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8154.0 - A Portrait of Australian Exporters: A Report Based on the Business Longitudinal Survey, 1997-98  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 22/08/2000   
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INTRODUCTION

Exporting is important to Australia. It helps pay for our imports as the economy grows. The gains from such trade enable a higher standard of living than we would otherwise have. It is also a source of new ideas and knowledge for Australian businesses as they compete against the world’s best in the international market place. ABS international merchandise trade and international trade in services statistics and outputs from the Department of Foreign Affairs and Trade provides a range of information about Australian exports. These sources provide detailed information about where exports go, what industries produce them and the revenue they generate for Australia. It is clear that exports make an important contribution to Australia’s economy. But what of the exporters themselves? Who are they? Are they large or small? How do they export? How are they different from other businesses in the Australian economy? This publication aims to answer some of these questions using data available from the ABS Business Longitudinal Survey (BLS).

The BLS is the first official longitudinal survey of businesses in Australia and one of the few in the world. It aims to explore the impact of particular business characteristics and behaviours on business performance by tracking a sample over four years: 1994-95, 1995-96, 1996-97 and 1997-98. The 1997-98 survey was the last of the current study. As well as surveying those firms that continued over the full four year period, a sample of new business start ups was introduced in years 2, 3 and 4 to ensure the overall sample remained representative of the population.

This publication uses the BLS database to examine the characteristics of exporting businesses and how they compare with Australian business as a whole. In the survey exporters identified themselves by indicating that they exported goods and/or services directly to businesses resident overseas.

While the longitudinal nature of the database is not fully exploited in the data in the publication, the important concept of the transient nature of exporting in Australian businesses is explained for the first time by examining the exporting habits of individual businesses over the four years. A more in depth investigation of this issue and other business behaviours is planned where various business cohorts will be analysed over time. This research will be reported in separate papers and reports.


CONTENT OF THE PUBLICATION

The publication is divided into four sections. Note that only Section 1 is provided here on the Website.

Section 1 examines a range of structural characteristics of Australian exporters in 1997-98 and compares them with non-exporters. It also examines the extent to which businesses are regular exporters as opposed to irregular exporters and looks at trends in business characteristics over the four years from 1994-95 to 1997-98.

Section 2 examines the labour market behaviour of exporters. Do exporters provide more jobs than non-exporters? Do they pay higher wages than non-exporters? Are they more likely to provide training and apply stricter occupational health and safety standards than non-exporters?

Section 3 examines a range of behavioural characteristics and explores possible links between exporting and firm performance. Do exporters use more sophisticated business practices than non-exporters? Are they more innovative? Are they more likely to pursue a growth strategy for their business than non-exporters?

Finally, Section 4 of the publication examines the use of the Internet and other technologies associated with the ‘Information Economy’. The section examines exporters’ access to the Internet, use of email, e-commerce and other electronic forms of communication in their businesses.

These published results draw comparisons between exporting businesses and non-exporting businesses in relation to a range of characteristics, behaviours and performance measures. It should not be inferred that exporting leads to particular business behaviour. Alternatively, the results may indicate that businesses displaying particular characteristics are more likely to export. What the results do highlight is how particular characteristics are correlated to exporting.


COVERAGE OF THE BLS

The BLS does not cover the whole economy and therefore does not cover all Australian exporters. The survey excluded all government businesses and non-employing businesses as well as some industries. Businesses in the Agriculture, Communication services, Education and Health and community services industries were all excluded, but this is not to say that all exports that originate from these industries were excluded. For example, many agricultural exports will be exported by wholesale businesses.

Data on exports of goods

The total value of Australia's exports of goods is measured in ABS merchandise trade statistics. To give an indication of the quality of the BLS estimates of exports revenue, the total free on board value of Australia's exports of goods during 1997-98 was $88 billion. This compares with an estimated $57 billion generated from export sales of goods by businesses in scope of the BLS.

While the restricted coverage of the BLS accounts for some measure of the under estimation of the value of export of goods, it is likely that sample error and reporting error are also significant contributors to this under estimation.

More details of the scope and coverage of the survey and sample and reporting error are given in the Explanatory Notes.

Data on exports of services

For a number of reasons the BLS also has only partial coverage of trade in services. These can be summarised as follows:

    • because of difficulties in accurately collecting information in a business survey on the sales of services to overseas visitors, this source of export revenue was excluded from data collected in the BLS;
    • revenue generated from freight and other transportation services was excluded;
    • because the Communication services industry was excluded, exports of these services are also excluded; and
    • it is likely that survey respondents did not report royalty and copyright earnings as services exports.

