Doing business overseas: how to trade professional services

According to ASEAN Connected, Australians have an international reputation for providing skills-based services. The 2016 report, which highlights business opportunities in South-East Asia, states that our knowledge in areas such as education, technology and infrastructure development are welcomed in the region.

While the Export Council of Australia's (ECA) Australian International Business Survey reveals that China, the US and the UK are currently the biggest markets for Australian expertise, there are several potential growth areas. One is Singapore, where the Singapore-Australia Free Trade Agreement (SAFTA) eliminates many tariffs and restrictions related to foreign trade. Another is the Philippines, where finance, engineering, design and web-based workers are ready to be hired by Australian businesses.

The key to international success is to develop a comprehensive strategy, says Lisa McAuley, Chief Executive Officer of the ECA. “Make sure you have enough information to understand exactly what you need to do to grow your business overseas."

Location: understand the business environment

For exporters targeting a new overseas market, it’s important to research not only whether it’s suitable for your service, but also how easy it is to do business there.

Some countries are much simpler to trade with than others, says Lee Featherby, Chief Executive Officer of corporate communications provider, PowerfulPoints. He believes Singapore is a low-risk option; China, on the other hand, can be much more complex – though this didn’t stop the business from opening a Shanghai branch two years ago.

“If you're going to do business in China, I believe you have to be on the ground,” says Featherby of the decision to expand overseas. “You need to be really agile with Chinese clients; if you're not prepared to move quickly, you're going to struggle.”

Hiring native-speaking Chinese employees has also proved beneficial, Featherby continues. “Your people on the ground are critical to your success when you’re operating remotely,” he says. “In my experience, you can communicate in English, but if you really want to be able to work effectively, you need someone who speaks the native language fluently.”

When expanding your business overseas, ensure you understand the local business environment there

It can be beneficial to set up a remote workspace in the countries you export to – particularly if employees speak the local language.

Quality control: shop around

Just as many Australians export their skills, others import them from businesses based overseas – hiring foreign employees to complete various tasks. The motive is generally to reduce costs, with many international firms charging cheaper rates than their local counterparts. But when hiring offshore, you need to make sure the financial savings are worth it, says Gazi of Gazi Photography. The Melbourne-based photographer uses suppliers based in Pakistan, the Philippines and the US for data storage, web development and basic image retouching.

“The quality of some of the work can be lower than what we’re used to here,” he says of the latter two services in particular. “I tend to just outsource a couple of small things overseas, like changing the colours at the back end of my website or clipping photos. It’s done within a few hours and it costs next to nothing.”

Gazi has learnt to shop around when it comes to finding the best suppliers. “It pays to read lots of reviews of the companies before you start dealing with them,” he says. “And make sure your terms and conditions are crystal clear so the finished product is exactly what you want.”

Importing skills for basic tasks from overseas can save your business time and money

Outsourcing tasks, such as image retouching, can save both time and money for Australian businesses.

Expenses: calculate the costs of working overseas

When trading a service, as opposed to a product, businesses don’t generally incur major expenses, such as shipping or customs duties. But some other costs may still apply.

“Some companies charge a commission for each project, on top of the actual service fee,” says Gazi. He explains that crowdsourcing marketplace Freelancer.com is just one business that operates under this model.

 

There are also taxes to consider, with income generated in different countries often subject to foreign and Australian tax. “You need to be aware of the withholding tax implications in the country you’re working with, because they can withhold a significant percentage of your billings,” says Featherby. “Do your due diligence well before you get there. Speak to people who already export to that country about costs, government regulations and the like.”

McAuley agrees, explaining that such networking can be invaluable when trading in a new country. She also encourages business owners to enrol in an international trade course before heading overseas. “Take the time and spend a little bit of money to educate yourself,” she suggests. “Investing in knowledge and understanding up front can help you in the long run.”

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