Answers:

Siimon Reynolds
It’s important you choose low cost marketing options, so I think horse shows and clubs are a smart move.
In addition, I would experiment with ads on Google, Yahoo and MSN, in a variety of horse related categories.
Next up, I’d create a low cost website if you haven’t already, that helps sell your wares.
Finally, I’d have a pop up box on that website that asks for people’s email address to get a newsletter from you.
That way you’ll soon have a list of hundreds of horse owners that you can inexpensively communicate with online.
Sarina Russo
If you want to grow your business, you must build up your brand – the stronger the brand the stronger the business
Over the past 28 years branding has been a crucial factor in the success of my business. So when people hear the name Russo, they think education, training and finding jobs.
So what is branding? I like the following definition from Harvard University: “Branding is a promise between the producer and the customer, over enough time to be believable”.
Branding is really powerful when it’s backed up by an exceptional product. Stores like Horse Land and Europa must be drawn to your brand with the desire to experience an emotional charge from your natural horse care products.
You must also never stop working on your brand. Networking is a fantastic way to take your brand to the next level, particularly with key industry players. By networking with successful people your horizons are opened and you will become more expansive in your thinking, you’ll think wider, further and deeper—you’ll have vision.
Some of the most effective branding initiatives I have undertaken over the past 28 years include starting up my own TV Show, How to Get that Job, writing my own book Meet me at the Top, and buying my first CBD building and naming it after myself.
Tim Pethick
People often comment that the nudie brand came from nowhere to be everywhere seemingly overnight. One of the reasons for this is that every nudie bottle is an advertisement—a tiny billboard—and a nudie is a product that can be consumed by everyone potentially multiple times a day. So, as the distribution base grew the bottle advertising exposures increased and the brand building effect was multiplied. Nudie is firmly in the mass market, ‘fast moving consumer goods’ (FMCG) arena and this means the exposure and brand building also move fast.
The principles used to build the nudie brand can be applied to any industry whether B2C (business to consumer) or B2B (business to business) but the speed with which it moved may not.
A natural horse care product is very specialised, is not directly consumed (ie the horse owner buys it but the horse is the ‘consumer’), and doesn’t benefit from frequency of exposure. So, the brand and business build will be correspondingly slow. There is no getting around this but to offset the slow build it is critically important to be highly targeted in the marketing and distribution of the product.
Horse shows, pony clubs and specialist equestrian stores are obviously targeted and so it seems to me your existing focus is spot on. Remember it will take time. The only other area not mentioned which must become an additional marketing platform is the web. Horse owners and enthusiasts will have favourite sites just about horses. To help build the brand profile quickly you need a great website for your product. You need to drive traffic to your website through a search engine optimisation (SEO) or search engine marketing (SEM) strategy, and you need to create an online campaign around other horse websites.
Jason Baker
There are several challenges when increasing the scale of a business from a market or order based approach to full-scale retail. These include convincing retailers to stock your product in the first place, producing sufficient volumes to supply national chains, and the distribution and financing of this.
Going straight from weekend sales to national distribution is probably too big a step to achieve in one go. A more gradual approach would involve an online strategy, such as setting up a store within eBay, or paid words on Google for horse care products, and also approaching independent or local retailers to distribute your products. National chains are unlikely to risk stocking your product without a track record of selling larger volumes, thus if you can prove your product on a smaller scale than national, but larger than current, it would be a good first step.
When introducing a new product to a national retail chain it is common for the retailer to take stock on consignment (ie not pay you unless the product actually sells), or even to charge for shelf space. The retailer will expect to generate a certain dollar return per area of shop, and will therefore seek some guarantee from you that this can be delivered, hence you have to pay for the space until sales are proven.
You also need to consider if making a product yourself you can achieve volume to sell to chains of 50-plus stores. If not you need first to develop a strategy to manufacture commercial volumes and be able to roll this out if you get supply contracts.
To achieve this larger scale rollout you will likely need substantial funds, so you need to consider financing as well.

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The 2006 Census Social Atlas Series is the ideal place to start your research, as it includes vast amounts of important information about Australia’s capital cities and selected region centres. The Atlases are cost-effective publications that allow you to visualise the demographic make-up of your city through the use of full colour, thematic maps.

The maps are accompanied by informative commentary which demonstrates trends, areas of growth and decline, and suburbs of interest in relation to each topic. Topics include population, cultural diversity, education, labour force, income, families and households, and dwellings.

“The Social Atlases provides some insight into the composition and structure of Australian society. The geographic distribution of the data highlights the diversity that exists within the nation’s cities and regional centres,” says Brian Pink, the Australian statistician.

The information contained in the Social Atlases has many different applications such as business planning, market research, and can even be used to determine potential business opportunities.
Social Atlases are available for all capital cities and include selected regional centres, for $29.00 each or $193.00 for the entire set.

To order your copy simply phone 1300 135 070, or visit www.abs.gov.au/census. So go on, explore your city today.

If you want to keep up to date with the latest Census news and information just email census.users@abs.gov and type ‘add to census email’ in the subject field.You can opt out at any time. Don’t miss out!

Following what is likely to be the worst return for 20 years, the Industry Super Network (ISN), the association for industry super fund, wants standardised returns reporting and a comparative table so investors can compare performances.
 
ISN executive director David Whitely says just as unit prices are published daily, superannuation returns should be published annually. “There is a need to improve transparency, and information about superannuation would serve to increase engagement in the general community,” he remarked. “Importantly, publication of five and 10 year numbers emphasises the long term nature of super and builds confidence in the system.”

Franchising is one of the fastest-growing sectors of the Australian economy, contributing 14 percent to GDP and employing more than 600,000 Australians, according to figures from the Franchise Council of Australia.

