Magazine article International Trade Forum

Internet for SMEs: A New Silk Road?

Magazine article International Trade Forum

Internet for SMEs: A New Silk Road?

Article excerpt

Are Australian firms ready to use the Internet as a means to join the global economy? And what lessons can be learned for developing countries from the Australian experience, especially for small firms located in rural areas?

With great enthusiasm, Australian SMEs have been adopting Internet modes of marketing and (to a lesser degree) sales, seeing this as a way of overcoming the natural disadvantages of small size and geographic distance. Yet these same SMEs often do not have a strong base of technological experience or global marketplace management skills.

In Australia nearly 95% of companies are SMEs -- although, of course, they account for a considerably smaller percentage of turnover. This mixture of economic significance, enthusiasm, technical and technological inexperience, and growing global awareness is potentially very dangerous. Small companies traditionally fall to survive in astonishing numbers -- the Australian figures suggest that one in two fail to survive their first year. The risks that global marketing pose to comparatively inexperienced and unsophisticated smaller companies have encouraged governments of all types to look at ways of assisting SME import/export activities.

What follows are experiences from Australian government and academia in examining how SMEs use the Internet to develop international business, and how government could facilitate the process.

Internet: A new silk road?

In 1997 the Australian Federal Department of Foreign Affairs and Trade commissioned a series of 12 case studies on small Australian companies that use the Internet for international trade. These case studies, which were undertaken by a group of students and academics, told a story of moderate success in using lowcost technologies (both web and e-mail based) by some small and innovative Australian companies. The cases were subsequently published in the form of a book entitled Putting Australia on the New Silk Road (available in PDF format from

A significantly larger follow-up project in 1998 looked at ways in which the government could effectively support Australian SMEs planning to use the Internet for international trade. A group of 36 case studies, based on a questionnaire and round-table discussions in major cities, resulted in the book, Driving Forces on the New Silk Road. An analysis of similar projects around the world led to Creating a Clearway on the New Silk Road.

What role should government play?

What role should government play, the studies asked. The companies were unanimous about what government should not do: they requested that government refrain from further regulating Internet-based trade activities. They were much less certain about just what governments should. do to assist them. The most popular suggestion was to create an online "one-stop-shop" for all offshore trading documentation -- so that companies need only go to a single site to find information, regulations and forms to undertake export activities. Forms would be downloadable (or even online); links to other sites, when absolutely necessary, would streamline the form-filling, permission-granting process to the maximum.

This project provided a rich mine of information on a cross-section of Australian exporting companies. They varied from large to small and were located in both capital cities and in remote, rural and regional Australia. Some of the most innovative companies were not, as one might have expected, those based in Sydney or Melbourne and possessing excellent technical support -- but were located in remote areas where technology was effectively dependent on the skills of the entrepreneur concerned (see, for example, the exclusively online operation, Mick's Whips, based more than 100 km outside Darwin and selling Australian products most successfully to Europe, Asia and North America (

Remote communities: Will they benefit? …

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