“It’s one thing to say, yes, you’re getting involved with exporting. The next question is, how much are you prepared to invest within a market to actually try and develop that market to work for you?,” says Anton.
In this episode of My Business Podcast, Anton explains how he took his Canberra-based business global by investing in and building partnerships with worldwide vendors, as well as how utilising the services of credit agency Efic enabled the business to identify opportunities in the export space.
- The difficulties he faces in exporting products and services worldwide
- How cultural differences can make or break your exporting efforts
- That exporting is on track to grow from less than 1 per cent to 15 per cent of his total sales
- How Efic works with businesses to identify and facilitate opportunities
And plenty more!
Adam Zuchetti: Welcome to the My Business Podcast everyone. Thanks so much for tuning in. Adam Zuchetti, the editor of My Business here. I'm flying solo today. My co-host Andy Scott has a serious dose of the man flu, so we told him to stay at home and not spread the germs. We want to focus today on an issue that is really important to a lot of businesses. A lot of firms are doing it, and a lot of other firms want to do it and aren't sure how to go about it, and the issue in question is exporting.
Now, exporting is something that Efic as an agency does a lot of work with particularly SMEs, to help facilitate that growth for them. So, today we've asked a business that uses Efic regularly, and has been exporting for quite a number of years to share some thoughts. So we've got Anton Pemmer from Bottles of Australia. He's on the phone from Canberra. Anton, thanks for joining us.
Anton Pemmer: My pleasure.
Adam Zuchetti: So give us a bit of background into the business and how it started.
Anton Pemmer: Oh, well Bottles of Australia started back in 1989 importing stickers from Hawaii for the BMX and bicycle industry, and then stepped into printing in 1991 and then manufacturing in Australia from 1992.
Adam Zuchetti: So Bottles of Australia started out doing stickers for bicycles?
Anton Pemmer: Correct.
Adam Zuchetti: How on earth does the transition come about like that?
Anton Pemmer: Well, I've been in bicycle retail in my own stores for 13 years, and I wanted to have a point of difference, so I started to look around for something different, and I was very much tied up with the BMX industry, and kids were after Oakley rub-ons, and Vans stickers, which you just couldn't get. I got onto a supplier in Hawaii and started bringing stickers in, and then that led to importing a BMX range of frames and handlebars, and that led to referrals to other companies, and we ended up representing like 20 companies of mainly US made BMX and bicycle product.
Initially, it grew from one referral to another, and all of a sudden, we were wholesaling, so we started bringing in stuff for our own store, and then we were supplying 20 stores and 30 stores, and then up to 450 stores.
Adam Zuchetti: Okay, so you started back in 1989 I think I read somewhere?
Anton Pemmer: Correct.
Adam Zuchetti: How long was it before you actually made the transition to Bottles of Australia? You would have had to rebrand and things like that.
Anton Pemmer: Absolutely. Well, the company started as Boss Racing Australia, which was the brand of BMX frames that we started with, and the company was called Boss Racing Australia. Then, in the mid '90s we went through a name change to Bottles of Australia, and also a consolidation of our range. We were representing these other 20 companies, as well as our own brand. We then found new distributors for those 20 brands, and then we just focused on the bottles 100 per cent.
Adam Zuchetti: At what stage did you get involved in exporting? Have you been exporting right from day dot?
Anton Pemmer: No. We've been exporting, I suppose probably since about '93-'94. But I would call it more accidental exports. It wasn't probably 'til the later '90s that we sort of joined the Australia Fiji Business Council and we did a couple of trips to Fiji, and were involved in developing contacts there and exporting into that market. But a lot of our early exports, when I say accidental, I mean someone's come across this somehow over the internet or some sort of search, and they've wanted to place an order for some product and we sent it to them. As opposed to us developing it and chasing a particular market.
Adam Zuchetti: Once you got to the stage that exporting became quite a targeted strategy for you, more than the accidental side, were you realising that there were problems that you were facing, and potentially costs involved that you weren't even really aware of, because you were just doing it accidentally? You weren't targeting it initially.
