Australian companies look offshore for post-pandemic growth opportunities

More than half (58%) of Australian mid-size companies are planning to expand offshore in 2023 and enter at least one new foreign market as the disruption from the pandemic subsides, according to HSBC’s new Business Balancing Act survey.

The survey of CEOs and CFOs from over 2,100 businesses across 14 global markets also found that Australian mid-market enterprises (MMEs) – firms with annual turnover of US$10 million to US$500 million – are confident their strong balance sheets (40%) and increasing international demand (30%) will help them achieve growth in an uncertain economic environment.

Scott Bannon, Head of Client Coverage for HSBC’s Commercial Bank in Australia, said: “Whilst a majority of Australian companies expect international trade to be more difficult in the coming year, their relative strength leading into the pandemic has ensured they are well positioned to pursue growth and their desire to expand is likely to remain strong in 2023.”

“As a general rule, local companies are going further offshore and doing it earlier in their lifecycle – be it healthcare in Asia, professional services in North America, or the food and beverage sector finding new markets in the UK and broader Europe.”

“It is also a trend that has included global expansion through digital means since COVID-19, where tech-enabled firms have been able to break down geographic barriers in quick time.”

A balancing act of managing growth and volatility

HSBC’s survey also found that 84% of Australian companies expect to grow in 2023 vs 76% of global respondents, despite economic headwinds.

Two fifths (40%) of Australian firms forecast sales growth of 15-20%, while more than a third (35%) expect an increase of 10-14%. The relative positivity is set against a backdrop of concern regarding inflation and the cost of living (32%), rising interest rates (26%) and the skills shortage (25%).

The research – carried out for HSBC by polling company Toluna – found that global businesses expect technology-driven efficiencies and the expansion to new digital platforms and channels to be two of the major growth drivers, demonstrating business leaders’ continued emphasis on digital and innovation.

Beneath the ambitious forecasts, Australian firms face a balancing act between finding opportunities to drive growth and managing a combination of challenges next year:

• Nearly half (47%) will focus on making their supply chain more secure, but nearly one fifth (18%) are concerned there is a lack of quality suppliers and goods.
• A third (31%) will expand to new digital platforms and channels, however there are concerns about a decrease in demand and reduced consumer spending (15%).

“Mid-market enterprises are the backbone of industry, old and new. They remain at the forefront of innovation and continue to refocus their business models despite ongoing economic uncertainty,” added Mr Bannon.

Investing to grow

The study, which surveyed businesses in Australia, Mexico, Singapore, UAE, UK, US, mainland China, Hong Kong SAR, India and Germany, among others, also found that:

• 40% of global firms are seeking external investment to support their growth, versus 33% of Australian companies.
• Globally, a third are looking to sell the whole or part of their business, versus 40% of Australian firms.

When asked how business leaders would prioritise investment for the next 12 months, customer experience (56%), employee well-being (55%) and increasing vigilance to prevent cybersecurity breaches (51%) top the list for Australian companies.

These investment plans, however, are balanced by 51% of mid-sized companies looking at how they can cut costs next year.