And now it’s those in the 20 to 30 age group who are looking to start a franchise, says James Nixon-Smith, Battery World general manager. “When you haven’t owned a business before, franchising is the perfect way to start out as often you are purchasing an established and reputable brand, require less start-up capital, and have access to established systems and procedures and have support from a head office and other franchisees.”

*Set clear policies at the outset of a credit agreement.

*Get a signed contract.

*Always conduct a credit check prior to the extension of credit.

*Issue invoices promptly.

*Monitor your accounts receivable on an ongoing basis.

*Gradually escalate pressure on your debtors.

*Be prepared to address individual circumstances.

*Start the collection process the day after the account becomes due.

*Cease the extension of credit on overdue accounts.

*Never be afraid to ask for help and don’t wait too long to call in the experts.

In a market saturated with options, your wine may find itself ageing a little too well. So how do you stand out from the pack? Andrew Peace, winemaker and exporter, believes the answer lies in innovation and environmental awareness. After all, green is in, so may be it’s time to turn to an old adage: “Once the last tree is cut and the last river poisoned, you will find you cannot eat your money.”

Yet Peace’s parents didn’t realise they were setting the foundations for a green business when they moved to a property in Piangil, Victoria in the early 80s—they just wanted to escape the rat race. But it was the motivation Peace, only a high school student at the time, needed to enrol in Roseworthy Agricultural College. 

Since then, with the passionate winemaker at the helm, the Peace family’s 100 acres of vines has increased to 750 acres, capable of crushing 25,000 tons of grapes. More than 90 percent of Andrew Peace Wines’ business is made up of exports and it's in the top 20 wine companies Australia-wide for both crushing grapes and export sales. “We’ve had a pretty good run,” says Peace of his family business, which employs the equivalent of about 65 full-time staff to keep up with the demands of exporting to 22 countries.   

The latest driving force behind their success is the ‘green factor’. “We’ve been leading the way with different packing techniques and I think that makes a big difference,” explains Peace, referring to the provision of wine in a Tetra Pak. Sounds simple, doesn’t it? But let’s face it; it’s an innovative approach to wine. The Tetra Pak is a glass alternative; almost as good as a screw cap and better than a conventional cork bottle, as far as oxygen ingress is concerned.

According to Peace, environmentally aware consumers love the concept. “It’s one hundred percent recyclable, and uses less energy than glass when being recycled,” he says. “Twenty-five truckloads of empty glass bottles are comparable to one truckload of empty Tetra Paks.”

The packs only weigh about 30g, while conventional bottles weigh between 700g and 1.2kg. So, with a transport saving of up to 40 percent, easing the environment’s burden comes with financial benefits. “It means that you’re a bit of a leader because everything is starting to go green,” he adds.

However an idea doesn’t mean much if you haven’t done the research to support it. Peace had the Tetra Paks road tested to see how they could be packed and transported and realised there was a downfall—they can’t be double-stacked and they need a pallet racking between layers.

Research has always been high on Peace’s list of priorities, long before the decision to use Tetra Paks. Andrew Peace Wines is now 13 years old, but Peace spent two years planning before launching, to ensure the business would get this far.

In fact, it was while reading up on business longevity and security that Peace realised export was a must. You see, security comes with multiple customers, he says, and initially Peace was only contracting to a couple of wineries. “So it all started for the security of the business,” he explains. “It’s really been the best move because we don’t do much contracting anymore. Most of the wine that we make gets crushed by us and we either sell it under a label that we control, or our own label. It’s all paramount to running a good business with long-term goals.”

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He recommends research to any business considering a new market. “You need to get in the market when it’s developing so people will take up your wine for distribution and then you’ve actually got the chance to manipulate your wine style to what people want,” he says. “In our main markets, which are the UK and USA, we actually got there early enough. And at the moment we’re doing very well in China as well.”

Always keep your consumers in mind, says Peace. “You need to make sure you do consumer research and let your consumer tell you what products work,” he explains.

“We try and open up in one or two markets a year, and we’ll go and get a feel for the product and label, maybe bringing back a couple of bottles of wine so we can taste them and do some analysis, try and target our style to their style and look for a distributor; that’s the way we’ve always done it.”

When deciding on label changes, Peace visits different label companies and graphic designers, gathering ideas to create a shortlist, and makes his final decision based on consumer research and focus groups. “I’m not saying that’s the be all and end all, but we try to take some advice before making a change,” he says. The Andrew Peace Wines label was recently changed in the UK, and sales jumped seven percent within the first few months.

Peace prefers a hands-on approach to business, and spends time in each marketplace talking to buyers and distributors. “If you went out there without talking to the market, it’s more of a risk.” He also takes part in larger events and fairs, where he can talk to hundreds of people each day.

Having taken the time and care to create a popular product, Peace spends about $20,000 each year on trademarking. “Trademarks are underestimated,” he says. “Especially in a business like ours; at the end of the day your brand is very important because it’s the future of your sales.”

Trading in foreign currency is also taken too lightly, says Peace. “The exchange rate is a big problem for exporters, if you get paid in Australian dollars, that’s a plus,” he says. “At the moment we’re doing business in the USA and Canada in American dollars and that’s an absolute nightmare; we’re making a conversion loss.”

With his sights firmly fixed on the business’ future, Peace explains that his five-year plan still includes increasing sales, despite worries about another drought. “Currently our packaged sales are about 750,000 cases; we’d like to get that to about a million cases. That’s a big ask, but that’s what we’re looking to do in the next five years.”    

The Face of Wine

What does the move to ratify the World Wine Trade Group Agreement on wine labelling requirements mean for exporters?