These factors have led to a significant undercoverage of total international trade in services. From the ABS trade in services statistics, Australia exported $25 billion in services during 1997-98. Of this, $18 billion was recorded in the travel, freight and other transportation components with a further $2 billion recorded in the communications and royalties components which were all excluded from BLS data. The remaining $5 billion was in other services which were covered in the BLS. By comparison, the BLS recorded $4 billion for this component. This difference can be accounted for in the main by the scope of the BLS and to a lesser extent by the fact that it is likely that there would have been some businesses included in the BLS which were not able to provide revenue details for their exports of services.

Notwithstanding these shortcomings, the publication still provides a wealth of information on the characteristics and behaviour of a large proportion of Australian exporting businesses.


CLASSIFYING BUSINESSES BY SIZE


The ABS currently uses total employment as the basis for classifying non-agricultural businesses by size. In this publication data are presented using five business size categories:

(i)
micro business - those businesses employing less than 5 people;
(ii)
other small business - those businesses employing five or more, but less than 20 people;
(iii)
total small business - those businesses employing less than 20 people;
(iv)
medium business - those businesses employing 20 or more people, but less than 200; and
(v)
large business - those businesses employing 200 or more people.


For some tables, size groups are combined because sample sizes do not allow the full dissection to be provided. In addition to the employment size tables, table 1.5 also provides data classified by turnover size.


SECTION 1 CHARACTERISTICS OF AUSTRALIAN EXPORTERS

This section provides an overview of the structural characteristics of exporters and how they compare to non-exporters. The extent to which businesses are regular exporters as opposed to irregular is also examined along with some indications of trends in business characteristics from 1994-95 to 1997-98.

BUSINESS SIZE

There are several alternatives for grouping businesses by size. ABS has adopted total employment as the basis for classifying non-agricultural businesses by size and the size categories used in this publication are generally consistent with other ABS business size classifications (see Introduction for more details). As well as presenting data classified by employment size groups, table 1.5 also provides details by turnover size group.

Most exporters are small businesses but export revenue dominated by large businesses

During 1997-98, in the industries covered by the survey, there were an estimated 21,800 exporting businesses in Australia which represented 4% of all businesses. These businesses generated over $60 billion in export revenue. Of the 21,800 exporting businesses, 77% (16,600) were small businesses (i.e. employing less than 20 people). While small businesses made up the majority of exporting businesses, they only accounted for 13% of total export revenue.

The 700 large exporting businesses accounted for 49% of export revenue while the 4,500 medium businesses (21% of the total) accounted for 38% of total revenue.

Exports of goods versus services

Of the 21,800 exporting businesses, 17,800 (82%) exported goods, while a further 4,000 (18%) exported services only. (See note in the Introduction relating to the limited coverage of the export of services). Service exporting firms were mostly in the small business sector (88% of the total) with almost 3,500 small firms exporting services.

EXPORTING BUSINESSES AND REVENUE






EXPORTING EXPERIENCE

Not all exporters are continuously involved in exporting; for some it is a short term activity; for others it is intermittent behaviour. To illustrate the transient nature of many of Australia's exporters, table 1.2 categorises these businesses which operated in all four years of the survey (1994-95 to 1997-98) into four groups according to their exporting activity over the period. The first group is the 'regular exporters' - those that exported in each of the four years; the second group is the 'irregular exporters' - those that exported in at least one year but not all four years; the third group 'all exporters' is the sum of the first two groups, while the final group, the 'non-exporters', are those that did not export at all during the four years.

Table 1.3 shows the level of exports for businesses in each of the exporter experience categories.

Regular exporters versus irregular exporters

An examination of the four year panel of businesses reveals that:

7% of all businesses that operated for all four years exported at some stage during the period;
    • of these, almost two-thirds were irregular exporters;
    • exporters in the large business category were more likely to be regular exporters with over half (54%) of the large exporting businesses exporting in each of the four years;
    • in the small business category only one third of the exporters exported in each year.

The regular exporting businesses, which made up 36% of the four year panel of exporters, were the major exporters averaging over $6 million in export revenue per year. This represented an average export intensity of 27% . (Export intensity is defined as the value of exports as a percentage of total income and is sometimes referred to as the export ratio.).

Overall, the irregular exporting businesses averaged $457,000 in export revenue each year they exported, with an average export intensity of 9%.

Of the irregular exporters, most exported in only one of the four years. There were 7,200 businesses (57%) exporting in only one year, while 3,800 (26%) exported in two of the four years and 3,500 (26%) exported in three of the four years.