Anton Pemmer: Oh, look absolutely. One thing's to say, "Yes, you're getting involved with exporting." The next question is, how much are you prepared to invest within a market to actually try and develop that market to work for you? One of the things, areas that we made in the early days was doing one trip to one country and hoping to sell into that market, but never going back. Or, if we did go back, it was only over the phone or via email. I think if you decide that you're going to get involved with exporting, no matter how you're going to do it, to what market, whether it's a large market or a small market, you need to be able to say, "I'm committed to this market for two years. I'm committed for at least full market visits in person, to press a palm."
I think if you're not prepared to do that, and let's face it, every trip is going to cost you between 5 and 10,000 to do that. If you're not prepared to do that, then it's probably better for you to save your money, because you won't get anywhere with us otherwise.
Adam Zuchetti: What were some of those really prominent initial challenges that you faced with exporting?
Anton Pemmer: Being totally naive I guess, as far as potential goes. One of the most recent things I found, like I've been in business since I was 19, so I've been around a little while, and I'm still learning. I think one of the latest things that I heard recently was that there was no such thing as an export market, and that there's really only somebody else's domestic market. You have to think domestically if you want to step into that market, and not domestic Australian. If you're going into the Indonesian market, you really need to understand the culture, you need to understand how does that country do business on a day-to-day basis.
Because what we would see as being a straightforward transaction maybe in Australia, there could be a lot of other things that are involved within doing business just in that domestic market. Like in Australia, when we start, we start with a full glass of trust, and we do business in a way. If a supplier or a customer does the wrong thing, then that glass of trust empties, but a lot of Asian markets actually start with an empty glass and you have to fill it full of trust. It's a very different mindset when you have to build the trust with the customer before you've even done an ounce of business.
When that trust comes, then so too will the orders. You have to be prepared to be a bit nimble, very flexible. It's not necessarily all about being the cheapest, but you have to really be focused on what's going to help that customer in that market, to do business with you, in the easiest possible way. Sometimes as a business on the other side of the world, we put barriers up that we don't even know are barriers, because we're not really familiar with what that culture is. For example, when we look at the South Korean market, one of the things I organised with our freight forwarder in Australia was who was their freight forwarder in Seoul?
Then, I went and met with them, as well as meeting with potential clients. So straight away, I could give that client a freight forwarding contact that is linked to Australia, that would make the shipments for that customer the easiest possible way. Because when we're exporting to a lot of markets, sometimes it's hard for them to even get their head around buying a product from Australia. Especially say with our product, which is a plastic sports bottle. Getting their head around that it's even possible to buy it out of Australia at a competitive rate, compared to China for example, the simpler that you can make it and the more flexible that you can be, that's a huge point of difference compared to dealing from other countries.
Adam Zuchetti: You've covered all the cultural aspects and the people aspects of exporting, but finance is obviously another really big issue for anyone looking to export. Efic obviously does quite a lot of work to try and help finance businesses to fund their export ventures. You use Efic, don't you, Anton?
Anton Pemmer: Yeah, absolutely. What's interesting was we didn't start using Efic 'til later on. It's only been basically the last couple of years that we've actually picked up on the use of Efic. One of the reasons we did was we had the opportunity to supply Puma as a global brand, and not knowing what the order size capacity would be, as far as how high the orders were, and then having to fund that, and then having to fund it for 60-90 days, as well as trying to keep your suppliers happy for the product, Efic made it simple for us. Because it's financed against orders have come through ... So I suppose if I go back to the beginning.
First, they want to know who you are, as the supplier, then they want to know who the customer is. If you're in the electronics business and you're supplying Sony, obviously they understand who Sony is and it comes with its own credentials. But if you're supplying an unknown business that has been existing for five minutes, it may be a bit harder. But when you're supplying major brands, and most Australian exporters are going to be targeting major brands or major corporations, then it enables you to scale very quickly.
Because it's financed against the orders, first the order came through for 10,000 or a million dollars, you would actually be able to finance that part of the operation. You can actually scale your exporting sales directly against the orders that come in. That just makes it so much easier. It sits outside of your normal business finance, because it's actually financed against the orders. You can pick whether you want that finance for 30 days, 60 days, 120 days, whatever works for you, and whatever's based against the terms that you're dealing with that corporation.