“If we could have a standard label for a group of countries, it would be much better,” says Andrew Peace, from Andrew Peace Wines. “Especially if you look at it from Australia’s point of view; 80 percent of Australia’s wine exports are to six or seven different countries. Now if you could have one standardised label for all of those markets, that’s a saving right there.”

Having to print multiple labels is also a strain on our already struggling environment, he says.

Peace’s advice when it comes to labels? “Make sure that before you print your label you get the Australian Wine and Brandy Corporation to approve it. A lot of people have a problem when they jump the gun.”

It sounds like a jetsetter's lifestyle. One morning you're enjoying an early paddle in the waters off the coast of sunny Queensland and before you know it, you're at your dinner date in Dubai. It's possible, of course, with an afternoon flight and time difference working in your favour, although most seafood cargo wouldn't necessarily look on the dinner date with any favour.

Seafood is just one Australian commodity that benefits from the rapidity of air transport. Others, such as flowers, meat, fruit and vegetables, are also frequent flyers. The trait that all these products have in common is their relatively short shelf life, which often means that the quicker they make it to market—wherever that is in the world—the higher the price they’ll fetch.

The distance between Australia and most of its fresh food markets makes airfreight doubly important. While cargo on a train from China to Germany will beat a cargo ship from Australia to the same destination, airfreighting is one leveller that helps Australian producers stay attractive for customers, even after sacrificing price competitiveness.

When time is money, the higher cost is worth it to retain quality, says Craig Templeman, executive officer of the Airfreight Council of Queensland (AFCQ). "Air is expensive, let's face it, but it's there for high value, time-sensitive products. With perishables, time is of the essence and shelf life is obviously better with airfreight. The extra hours—not even days—can give you added extra high yield revenue, for example, at restaurants.

"We actually enjoy relatively low airfreight rates out of Australia. From Europe inbound it's a different story. The strong Aussie dollar and drought tend to cloud things, but exporters don't know how lucky they are."

Industry associations like the AFCQ focus on all airfreight issues, from ensuring that growers, producers and exporters are catered for by the airfreight carriers, to working with the airlines to make certain they have the right infrastructure and conditions to operate at their optimum. Overall, these associations work to improve the airfreight environment for the industry as a whole.

Ready to launch

If you're an exporter (or potential exporter) thinking of sending your product by air, there are three main areas you'll need to examine before your product leaves the runway. The first is to understand your product and find suitable packaging for it, if only because you'll save some money on space when your product is efficiently packed.

Many fruits need to be packaged correctly to avoid bruising, which may involve special foam cladding or custom-sized boxes. And temperature is an important factor, with cool and dry storage conditions suiting most other perishable exports like flowers, vegetables, meat and seafood. If transporting livestock or live seafood, you may need to consider animal safety and the regulations that govern animals in transit.

"Australian exporters are very good at retaining product integrity, looking after the product," says Templeman. "We have some pretty sophisticated packaging companies. If you tell them what your product is, they can come up with something to put it in; we invented the thermal blanket. There are some wonderfully innovative things happening with packaging, product temperature-wise, and with data logging."

Quarantine is another issue agricultural and horticultural exporters will need to understand, both the quarantine laws of this country and those of the destination country. Some restrictions may apply to the type of product you're trying to export, for example some species of native plants, or the quantity of product you're trying to export. And of course it's wise to make sure your product is acceptable at the destination country as well, so the flight isn't in vain. Needless to say, there's a fair bit of paperwork involved at both ends, which is where a freight forwarder steps in.

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A freight forwarder is a company committed to looking after the safe passage of your product from its departure point at its country of origin, to its arrival point at the destination country. "Forwarders will look at: What sort of business is it? What's the commodity, what are they exporting? Where is it going? The weights and volumes. Once that's ascertained, your freight forwarder will do all the documentation for you. They'll look after your insurance, security, fuel charges, and make sure their agent at the other end looks after your business," explains Templeman.

"Along with the homework you do in sourcing a good freight forwarder, you should get quotes. Shop around. There's a heap to choose from; about 200. The bigger companies have international offices and a lot of them are IATA [International Air Transport Association] accredited. The airfreight industry is highly regulated and highly controlled."

Different freight forwarders have different strengths so the right freight forwarder will depend on your product. Templeman recommends asking advice of any of the airfreight councils (see box) or industry associations such as AFIF (Australian Federation of International Forwarders), CBFCA (Customs Brokers and Forwarders Council of Australia) or ICHCA (International Cargo Handling and Coordination Association).

On the perishable front, Templeman notes that the AFCQ has been trying to establish a 'fresh port' in Queensland for some years. Perth has one, and the council is eyeing off one of Queensland's three international airports—Cairns, the Gold Coast and Brisbane—as possible sites.

A fresh port is a facility dedicated to the transport of perishable products. The advantages of having a fresh port are the availability of purpose-built resources and use of specialised transport equipment, and the potential to reduce handling that might delay its journey from producer to plate. "Instead of going to a freight forwarder then to the cargo transport, it might go from the grower straight to the complex to make things seamless. That should keep the rates low; we don't want double handling or double costs," he says.

Time is money

Airfreight isn't restricted to perishables, however. Templeman lists other time sensitive items that travel by air, including commercial samples, componentry, scientific instruments and even mining equipment. "It might be a prototype that may be holding up production of something," he suggests. "Wine is very expensive to airfreight, but there might be a pallet going to an international wine show or a big ambassadorial function or an Aussie function where they can show off Aussie wines."

Pharmaceutical and biological products also regularly travel by air; Templeman mentions that inoculations for equine influenza flew in to alleviate the recent epidemic. He also notes that many biotechnology companies that import products for research and development may then export them at a later date. "Biotech is growing. Products might come in from the States and then something happens to it here and then it goes out elsewhere, even just to research complexes," he says. "When we get the fresh port, treatments, blood and body parts will have to be looked after."

