Seven self-interested reasons to buy Australian

• Stephen Craft
• 28 February 2010
• Page 1 of 2 : single page

Photo credit: Christopher Nielsen

You don't have to be a dyed-in-the-wool patriot to put Australian suppliers at the top of your shopping list, reports Stephen Craft.

It's never been easier to buy goods and services for your business from offshore. Books, computers, graphic design and accounting services, all just a few clicks away. So why restrict yourself to vendors who happen to have an ‘au' at the end of their domain name?

In fact, a hard-nosed economist may even argue that you have a patriotic duty not to put Australian companies before cheaper overseas alternatives. The idea is that unrestricted global trade helps us all by encouraging each country to focus its resources on the industries in which it is most efficient. That allows us to produce more goods and services in total, increasing the size of the global cake so everyone can have a bigger slice.

"Every country has a comparative advantage, ultimately based on, as they say in the textbooks, its ‘relative factor endowments'," says Peter Switzer, independent economist and financial commentator. "The more you can push your resources - your labour, your capital, your enterprise - into the area where you have the most potential global comparative advantage, the end result's going to be a far more competitive country."

“Our currency is one of the world’s most volatile: a rapidly falling dollar can make life uncomfortable for anyone who relies heavily on overseas suppliers”

That's certainly been Australia's experience. Since the Hawke government began the process of unilaterally cutting tariffs almost 30 years ago, we've seen a surge in trade, productivity and, ultimately, economic growth.

"Lots of people warned we'd be ruined when we took away the tariffs," says Switzer.

"But since then we've gone through 17 years of continuous economic growth. Resources that were being sucked up by protected industries ended up going to other industries, like the high-tech industries."

The result is that some Australian companies in the industries that thrived are among the best in the world. Perhaps buying Australian is less about your patriotic duty and more about good business sense.

Here are seven more reasons why.

#7 Currency issues

Currently, the strong Australian dollar is making offshore shopping look pretty attractive. But it's important to remember that our currency is also one of the world's most volatile. A rapidly falling dollar can make life uncomfortable for anyone who relies heavily on overseas suppliers.

According to Switzer, it's essential to have currency hedging in place, but sometimes that's still not enough. "Some strange things happen, like September 11. Then currencies can head off in a strange direction."

So, while buying Australian means you can't benefit from favourable exchange rate fluctuations, it also means you won't be disadvantaged if foreign exchange markets turn against you.

#6 World-beating products

When we think of Australia's areas of competitive advantage, we tend to think of sectors like agriculture and mining. Yet Australian companies have a whole lot more to offer.

"We actually have some really surprising areas of competitive strength," says Switzer. In particular, he believes Australians shine in industries that combine technology with creativity, such as software, architectural services, event management and niche manufacturing. Adelaide's successful but largely unknown Rising Sun Pictures, for example, created the visual effects for Hollywood blockbusters, including Terminator Salvation, X-Men Origins: Wolverine and the Harry Potter movies.

Gavin Dixon, chief executive officer of accounting software company Reckon's Business Division, agrees. "Australia is innovative in software," he says. "The Google Wave development is an Australian initiative."

This culture of innovation gives Australian products an edge.

"You can't outsource innovation," says Dixon. "You can't go to India or China and say, ‘Please be clever for me'. Australia has a culture of doing things, rather than waiting for things to be done."

#5 Designed for Australian conditions

A product doesn't always have to be the best in the world to be right for your business. Sometimes it just needs to be the best fit for local conditions.

Unless a product has been designed for Australia, you can end up spending valuable time customising it for our regulatory environment and financial system.

"We have a relatively complex environment here in Australia, with different state and federal regulations," says Dixon. "People running small businesses are very, very time poor, so it's really important to them that a product is easy to use and doesn't make them jump through hoops to get things done."

For this reason, Reckon has a local development team that customises its base US software for Australian users, says Dixon. Reckon's Quickbooks payroll software, for example, has been built to interface with Australian banks and superannuation funds, as well as the Australian Tax Office.

#4 Reliable supply chain

Reliability can be an issue with overseas suppliers due to the logistical complexity of ordering and receiving products from half a world away, says Ian Harrison, chief executive of the Australian Made, Australian Grown campaign. Reliability of supply is particularly important for manufacturers who use a lean manufacturing methodology that focuses on keeping inventories to a minimum. Wholesalers and retailers who want to keep stock on hand to a minimum are similarly vulnerable to delays.

"We all understand that you can enter into an agreement with a Chinese supplier and get a product delivered here that's a lot cheaper," he says. "But if there are supply interruptions or transport problems or wharf problems or quality problems, there are generally some very good reasons for thinking locally."

The more supplies or stock you keep on hand, the more capital you have tied up in your business and the longer your cash flow cycle. In that situation, a local provider who can deliver at short notice could offer big savings in the long run.

#3 Local support, from local people

Sometimes a local product that costs more upfront can be better value over its life-time. Especially if it comes with fast, effective after-sale support.

"It's a question of how you cost it," says Harrison. "Do you cost it for a whole-of-life timeframe? Do you recognise that you might need supplies, you might need servicing, you might need replacements?