REGULARITY OF EXPORTERS - 1994-95 TO 1997-98



Born globals

Table 1.3 also shows details of the so called 'born globals' (those businesses that commenced exporting in their first year of operation). In the survey, new start-up businesses were identified in 1995-96, 1996-97 and 1997-98. During the three years, an estimated total of 224,000 new businesses commenced operation with almost 3,300 (1.5%) of these exporting in their first year of operation. These businesses tended to be significant exporters, averaging $2.5 million in export revenue in their first year of operation and recording an average export ratio of 25%.


GROWTH IN THE EXPORTER COMMUNITY

Over the three year period 1994-95 to 1997-98, the number of exporting businesses increased 26% from 17,300 to 21,800, which represents an annual average growth rate of 8% per year. Over the same period, export revenue increased from $54.6 billion to $60.2 billion (10%) which represents an annual average growth rate of 3% per year.

Small business leads the way

Over the three years, growth was strongest in the small business sector, particularly in micro businesses (those employing 1-4 people). The number of exporting micro businesses increased from 5,500 in 1994-95 to 7,500 in 1997-98 (37%) representing an average increase of 11% per annum.

Other small businesses (those employing more than 4 but less than 20 people) also recorded strong growth rates with numbers of exporting businesses increasing at an average of 9% per annum over the three years.

In terms of exports revenue, levels for total small business increased from just over $5 billion in 1994-95 to $7.6 billion in 1997-98, representing an average growth rate of 15% per annum.

Growth rates for medium businesses were less pronounced with the number of exporters increasing at an average of 4% per annum to almost 4,500 businesses and export revenue for the sector increasing at an average 5% per annum to $23.1 billion in 1997-98.

In the large business sector there was a slight decline in the number of exporters over the three years, dropping from 775 in 1994-95 to 700 in 1997-98 (an average annual decline of -3%). Over the same period revenue also dropped marginally from $29.7 billion to $29.5 billion. This fall in exporting activity by large business was during a period when the total income of large businesses increased by 7% per annum. Large business' share of total export revenue also dropped over the period from 54% in 1994-95 to 49% in 1997-98.


EXPORTERS BY TURNOVER SIZE GROUP

Table 1.5 provides details of the number of exporters and export revenue by turnover size group for 1997-98. Again the smaller size categories dominate in terms of number of businesses with just over half (51%) of the 1997-98 exporters recording turnover of less than $1 million. These 'low turnover' businesses only accounted for 1% of total export revenue.

At the other end of the scale, the 840 exporters with turnover of $50 million or more accounted for 76% of total export revenue.


EXPORT INTENSITY


Table 1.6 again categorises the exporting businesses that operated for the four years of the survey into three groups; regular exporters, irregular exporters and all exporters. Then as a separate group, the born globals are presented to examine the export intensity for each category.

Most businesses which exported generated only a small share of their total income from exports. Of the 4% of Australian businesses that were exporting during 1997-98, over 63% of them were generating less than 10% of their total income from exports. This intensity measure is sometimes referred to as their export ratio. A further 23% of exporting businesses recorded an export ratio between 11% and 50%, while only 13% recorded a majority of their income as being sourced from exports (i.e. a ratio of more than 50%).

Looking at the regular exporters (those that exported in each of the four years of the survey), there is a high percentage of businesses (24%) that recorded an export ratio of more than 50%. Of the irregular exporters, on the other hand, only 8% recorded an export ratio of more than 50% in the years that they exported.

Born globals generally recorded similar intensity levels to the regular exporters, with 59% of businesses recording an export ratio of 10% or less and 22% recording a ratio of 50% or more.

The average export ratio did not vary significantly across the different business size groups, although micro businesses (those employing 1-4 people) tended to have more businesses with an export ratio of more than 50% in each of the categories, regular, irregular and born globals.


INDUSTRY DIMENSION


Tables 1.7, 1.8 and 1.9 provide an overview of the industry coverage of Australian exporters. However, as noted in the Introduction there are certain exclusions from the BLS that should be kept in mind. Firstly, the survey excludes non-employing businesses, government enterprises as well as the Agriculture, Communication services, Education and Health and community services industries. Also, it does not cover exports of travel, freight and other transportation services.

Proportion of all exporters

Across the industries covered, the Manufacturing industry with almost 6,900 exporting businesses accounted for the highest proportion (32%), of exporting businesses. Manufacturing businesses also recorded the highest proportion of export revenue (39%), generating $23.7 billion during 1997-98. The Wholesale trade industry was also heavily involved in exporting with 6,100 businesses generating $17.1 billion (28%) in export revenue.

The Property and business services industry, mainly the Business services subdivision, was strong in exporting in terms of number of businesses with 4,700 businesses (22% of exporting businesses) involved, however, they only accounted for $0.9 billion in revenue (1.5% of total export revenue).