The substantial increase in the volume of airfreight is testament to the importance of this mode of service, but airfreighting is not immune to obstacles that may prevent it from reaching its potential heights. Factors such as security, safety, infrastructure, the environment and the skills shortage have weighed heavily on the rise of airfreighting rise. >

Templeman nominates air traffic as a particular problem, considering that many of Australia’s main airports are expanding and the skies are becoming more congested. The good part is something’s being done: “The air industry as a whole will be affected by increased air traffic and parking problems, but the industry has noticed it and planned for it,” he says.

Exporters shouldn’t discount the possibility of air-sea freight as another option, if their load isn’t too time-sensitive. Air-sea combinations usually involve shipping commodities by air to a centralised location such as Singapore, then by ship to their final destination. This is handy for the budget conscious, considering that the frequency of container ships to Australia is not as high as some of the Asian ports.

Airfreight clearly has advantages for time-sensitive, high value items and may just be the right fit for your cargo. Was that chicken or fish?

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Into Thin Air

There are a number of different freight and logistics councils that operate in Australia that you can contact for help. While the branches are mostly state-run, they usually connect at a national level as a network. Councils and associations are non-partisan and should be able to supply you with information about freight forwarders suitable for your product, which service your area.

Australia Airfreight Council: www.australianairfreight.com

Australian Freight Councils Network: www.freightcouncils.com.au

Australian Logistics Council: www.austlogistics.com.au

Air Freight Council of NSW: www.airfreightnsw.com.au

NT Freight Working Group: www.nt.gov.au/dcm/freight

Airfreight Council of Queensland: www.australianairfreight.com/secondp.htm

South Australian Freight Council: www.safreightcouncil.com.au

Tasmanian Freight Logistics Council: www.freightlogistics.com.au

Victoria Airfreight Council: www.australianairfreight.com/vac

Par Avion

What doesn't fly is usually not what cannot be carried by air, but what will not be permitted in the air by law. Bet you never thought these things would fly:

V8 cars

Camels

Racehorses

Live goats

Mining equipment

The Flying Grocer

The Middle East is a hungry market with an appetite for our fresh produce, judging by their consumption of Australian fruit and vegetables. Chris Pardy, from Ernest Pardy & Sons in Sydney, estimates about 70 percent of their exports travel by air to their main markets in the Middle East and south east Asia. "We find that we’re getting orders which have to be acted on very quickly before the market changes, rather than taking three or four weeks to get there," he says. "We can react to the current market within 48 hours of placing the order and that’s mainly what we specialise in."

The tiny agriculture sector of the Middle East doesn't quite feed the region's population so as a result they import a lot of produce from Europe, Asia, the Americas and, of course, Australia. This works out well as it means that our seasons don't clash with their northern hemisphere imports. Ernest Pardy & Sons do well in their niche of specialising in stone fruit. "A lot of the tropical fruits come out of Thailand and other Asian countries, but we do the temperate fruits like peaches and nectarines that can't be provided by the tropical and subtropical countries," explains Pardy.

The business uses a freight forwarder for their air cargo "because they have better deals than we would have, dealing with an airline" but process all the sea shipments themselves through a shipping company—"I don't think a freight forwarder could get us better rates". Pardy says they looked for a forwarder who would be available at key times for providores, late at night and in the early morning, and someone "prepared to do a little bit more than the normal freight forwarder", a specialist for the perishables market.

Pardy is also a member of the Air Freight Export Council NSW, invited by the government to represent providores. Of the issues he discusses with the council, securing the cold chain and freight rates are two priorities. But, he says; "We’re very lucky to have a lot of airlines that fly here to offer a service to Australian perishables so freight rates are reasonable considering what they were 10-15 years ago."

The world of credit risk has many facets and events unfolding around the globe, with the US subprime market and fear of recession spreading, certainly have an impact on the Australian domestic market and the view of its exporters. Coupled with Australian interest rates being at a ten-year high, and recent executive surveys revealing growing negative sentiment on the back of statistical evidence of an increase in payment defaults, the credit and liquidity markets remain fragile. 

In this environment, management of a significant company asset like the accounts receivable is being addressed by a number of global credit insurance underwriters. They provide products that deal with the key issues of payment default, management, and financing of the accounts receivable. They offer insurance and finance-based solutions that effectively remove most of this risk from the balance sheet of the insured or their interested financial partners. This is achieved on the basis of well-managed and executed credit risk control, and offloading of non-payment risk to a well-rated risk carrier.

Bespoke solutions

Credit insurance in its most vanilla form covers the risk of non-payment—usually on insolvency but often with specified political risks cover for cross-border transactions—on payment terms up to 90 days, with 90 percent indemnity and usually a small non-qualifying level to eliminate subeconomic losses from the claims process.

However, over the last few years the market has evolved substantially, offering all companies the opportunity to work with the insurers to develop a bespoke solution often not only addressing the payment default risk but management of the entire accounts receivable flow from ‘birth to grave’. The most advanced insurers can offer:

* Company information;

* Support the ‘birth’ of a new credit account with background information and a credit rating incorporating a recommended limit amount on debtor;

* Commercial credit reports on offshore companies;

* Company, sector, and country ratings;

* Receivables management;

* A seamless integrated approach to receivables management;

* Global collection coverage: in the event of adverse information, notified default or insolvency (‘the grave’), mobilise recovery and collection teams to minimise the potential loss and maximise the salvage/dividend and do this anywhere on the planet at nominal cost to the insured client;

* Regular updates on account progress;

* Performance-related fee structures;

* Online/web based services and electronic communications;

* Receivables protection using insurance solutions;

* Trade credit insurance;

* Political risk insurance;

* Single counterparty risk insurance; and

* Self-underwriting.