Again, if you're the electronics guy and you're selling to Sony, and they're going to pay you in 60 days, and you'll get 80 per cent of the value, depending on how much it is, let's say 80 per cent of the value financed upfront so then you can make sure you have all your wages covered, make sure you have all your suppliers covered, all that sort of side, and be able to scale very quickly, without it impacting on the rest of your normal business, and the rest of your normal finance facility.
For us, we found it very accessible. It's very straightforward. Obviously you pay an interest rate to do it, but for us, when we don't know what's coming, it actually gave us the chance to then predict if sales went to a certain level, we would have no problem to be able to finance it. That's what the beauty of dealing with Efic was. Quite frankly, they're so easy to deal with. They just don't want to put you in a position where you can't do business. They want you to do business. It's in their own interest, and also in yours, so why not?
Adam Zuchetti: I'm curious to ask, Anton, because you've gone into the benefits of using a credit agency to help you export, but why specifically Efic over the myriad of private agencies out there?
Anton Pemmer: I came across Efic through the Canberra Business Chamber, was how I came across them. It just seemed straightforward. For me, it just seemed like there was no hidden agendas on it. It was about purely developing the business and making it happen. Every dealing that we had along the way prior to doing it was really straightforward and very transparent, and for me, that's what I wanted.
Adam Zuchetti: That sounds at odds with what you'd expect from a government agency. Everyone thinks big government, big red tape, lots of bureaucracy, going to take lots of time, and you're saying that's not been your experience.
Anton Pemmer: No, not at all. Obviously you have to be transparent yourself, do you know what I mean? Like so if they're asking you for financials, and they're looking at cash flow projections and things like that, you have to obviously provide that sort of stuff, no different to what you would a normal bank. But it's certainly nothing out of the ordinary, and we certainly didn't feel that we had to jump through a million hoops for it to happen. It happened very quickly and it was really straightforward, but again, it comes back to are you prepared? Have you got the right financial model within itself? Are you dealing with a reputable company?
Because obviously when they do the finance, we don't just say to them, "Oh, we need X amount of dollars." We have to actually copy them in on the actual orders, so they know that everything is legit and above board. It's like dealing with Austrade. If you think of Austrade as being your assistance within the market, and you think of Efic as being your assistance from the finance development part of it, it's a pretty good combo that can help an exporter grow quite rapidly. The challenge is getting that order up originally. From a business who's considering exporting, what homework have you done even to get that order in the first place?
What have you been prepared to invest in that market to get those sales? Because obviously Efic don't come onboard unless you have the sales. You've already invested in the market, you've already invested your time and commitment, and now they're just giving you the ability to make it happen in a pretty seamless way.
Adam Zuchetti: But I understand that Efic's also helped you secure a really big new opportunity. Can you talk us through that and how that came about?
Anton Pemmer: In itself, they didn't secure the opportunity for us, but they enabled us to be able to plan ahead to continue to secure that opportunity. Yeah, when you're going from say exporting to one or two countries, and then you're exporting to 20 to 22 countries in one hit, all the sales part of it and the working with the customer, Efic haven't had any involvement in that side of it. Us as a company has done that, but it gave us the confidence to be able to go out to that sort of client and know that you could deliver. That's the main thing.
Adam Zuchetti: Can you just give us a bit of an overview of the export volumes that you're dealing with? You mentioned I think it was 22 countries just then that you export to. Give us a run through of where your products are actually going.
Anton Pemmer: Yeah. Here we are, a Canberra based company, and we're exporting to countries like India, Russia, Germany, France, Panama, Canada, the US, Indonesia, Singapore, and they're just a few. You would never think of a Canberra based firm having that sort of export spread, and part of that is also because of a change of strategy where we've in the past targeted one particular market or country, as opposed to targeting one particular customer who already has distributions in a series of countries. For us, it was quite a big mindset change, where traditionally we would then go, "Okay, we want to export say to Japan," so we would then target Japan, looking for customers in Japan and so on.
Where now, we tend to work with global brands and global companies that require us to have a certain level of service delivery, to be able to supply into that market. Because those global brands hold you very accountable, and I've got to tell you, the learning curve is extremely steep. You get scored on your performance and from season to season, or order to order. If you don't reach a certain standard consistently, then you're probably off the opportunity, but at the moment, it's given us the ability to take exports which were say less than 1 per cent of our business, going to more like 5 per cent of our business.