DISTRIBUTION OF EXPORTING BUSINESSES BY INDUSTRY



Exporters as a proportion of industry totals

Looking at how well exporters are represented in particular industries, Mining (16%), Wholesale trade (15%) and Manufacturing (13%) each had a significant proportion of businesses involved in exporting during 1997-98. In the Mining industry, exports revenue accounted for just over half the total turnover of the industry which was well above the levels of the other industries.

Almost 15% of Wholesale trade businesses operating in 1997-98 were involved in exporting with 8% of the industry's turnover accounted for by export sales.

In Manufacturing, 13% of businesses were exporting and export sales accounted for almost 13% of the industry's total turnover.

Growth by industry

Table 1.8 indicates that in relative terms, growth has been strongest in the less significant exporting industries (grouped in the 'Other' category in the table). In these industries the number of exporting businesses increased from 2,500 businesses in 1994-95 to 3,700 in 1997-98, representing an average increase of 14% per annum. Over the same period exports revenue for this 'other' category grew at an average annual rate of 21% to $2.8 billion.

The Property and business services industry also recorded strong growth in the numbers of exporting businesses (13% per annum) but recorded fluctuating revenue levels over the four years with 1997-98 total exports down 12% on the 1994-95 total.

Of the larger more significant exporting industries, Wholesale trade recorded an average annual increase over the three year period of 8% in the number of exporters and an average increase of 6% per annum in exports revenue over the three years.

While the number of businesses in the Mining industry is small, it also recorded strong growth over the period with revenue increasing at 7% per year. Over the same period the number of Manufacturing businesses exporting increased at an average of 3% per year, however, exports revenue for the industry dropped slightly (down an average of 2 % per year).


AVERAGE ANNUAL GROWTH BY INDUSTRY - 1994-95 TO 1997-98




AGE OF BUSINESS

Of the 21,800 exporting businesses in Australia in 1997-98, more than 6,300 (29%) were less than five years old. However, these younger businesses tended to be the less significant exporters, accounting for less than 10% of total export revenue. Businesses aged 20 years or more accounted for just over 50% of total exports revenue, however, they represented only 15% of businesses.

Growth by age

Over the three year period 1994-95 to 1997-98, the number of exporting businesses aged 10 years but less than twenty years old increased by an average of 16% per annum, from an estimated 4,400 in 1994-95 to just under 6,800 in 1997-98. This was almost double the growth in the number of exporting businesses aged 5 years to less than 10 years old (8% per annum). The number of businesses less than 5 years old increased by an average 6% per annum, while the number of exporting business aged 20 years or more increased only marginally from 3,256 in 1994-95 to just under 3,300 in 1997-98.

Businesses aged 10 years but less than 20 years old also recorded the strongest growth in export revenue over the three year period, increasing from $10.5 billion in 1994-95 to $17.5 billion in 1997-98, an average increase of 19% per annum. Businesses aged 20 years or more also recorded growth in exports revenue increasing at an average of 8% per annum, while the two other age groups, less than five years old and five years to less than ten years old recorded a decrease of 19% and 10% per annum respectively.


FOREIGN OWNERSHIP


The survey collected broad level information on the extent to which each business has foreign ownership. Clearly most businesses are wholly Australian owned; and similarly, most exporters are wholly Australian owned (83%). However, it was the businesses with significant foreign ownership (50% to 100%) that were the larger exporters, with businesses in this category accounting for only 15% of Australian exporting businesses but 43% of total export revenue, the same proportion as the wholly Australian owned businesses.

FOREIGN OWNERSHIP OF EXPORTING BUSINESSES




EXPORT MARKETS

In the 1994-95 survey, businesses were asked to nominate the three major countries of destination for their exports. Table 1.13 shows the major countries or regions of destination targeted by Australia's exporters for each employment size group while table 1.14 shows destinations targeted by export revenue size.

Across the board, the most popular region was the Oceanic countries (New Zealand, Papua New Guinea etc.) used by 46% of Australia's exporters. South-East Asia was the next most popular with 35% of exporting firms using these markets.

To some extent these proportions are being driven by the smaller exporters:
    • Oceanic countries were the most popular destination for businesses with export revenue of less that $1 million;
    • higher volume exporters, those with export revenue of $1 million or more, were more likely to target Japan or South-East Asia.


EXPORTERS BY COUNTRY OR REGION OF DESTINATION - 1994-95




EXPORTERS USING INTERMEDIARIES

The 1994-95 survey collected information on the methods by which export sales were made.

Most businesses exported directly overseas to an unrelated business. This method also accounted for the largest proportion of export revenue generated in 1994-95 (48%). The next most popular method was selling directly to subsidiaries with 16% of exporters involved, generating a similar proportion of total revenue.



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