Receivables Financing

The latest enhancement, and possibly the most significant, is the ability to offer funding through invoice discounting or factoring, integrated with the credit insurance cover of all or part of the account receivable. This offers limited recourse funding against these secured debts and the underwritten buyers on such a portfolio attract 100 percent indemnity for all qualifying claims amounts.

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Leveraging the sales ledger is increasingly seen as an easy and convenient way to raise additional finance, offering an unencumbered and alternative form of security to borrow against. It also represents a self-funding mechanism to achieve management buy-outs and fund acquisitions and capitalise on large opportunities. Plus it’s a solution for managing liquidity and cash flow and improving financial ratios, including the debt to equity ratio, return on export, return on assets and so on, and an optimal cost-to-income ratio, replacing fixed cost overheads with variable outsourcing costs while retaining core competencies and outsourcing generic functionality.

Globalisation has created a complex web of domestic and cross-border trading and investment, often supported by similarly complex corporate structures. Identification of one’s real contracted counter-party is not always as straightforward as expected and may involve an intensive period of contact and investigation before any financial commitment to supply goods or services is contracted.

The sophisticated trade credit insurance market arguably represents one of the largest aggregate and contemporary company databases in the world. The significant difference between information and credit risk opinions from the insurance underwriters and a pure mercantile agency is that, more often than not, the insurer providing the analytical and investigative report on a target company will also be carrying that company as an insured risk. Therefore, in the event of default or insolvency, the insurer may well pay one or multiple claims to insured clients on defaulting or insolvent debtors. With a vested interest in accurate, timely, up-to-date credit risk analysis and management, an underwriter is an essential partner in effective risk management, especially in a deteriorating market cycle.

Larger buyer defaults have an unacceptable impact on the balance sheet for most companies, and profit and loss has become the focus of another of the credit insurer’s product suites, the so-called ‘catastrophe’ cover contract. This specifically targets those accounts receivable deemed to have a critical impact on the wellbeing of the business. These contracts don’t require the full portfolio of accounts receivable to be underwritten, focusing more on the major accounts. Premium spend is often kept in check with a larger loss retention by the insured, creating a mezzanine layer of insured risk above the ground level of loss, often described as the aggregate first loss. These types of insurance contract are for the company with a larger, stronger balance sheet that is able to sustain some losses but unwilling to accept any large ones.

Longer tenor transaction, such as equipment leases up to five years, can also be underwritten with a number of financial institutions offering facilities underwritten by one of the global credit insurers. These same risks can also be underwritten as single counter-party risks for domestic and offshore debtors.

For the exporter, the ultimate component to conclude the comprehensive management of credit risk along the supply chain is the global collection service. When a buyer defaults, even a well-known debtor, the exporter may now be dealing with an unfamiliar jurisdiction. Some suppliers’ collection services, for example, offer insured clients the ability to hand this process over to the underwriter for a nominal administration fee, for qualified claims. They will then pursue the debt in cooperation with the company and cover all costs, including legal, to minimise the loss and maximise recoveries.

The age of mass customisation, intense competition, and globalisation has accelerated the evolution of the once simple trade credit insurance to become a component of the overall management, underwriting, and financing of the trade receivable.

—Hamish Osborn is the national commercial manager for Coface Services, Australia. For more information, go to www.coface.com.au

Protecting intellectual property (IP) is hard to get right. In a lot of cases there are businesses that never register trademarks or patent their great invention, only to find themselves without a leg to stand on when someone else comes along and steals their design.

Even worse, there are cases where businesses have failed to check the register for existing businesses that may be too similar. This leads to the business investing time and money establishing a brand, only to find that they are infringing on another business' IP. Former fashion label Tsubi famously had to change their brand to Ksubi when they went global. The high profile case involved a Californian shoe brand called Tsubo, established years before Tsubi. Tsubo successfully challenged Tsubi on the grounds that the two names were too similar and that they were both trading in fashionable street wear.

On the other end of the scale there are businesses that protect their IP in plenty of countries but spend too much time and capital doing so and don't have enough left over to move the business forward. Overcommitting to IP can sap as much from a business as underdoing it. Of course it all comes down to balance, but what can a business do to protect their IP adequately without being excessive?

Tal Williams, partner at Australian Business Lawyers, says businesses first need to define their IP and identify which parts are assets they should value and protect. He cites a case where an online business went to sell their website and saw a good offer significantly decline in value when it was discovered that the website designer had retained most of the worthwhile IP. "The business actually had nothing to sell because the real asset was the IP, the design and the coding that the web person had done," explains Williams. "You'll get into trouble if you don't identify the IP early on."

Williams lists trade secrets, copyright, trademarks, designs, circuit layouts, and patents as IP that can be protected. If you're in the agriculture or horticulture sector, plant breeder's rights will probably also apply to you. Once you have defined your business' IP, you can start to employ various strategies, and not all of them involve registration fees and bureaucracy.

Copyright is automatic, for example, and trade secrets are best kept, well, secret. Williams says this means businesses can avoid revealing key parts of their products or processes that would otherwise be available for anyone to see, had they filed a patent. He recommends dealing with people that you trust and using legal confidentiality, such as non-disclosure agreements with the consequences of disclosure spelt out. "If you have people that you can trust and you haven't got a product that's easily reverse engineered, that's a pretty good way of protecting IP because no one knows," notes Williams. "Sometimes in that scenario there are 'poison chalices' put in place where if even if you get three [necessary components] together you still can't get it working because there's a fourth party that knows what you have to tweak in each of them to make it work."