At this stage, and what our strategy is going further forward, we would expect that to go from 5 to 10 to 15 per cent over the next couple of years.
Adam Zuchetti: Okay. How many units are you typically shipping in a given month?
Anton Pemmer: In a given month, from an export perspective, it tends to vary because of seasons. If we're working on a particular season, or what they call an "order window," there might be anything from 30 to 60,000 units being exported. Just depends on the time of the year.
Adam Zuchetti: Coming back to what you were saying about being Canberra based, that must present some particular logistical challenges as an exporter. What are those particular challenges and how have you really faced them head on?
Anton Pemmer: Well, it's really funny. People think, "Oh, look, if you're in Canberra, you're so far away from the ports and so on." There's certainly advantages of being here as well. If we were in Sydney and we had to ship a pallet to Port Botany for example, or a container or whatever, we would still have domestic freight involved. When we're shipping from Canberra to Sydney, it's actually not a great deal difference in cost between moving something from one side of Sydney to the other, to moving it from Canberra to Sydney. Then, if you offset that against the cost of rent, the flexibility and access to international contacts through the embassies, for us from a product development perspective, working with University of Canberra, or the ANU, it comes very easy on that sort of side of it here.
For us, we haven't seen it as a disadvantage at all, being based here. Also, from a domestic market perspective, it hasn't been an issue because we supply nationally. Even if we were in Sydney, we would have to still ship to every other state. It's a positive for us, and we love the lifestyle down here.
Adam Zuchetti: Very good. So, just to sum up Anton, you've got quite a bit of experience exporting now over the years, and you've covered so many different points, but for any business owner that is actively looking to get into export markets, or they're in a similar position to you where they've identified they're accidentally exporting, and that they want to embrace that to further their growth, what key pieces of advice would you give to them?
Anton Pemmer: Really get to know the country that you want to export to. If you're going to be targeting a particular country, then understand the culture. Understand the food, understand the people, even before you even think that you want to sell them anything. Really get to know what it's about. And if you're going to make the effort to target a particular country and you're going to go there, make sure a simple thing like your business card's in the language of the country that you're visiting, that your price list and catalogues are in the language of the country that you're visiting.
You might think, "Oh, well yeah most people speak English everywhere," but the other effect is yeah, they do speak English, but when you pass across the table your business card, say in Korean for example, and then you pass your catalogue across in Korean, and then your price list is in Australian Dollars, US Dollars, and Korean Won across the table, the reaction that you get from your potential customer is amazing. They will just sit back and go, "These guys are serious," because they're so used to people turning up and assuming that they will know exactly what they're about.
Taking the time to really familiarise yourself with some of the simple cultural differences in a country, to be able to say hello and goodbye in their language, to be able to say please and thank you. Those couple of things open up far, far more doors than you would ever imagine, and that would probably be the starting advice I would give to anybody who's even considering to export.
Adam Zuchetti: Okay, and what about the finance side of things, and people thinking, "Look, I can't afford to finance export expansion and things like that" or that, "Export funding's going to be prohibitively expensive?" What would you say to them?
Anton Pemmer: Well, I don't find the export funding prohibitively expensive. I actually find it's quite reasonable to do. I think it's because of its flexibility as well, but I think it comes back to what's your average order size? What do you really need? Do you have other financial facilities that if you use that for your export development, or export funding, will that impact on your standard business? If the answer is "possibly" or "maybe" or "yes," then you should really look at the Efic side of things, for the export funding side.
Because that way, you can do it and it has no impact on your existing business, and that's a real key thing. Because a lot of companies have good, strong domestic business, which then underpins their export opportunities.
Adam Zuchetti: All right, brilliant. Thanks so much for speaking with us, Anton. You've given us some great insights.
Anton Pemmer: Absolutely my pleasure, and always happy to talk to anybody who ... I've made enough mistakes in the export to have learned a lot of lessons, so happy to pass it on to anybody.
Adam Zuchetti: All right. Brilliant. Thanks, Anton.
Anton Pemmer: Thanks very much.