The Global Market
I left my cushy corporate job in the 1980’s to launch out into my own business. I was an electronics automation engineer at the time and I figured that I would be far better off working for myself than working for a boss. During the next few years I designed a number of products from small electronic devices to an innovative process control system. One of the ideas I came up with was an internal Uninterruptible Power Supply (UPS) that would sit inside a Personal Computer and keep it going in the event of a power failure. It was innovative for its time and only about $110 and I was shipping them all over Australia. It wasn’t long before I realised that if Dick Smith or someone like that decided to get into the business they could have these products manufactured in China and landed in Australia for less than I could buy the parts for.
I decided to approach the Government of the day and ask if I could get tariff protection on the product and I was told “No – we are not doing that anymore, you will need to learn how to become competitive in a global marketplace”.
I remember being quite annoyed at the time because this ‘global market’ was hardly an even playing field. The Chinese had a different monetary system, they had subsidies and very cheap labour. I felt that our government should be protecting the small entrepreneurs like me.
Of course, that didn’t last long because I realised that there is always an upside – there is always opportunity, it is just a matter of opening your eyes and finding it.
In this case, I realised that there were a few options :
By working in a small clearly defined niche I could beat the large organisations who could not and would not compete.
There are opportunities for business that require specialised local IP that larger businesses or overseas companies can’t compete with.
In my case, I developed some specialised electronic test equipment that appealed to a small target market and required local engineers to configure, install and support it. That ended up being quite a successful business model.
There are many things that can be exported and many organisations have done and continue to do this very successfully.
If you can’t beat them join them. You can either import and sell directly or import and value add services on top. In 1989, I started an IT business providing products and services to local businesses. The products were imported and in those days we were making reasonable margins on the hardware and it was a good business. Over the years the margins dropped to the point where we are only making 2% to 5% on many of the hardware products we sell and so the income is made on the value added services such as design, installation and support.
There is power in numbers and many businesses that worked together were able to successfully compete in this space.
Looking back I realised that there were three type of company in this environment:
(i) Those who thought it wasn’t happening. It did happen and most of these companies failed.
(ii) There were those who said let’s put up a fence around our country and protect ourselves.
That didn’t work and the companies who took that approach also failed.
(iii) Then there were the entrepreneurial companies whose attitude was to look for the opportunities. The companies that took that approach mostly chose one or more of the five options outlined above and many of them became very successful.