Companies with short-term innovations may find that adding restraint clauses in employment contracts is the best and most cost-effective way to keep ahead of the competition. Restraint clauses prevent former employees from passing on your IP to competitors for a specified period after ceasing employment at your business. Some restraint clauses may also state that former employees cannot work for competitors for that specified period.

Keeping IP secret becomes especially important if you decide to take the next step and apply for a patent. "If you do make it public and it does get out before you apply for your patent, you lose your ability to apply for one," warns Williams. "So the first step is to keep it secret. There are many, many business that operate on that basis, particularly ones that are difficult to reverse engineer or ones that require various expertise in order to provide the service."

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Taking on the world

If you choose to register your IP, you must start in your home country, which means going through IP Australia (www.ipaustralia.gov.au). Registration also ensures that you are not infringing on existing IP as the prerequisites for filing a patent include that the product or process must be novel. If you are unsure of the value of patenting your IP, you may apply for a less costly provisional patent, which lasts for 12 months, while you assess the commercial worth of protecting your IP.

From registration with IP Australia, Williams asserts that going international is just a few steps away. "You register your trademark here, then afterwards you have an option to file an international application. IP Australia, through various treaties, has an administrative mechanism that enables relatively easy registration in the countries that you choose. They then review your patenting and make sure it's novel and it's going to be okay overseas," he explains. "The good thing about IP Australia is that they have experts in each area so if you have a medical device, they have experts who only look at medical device patents; they know what's going on and they know what's out there.

"At the end of that examination process you select which country or countries you want to register in. You can go directly to those countries but it's easier going through IP Australia. Then there's a further review process that those countries will do. Going through IP Australia is the simplest and the most cost-effective way, but it still can cost a lot of money," says Williams.

And that's only the upfront costs. "There's another lot that comes six months later in some countries and there's requisitions to attend to—some countries may or may not be happy with you and you have to deal with that."

IP Australia has a fee schedule set out for trademarks on its website, as does the World Intellectual Property Organization (WIPO; www.wipo.int), but it's hard to put a figure on the amount it will cost for patents because it differs with the complexity of your product, process or design and in which countries you intend to register as they all charge differently. Estimates put the process at several thousand dollars to move your IP up until the point of choosing countries, but Williams can't quote a figure because "it depends on how complex [your case] is".

Ability to enforce the law is also an important consideration. WIPO is the governing body that oversees IP protection internationally. It has an arbitration and mediation system that parties may choose to use should a dispute arise, which generally costs less than litigation. However, if the dispute enters litigation territory, Williams says businesses need to consider what they'll gain from legal action.

"The first part is 'can I afford to go through the legal process?' Most countries are up on their IP but you're then left with the legal system of the country when it comes to enforcement," he explains. "Enforceability means you have to have someone who has money on the other end, you need to be able to find the person who has actually infringed and if you can't find them or you can't find their assets—or they have no assets—then there's no point. Although, some companies want to make a point, they want to let the industry know that they'll attack for the principle of it, even if it costs them."

Two issues currently doing the rounds in the IP sector are piracy and ‘cybersquatting’. Piracy, says
Williams, has almost single-handedly put IP in the international spotlight. "The burgeoning market in fake goods is of very significant concern and free trade agreements invariably have IP requirements." While there’s still a way to go to eradicate piracy, at least the issue has traction.

As for cybersquatting, WIPO seems to have taken care of that. Cybersquatting is when a company registers a variation of your trading name, or even a close misspelling, as a domain name. Says Williams, if the squatter is not trading under the domain, there is an argument that they don't actually own it. "You can go to WIPO and WIPO can say 'we force you to transfer the ownership of the IP to the people who actually own it'. Eighty percent of claims to WIPO result in the transfer of the name back to the right person."

It's a relief to know that IP laws are becoming more sophisticated all the time. The most important thing is to realise IP is an asset and to value that accordingly, even when selling your business. "They are a commodity, they do show a seriousness that increases the value of your business. If you're selling your company and you have three registered patents, that can be an asset and increase the amount of money someone would pay for your business. It's better than a business who says 'we're doing really well and we have three secrets'," explains Williams.

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"The overriding thing for all of this is your IP strategy. The mere fact that it is new and exciting and can be registered doesn't mean that it should be. I had a client who'd spent well into six figures on registering a worldwide patent but had no money to spend on his business."

Which brings us back to the question: ‘To protect or not to protect?’ It’s all about finding out which IP assets you can’t afford to lose and striking a balance.

Strategy First

* At a recent World IP Day event Dr Harvey Dillon, director of the National Acoustics Laboratory (NAL), mentioned that his organisation held patents but that the patents only covered a tenth of their overall IP. This meant that the NAL could show they possessed valuable IP assets without revealing all the secrets that would allow others to copy their methods.

* Be aware of your prototypes, especially if your product can be easily reverse engineered. If your prototypes are too close to the eventual product, you could be giving away all your secrets. "Put out a prototype that's not quite right so what people see, and therefore try to copy, is not the actual thing," suggests Tal Williams, partner at Australian Business Lawyers. "Counterfeiters are out for quick money so they're not going to do a whole new factory design if they find out they got it wrong, they'll dump you and go somewhere else. The more you can frustrate easy cash going to them, the better.”

* Trade shows can be a tricky area because you want to show off your products as much as possible but you don't want competitors picking up your ideas. Identify how much you will disclose to interested parties and keep an eye on what your competitors might be gaining.

CASE STUDY: Smoothly does it

Now with over 200 stores in 11 countries, the Boost Juice franchise is fulfilling their ambition to be one of the world’s most loved brands.

