan already (and about 60% the size of US, rather than the nominal 40% or so)

– There is good reason to believe that these Chinese economy is even larger, with one study estimating the grey economy may add another 30% on top of the official GDP numbers

– A long-term historical perspective would acknowledge this as a “return” to #1 (a rank China has probably occupied more than any other nation-state over human history)

– Putting this all in per capita terms tempers the story considerably, as China struggles to crack the top 100 nations on an income per head basis even when converted to PPP.

This last point is in many ways the most important aspect.  China, and in particular its entrepreneurs, planners, and citizens, isn’t about to slow down in the pursuit of a prosperity.  In the medium-to-long term only India has any real chance of matching the nation for market and labour-force size.  China is already the world’s top exporter, steel-maker and auto market.  The world’s largest multinationals are all scrambling to part of  China’s engagement with each and every aspect of their value chains.

Fostering a Chinese wine giant?

While we all wait eagerly to see who might buy up the soon-to-be-untangled Foster’s beer business (see this piece for a recent update of the contenders), it is possible that the more fascinating and globally significant acquisition might actually occur on the wine side of the company’s separation.

An Australian article last month got me looking into the prospect of a Chinese takeover of some or all of the forthcoming wine business (renamed as Treasury Wine Estates).  The article mentions that China’s Bright Foods, failed bidder for CSR’s sugar business, has sounded out Foster’s about the firm’s “Hunter Valley operations focused on the blue-chip Rosemount brand”.

I was a little unclear on the size and scale of China’s wine market.  I have certainly heard the usual extravagant claims that it could be an enormous untapped opportunity for Australian exporters, but what I was unaware of was the actual scale of existing domestic production.

According to this academic study China is already the 6th largest producer of wine in the world (at 13,005m hectalitres in 2008).  That’s more than Australia (11,700m), South Africa (9,890m), Chile (7,860m) and NZ (1,700m).  Chinese production grew 17% between 2004-8, while pretty much all ahead and around them on the list experienced pretty hefty declines in volumes (e.g. Australia fell 20%, France 25%).

Certainly China is not currently a significant exporter of wine (unlike most of the other major producer nations), and the initial focus of any foreign acquisitions will likely be on servicing the Chinese market with higher quality imports.

The longer-term picture is where it gets interesting, however. Picking up a firm with strong international brands (which Bright Foods would certainly be doing if they secured some/all of Treasury) would allow the Chinese firm to build up much-needed expertise in marketing and distributing beyond Chinese shores.

This could well be the birth of a new wine giant.

(As an aside, there is an unfortunate irony to the possibility of a big chunk of Foster’s shifting into Chinese hands, as the firm had a very torrid time from 1993-2006 trying to build a beer presence in the country).

Do you want a piece of me?

As we truly enter the Silly Season, I thought you might like this story.

Up for grabs is a share in the burgeoning and ambitious Shaolin Monk empire:

“…a stockmarket listing that could raise £85 million ($A155 million). The move is part of Mr Shi’s plan to franchise the monastery across China, the US and South-East Asia. Shaolin has already taken over the management of several temples in Yunnan and the rumour is that it also has its eye on a site in Taiwan. ”We cannot avoid or ignore the modern world,” he said. ”If we do, we have no chance of survival.'”

Sounds like an offer to good to refuse… or perhaps too good to be true.