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Globalisation... How can Australia compete and win?

02 September, 2005

Complaining about unfair competition is rather unproductive. If an Australian business attempts to compete against a Chinese company with the same or better machinery, the same processes, a generic product and Chinese labour costs, the outcome is easy to predict.

The following article was contributed by an industrySearch reader following our recent article on globalisation. With further contributions from readers this series of articles could assist Australian industry to define and understand their role in the global economy of the future. Do you have something you’d like to say on this subject? Email editor@industrysearch.com.au

If the Australian business is producing a generic product and lacks patents, proprietary information, a truly distinctive customer relationship or something similar, then a competitor from a lower priced country can be expected eventually. Failing to plan for the arrival of this competitor is planning to fail, a cliché but one that seems to happen far too often.

More than a hundred years ago, grain and wool growers in Britain started to experience serious competition from Australian and Canadian growers. Globalization has been around for quite a while.

Complaints about ‘unfair' competition and calls to ‘do something' continue to be heard. If there are subsidies for a US or Chinese or where ever competitor, there is not a lot that can be done by Australia if that government wants to keep spending their taxpayers' dollars to provide Australians with cheap products or services. If the trade agreements are being violated, then complain but remember that usually, only the lawyers make money from litigation.

Some companies actively move on to new products, before their old products become generic or too easily copied. Others sit on their hands and wait to be run over.

If an overseas business has invested time and money to buy and/or develop better technology, product designs and production methods, how can this be considered unfair if an Australian company chose not to do better?

The most surprising thing about globalization and lower cost imports undercutting the offerings of Australian companies is the reaction of the unions. If an Australian business has a profitable market and doesn't seek to compete overseas, it should expect and prepare for new competitors from overseas. If management has failed to prepare then the employees, their unions and the company shareholders should be asking why. No one ever seems to ask, the appearance of a new competitor so often seems to be such a surprise.

There are globally competitive Australian companies, they export Australian developed products, services and technologies all over the world and probably watch their competitors very closely. If Australia starts to erect trade barriers to block imports then corresponding action could be expected against Australian exports. It really would be ‘unfair' to ask Australia's globally competitive companies to give up their global markets and sell only to the small, Australian market simply because they serve their customers better.

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