As you would expect from a franchise, protecting the Boost trademark is their top priority. “Global trademark strategy is at the heart of our global expansion and is the core intellectual property for a franchisee licence,” says Amy Roy, legal counsel for Boost Juice. “A registered trademark gives you the right to own your brand in a new territory and to market for prospective business partners. Most importantly, a registered trademark reserves our rights to our name and protects our brand by preventing infringers. Without taking this step, our rights to brand protection would be limited to common law rights, a less commercial protection measure in our competitive corporate world.”

In addition to the brand, there is plenty of IP that Boost has recognised as valuable to their success. Roy says their IP covers everything from copyright material to trade secrets as well as their systems and procedures for the preparation and sale of their products.

Another aspect to their strategy is thinking of the future. Although the brand has only entered a handful of countries so far, they’ve registered the trademarks in more than 50 in anticipation of further expansion. Roy explains that they incorporate an individual IP plan in the early stages of every commercial deal. “Boost Juice has established strong relationships with trademark attorneys worldwide who know our brand and vision and are always a step ahead of the game to ensure we identify our intellectual property rights and capture their protection. Every jurisdiction is different and requires a different strategic approach.”

As for defending the brand, she sounds a warning note. “We are a very friendly and innovative brand, but any threat of dilution will see us show our strength. The process of initiating infringement actions in many jurisdictions is a slow and tedious one, however Boost is generally victorious in the end.”

It’s hard to avoid the impression that Indonesia and Australia are just like a couple of bad-tempered neighbours, yelling at each other over the back fence while ‘family’ members, such as media commentators, urge them on to ever greater expressions of mutual distrust. 

But speak to a bunch of exporters—especially SMEs, who make up the majority of people engaged in our bilateral trade—and you’ll discover that this is largely what it is: an impression.

No one denies that critical events have impacted on the Australia–Indonesia relationship: the Bali bombings, attacks on Australia’s Jakarta embassy, the tragic fates of young Australian drug smugglers and worrying incidents like outbreaks of avian flu. Business people are also aware that Indonesia was hammered during the Asian financial crisis, necessitating a major financial rescue operation from the International Monetary Fund. Indeed, the last 10 years have seen enough negative reports emerging from Indonesia to keep even the most demanding pessimist happy.

So, yes, Indonesia is a difficult market. But it’s also important to understand that things have been changing quickly—and sometimes radically—around that great archipelago to Australia’s north.

Towards democracy

Indonesia’s Minister of Finance, Dr Sri Mulyani Indrawati, has exemplified this break with the past by receiving Euromoney magazine’s World Finance Minister of the Year award. His country’s economic performance has improved universally and Indonesia’s investment climate is now regarded as being quite good.

The changes go far beyond money management. The recent death of President Suharto, the military strongman who dominated Indonesia for 32 years, has highlighted the achievements of his current successor, President Dr Susilo Bambang Yudhoyono, who is credited with having turned his nation into a fully-fledged democracy.

Late last year, President Yudhoyono made an extraordinary appeal for both Indonesians and Australians to look beyond the ‘tyranny of stereotypes’ and make full use of opportunities in each other’s countries.

Australia’s Senior Trade Commissioner in Indonesia, Rod Morehouse, couldn’t agree more. He believes we all need to put a bit more effort into loving our neighbours, especially a neighbour that’s almost within swimming distance of our northern shoreline and which is home to more than 222 million people.

Distinct sounds of harmony emerged from Canberra in March when Indonesia’s Defence Minister, Dr Juwono Sudarsono, flew south for talks with his Australian counterpart, Joel Fitzgibbon, who described our mutual defence relationship as “approaching the same warmth it experienced before East Timor in 1999”. Fitzgibbon’s chat with Dr Sudarsono went beyond the niceties, exploring opportunities in building, management, science, technology and other support projects. Trade Minister Simon Crean had already chosen to make his first overseas visit to Indonesia.

And consider this: there are nearly 3,000 Australian companies currently doing business with Indonesia, 400 of them with offices inside the market, and Australia’s merchandise exports to the market in 2006-07 were worth $4.24 billion while services exports totalled $858 million. All up, our two-way trade in goods and services is worth $10.4 billion.

“It’s the fourth-fastest growing economy in Asia after China, India and Vietnam, and the biggest market on our doorstep,” says Morehouse. “Australia is already Indonesia’s seventh-largest source of imports and rising consumer demand is creating brand new markets for life-style products and services.

 “Indonesia has a burgeoning middle class with approximately 22 million consumers capable of spending $1,900 a month. More than half the population is under 25.”

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Even current global economic anxiety hasn’t stopped the World Bank forecasting that Indonesia is well-placed to navigate the slowdown, even if its present growth rate will ease, and then only by a modest five-to-six percent. The Bank credits this strength on Indonesia’s investments in structural reform and sound macroeconomic policies over the last 10 years.

Indonesia has long been an important market for major Australian mining companies and, in recent weeks, BHP Billiton revealed plans for a $2.2 billion-plus nickel laterite project there within three years. But it isn’t all about giant corporations. Australian SMEs are supplying products, technologies and services to major Indonesian infrastructure and mining projects while others are pursuing a broad range of other opportunities.

They include companies like Perth-based legal, commercial and training specialists Hugh Fraser International; Global Track crane components from Geelong, Victoria; video hire service Video Ezy; Ray White Real Estate and Gloria Jean’s Coffee. All have established strong footholds in the market.

And that’s far from the end of it; Australia is Indonesia’s largest supplier of live cattle, dairy products and sugar with growing opportunities in building and construction, agribusiness, food and beverage, ICT, education, and industrial machinery, processes and technologies.

