Technological advancements are breaking down business barriers at an incredible rate. Business are now capable of sourcing, negotiating and finalising deals from one side of the globe to another in a matter of minutes. It's the kind of connectivity that lets exporters in Australia truly flourish.
However, the more businesses grow overseas, the more they need to take into account the global risks that threaten their companies as they do so. Here are some of the biggest global risks facing Australian SMEs and how you can prepare.
Changes in legislation
It's not just changes in Australian legislation that threaten the way you do business – it's also the changes in legislation around the world. The most recent example of this is President Trump's actions of removing the United States from the Trans-Pacific Partnership, causing uncertainty around the North American Free Trade Agreement. All of this has reduced the inflow of foreign direct investment impacting the currencies of other countries like Mexico.
To prepare for these risks, companies need to have a firm understanding of what is going on in countries they want to infiltrate, as well as how changing legislation can affect their business. Some of the best resources can be found with AusTrade, or come directly from the advice of our legal partners.
Negative economic development
What happens when you're doing business with a country that enters a period of economic slowdown? In 2015, the Japan-Australia Closer Economic Partnership Agreement was signed, making Japan one of Australia's biggest trading partners. But Japan has also seen recent economic hardship, with weak consumer spending after the stock market slowed down and a property bubble burst.
The trouble here is that Japan's population is getting older, and the World Economic Forum expects that by 2020, the country will lose around 600,000 people a year, making it hard restore the economy. Here, businesses need to seek to diversify your exposure and reduce the concentration of risk. Look to break into new markets safely by partnering with a trade credit expert to help mitigate those risks.
A large part of the global marketplace is now online, allowing businesses to expand their customer bases significantly. However, putting all that personal information online opens up a business and its customers at risk of cyber attacks. In fact, a recent PwC survey found that Australia actually have some of the highest number of cyber security incidents – in 2014, the country reported 9,432 incidents in that year alone.
But now we're seeing these attacks starting to reach companies around the world in a single blow. Earlier this year, the WannaCry ransomware attack hit 150 countries like Russia, China, the U.K., the U.S. and Australia affecting more than 200,000 computers. Attacks like this steals money and disrupts business, but similar hacks will be out for company data. So while companies can fortify themselves with strong IT staff and systems, they still need the organisation as a whole to commit to participating in safety practises.
If you'd like to learn more about how you can prepare your SME for whatever happens in the global marketplace, contact the team here at Coface today.