18 Feb 2020

Tags

• Divya Skene

• AIBS 2019
• International Trade
• Tourists
• Visitor Economy

"Operating among Australia’s digitally-savvy multicultural communities, businesses are in a unique position to engage with the world”

Sociologists describe the word 'glocalisation', as showing global and local tendencies at the same timeⁱ. It is a term that is increasingly relevant to Australia’s internationally active businesses.

Many Australian businesses have products and services that are popular amongst Australia’s culturally and linguistically diverse (CALD) communities.

There is now evidence that Australia’s CALD communities support international market development for Australian goods and services.

Structural drivers

Two key factors influence this trend.

1. First - and this is an area of comparative advantage for Australia - 49% of the Australian population has one parent born overseas¹. So our CALD communities (with international social networks) have scale as a share of our population.
2. Secondly, digitisation has enabled seamless connectivity between individuals, businesses and international markets, with mobile and digital devices now supporting real-time purchase, payment, logistics and promotion.

These two factors have transformed international trade for selected businesses, encouraging them to consider local and global markets simultaneously.

Australian glocalisation - local communities and international market development

Over the last decade the role of CALD communities in promoting Australian trade with the world has been explored by academics , researchers , policy advisors and bureaucrats - but what has been missing in all this, is the perspective of exporters.

What do businesses themselves think about the role of multicultural communities in international market development?

Our most recent edition of Australia’s International Business Survey (AIBS) shows that 28% of all surveyed firms regard Australia’s multicultural communities ⁱⁱ as ‘essential’ or ‘very important’ for international market development. A further 21% recognised they were somewhat important.

• In all, around half of the 600 surveyed AIBS 2019 firms reported multicultural communities to be important for international market development.

What this indicates, is that international market development is no longer solely undertaken overseas.

Rather, in many cases international market development is also influenced by local communities that consume Australian products and services.

Socially-networked pathways for goods trade

The AIBS survey asked specific questions about the type of influence communities have on the promotion or sale of Australian goods and services.

The survey confirms that firms are working with local intermediaries with specific language and/or cultural skills to export goods overseas.

One quarter of all the goods exporters we surveyed agree goods sold to multicultural communities in the domestic market helps to fulfil export demand ⁱⁱⁱ .

• This finding is statistically significant for goods exporters making their highest revenues in China, with 44% of such surveyed firms agreeing that goods sold domestically to multicultural communities fulfils export demand.

A specific example is Australia Post’s business assisting Chinese-Australian community members in Australia to ship Australian retail products to their families, friends and clients in China. Australia Post now offers over 150 products in its stores in Eastwood in NSW, and Melbourne and Box Hill in Victoria. It offers a larger range on its online store chinadirect.auspost. The online stores provide authentic consumer products, the convenience of shopping from home, no GST, and a range of destination choices including Mainland China, Taiwan, HK and Macao.

Australia Post’s China Direct stores also allow Australian merchants to test innovative brands with Asian-Australian audiences - a specific example of glocalisation informing international market development.

A reliable and loyal overseas network supporting services trade

Similarly, services exporters agree^iv that domestic consumption of services by multicultural communities helps to promote their service to overseas consumers.

Thirty-eight percent of services exporters surveyed ‘agree completely’ that local multicultural consumption of services (for example, tourism, education or financial services) is an essential element for promotion of their service overseas.

Take tourism, for example. A large share of the rise in visitors to Australia over the past decade (from 5.1 million short-term visitors in 2008-09 to 8.6 million in 2018-19) is due to people wanting to visit their friends and relatives. VFR (i.e. those Visiting Friends and Relatives accounted for 33% of the rise in visitors over the past decade.^v

VFR visitors are loyal, with 25% visiting Australia between 8 and 20 times.

Just as in our own personal lives, these friends and relatives can be relied upon to help Australian tourism through tough times.

• In the 5 years after the global financial crisis (between 2007-08 to 2012-13) holiday visitor growth stagnated, growing by just 3%, while VFR increased 28%.

Key markets for VFR tourism include New Zealand, China, United Kingdom, India, Malaysia and Singapore.

Australia’s Asian middle class is in touch with Asia’s rising middle class

The AIBS Survey responses indicate businesses making their highest export revenues in Asia are most likely to engage in Australian-style glocalisation.

The AIBS survey showed a significant share – between 28 to 40 percent - of firms making their highest revenues in ASEAN, Hong Kong, China, Japan and India report that multicultural communities are essential or very important to international market development.

The results suggest that local Asian communities, with their established international networks, direct channels, language and cultural skills assist Australian firms through active trade intermediation, goods/services recommendations, or by acting as a pull factor.

The combination of digitally-and culturally savvy CALD communities, puts Australian businesses in a unique position to market into Asia.

¹ 2016 ABS Census of Population and Housing

ⁱ The term’s origins are Japanese, but it was defined by sociologist Roland Robertson in 1997.

ⁱⁱ Here, the term ‘multicultural’ is used interchangeably with the term ‘culturally and linguistically diverse’.

ⁱⁱⁱ Agree completely (11%) and somewhat agree (14%)

^iv Agree completely (20%) and somewhat agree (18%)

^v We note that the Australian friend or relative of a VFR visitor is not necessarily always from Australia’s CALD communities.