Australia’s ‘top end’ has evolved its own special relationship with Indonesia through the establishment of the Australia-Indonesia Development Area (AIDA), which seeks to involve the private sector as a key player in developing relations with the eastern provinces of Indonesia.

So why does Indonesia’s image in many quarters in Australia remain so depressingly negative?

Austrade’s chief economist Tim Harcourt is perplexed about how a rumour—claiming that trade missions from Australia had been banned—ever gained any currency. “Austrade’s Jakarta office regularly organises trade missions to Indonesia,” he says.

The Department of Foreign Affairs and Trade (DFAT) says current travel warnings do warn against travel to the Indonesian archipelago, but in Canberra the attitude is that DFAT has an obligation to all Australians to warn them when problems exist and are not expressly to preclude business travel. There’s an expectation that business travellers will use common sense when dealing with the subject.

Significantly, Australia and Indonesia are now in the final stages of a feasibility study into a possible bilateral Free Trade Agreement (FTA) with a report expected in mid-2008. “One third of all Australian exporters send at least some of their products to the ASEAN (Association of Southeast Asian Nations) region,” says Harcourt. “Clearly, an FTA with Indonesia, and the possibility of a broader agreement on trade between ASEAN, Australia and New Zealand, would be tremendously important for us in terms of market access.

“We’re hoping an FTA might deliver to us three vital things: good market access with no tariffs or other barriers; good trade facilitation, taking care of issues like visas and border access; and a good investment climate and superior security. If we can get those three things sorted out we will be in a very good position.”

There’s no doubt problems exist in other areas of Indonesia’s establishment, like infrastructure and law reform in forestry and mining, while easier access for Australians is needed in the key economic growth areas of telecommunications, financial services and mining.

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Our trade future

From Indonesia’s perspective, there’s hope that an FTA could deliver other benefits. Indonesia’s Trade Minister Marie Pangestu says she’d like nurses, construction workers and hospitality industry professionals to join the Australian labour market under the proposed free trade agreement. An FTA could deliver benefits in two-way commercial linkages, market competitiveness, improved business transparency, secure intellectual property rights, ease of establishment for Australian businesses in Indonesia, and the recognition of overseas professional qualifications.

“Indonesia will always be a different sort of country,” Harcourt adds. “But there are many things the Indonesians are keen to achieve that would make things easier for our exporters and investors. So, the more support their efforts attract from the Australian business sector, the better.”

A key level of support all Australian exporters can provide is in approaching the market with respect and adhering to important cultural principles, such as maintaining a commitment to the market through thick and thin.

“Australian businesses have to work hard on the quality of their business relationships in Asia,” says Harcourt. “If you are a carpetbagger who pulls out of the Indonesian market the moment that business gets a bit slack, or the going gets tough, you’re going to find there’ll be no business for you when you decide to go back in.”

What of the future? Is Indonesia’s modernisation program destined to continue uninterrupted?

Presidential elections are to be held in Indonesia in 2009 and there are expectations that Vice President Jusuf Kalla will challenge President Yudhoyono. What is likely to happen if Dr Yudhoyono loses office? The view from Canberra is that, despite all the upheavals that have affected Indonesian in the past decade, none have significantly eroded the push for modernisation and reform.

Whatever happens, goes the thinking, things are bound to keep on improving.

CASE STUDY: Reaching Export Heights

When you’re talking about small businesses, they don’t come much smaller than the Victorian lifting equipment specialists, Global Track (globaltrack.com.au). But when you get down to looking at achievements, they hardly come any bigger.

Greg McKay and his son Bruce are the sum total of Global Track’s staff at its Geelong headquarters, but this two-man operation has achieved success in Indonesia that has outclassed some of the world’s biggest operators.

With Greg doing the designing and negotiating and Bruce in charge of the company operations in Australia, the McKays subcontract much of their manufacturing to local firms. The result is a firm that currently exports some 30 percent of its production with expectations for this to grow significantly as more international crane companies pursue their expertise.

Global Track’s global push began last year when they took part in the Australian Technology Showcase expo in Melbourne. “An Indonesian guy asked us to quote on 16 two-tonne by 15-metre manual crane bridges,” Greg explains. “The biggest manual crane bridge built in the world previously was just 10 metres but, because of our design, we were able to build up to 15 metres. I won the deal, despite his chief engineer claiming the crane bridges wouldn’t work.”

The Indonesians flew their engineer to Geelong where his face fell when he saw how big the crane bridge was, but lit up when he activated it. They ordered another three cranes before he returned to Indonesia. The company has now placed a further provisional order for 38 more.

“The Indonesian factory covers 10 hectares and processes 15,000 tonnes of steel a month,” says Greg. “It employs 800 people round the clock and our cranes are being operated by women who have no trouble loading trucks with them. There’s nothing like it anywhere else.”

Greg is designing a 21-metre power driven crane for them using Global Track’s unique pivotal technology.

The biggest problem he had doing business in Indonesia related to language. Now the company has a teacher there coaching staff how to speak English. As for the nuts and bolts of business, he found Indonesians to be hard negotiators but prompt payers.

He counsels other SME exporters to do their homework to make sure they are dealing with a reputable company. “It can be hard breaking into a market dominated by strong multinationals and it takes time to establish your reputation. And there’s no magic formula for success, it’s just a matter of getting off your butt and working at it.”

Global Track says the biggest crane company in the world, Germany’s Demag, is now assessing its products with interest in the United States and Indian markets.

Greg’s enthusiasm for design is undimmed. He is currently “increasing the size of our back paddock” by building a new design curved track bridge crane at Corowa in NSW. “But you can be certain I’ll continue dealing with Indonesia,” he adds.