10th March 2017
Recent economic data has painted a decidedly mixed picture for Australian businesses. On the one hand, a recent report showed overall profits up 20% in the latest 3-month period, reflecting a much-needed economic growth of 1.1% for the country as a whole. Balance of payments numbers have been equally welcome, reducing the nation’s ongoing deficit by two-thirds.
Much of this growth, however, seems to come from the latest swing in commodity prices – numbers which, as history frequently shows, can swing in the other direction just as quickly. Moreover, wage growth has been stagnant in recent months, with numbers on jobs and spending growth also leaving much to be desired. A look through the current writings of Australian analysts and economists will show a significant divide on whether the bigger picture suggests good or bad times ahead for businesses and consumers.
However, there is one area which has seen several highly promising developments in recent weeks. The online marketplace has been re-shuffling the world’s economic deck for years, and it increasingly appears as though Australia has been dealt a strong hand.
After the relative free-for-all that defined the opening years of the global internet-based economy, Australia is at last joining the countries which closely regulate how online profits are taxed. The recent crackdown on tax avoidance for international companies now means that Australia is expected to take in an additional $2 billion annually from multinationals like Facebook and Google, which had previously been avoiding the country’s tax system by using offshore accounts in low-tax nations to record their profits.
This more assertive approach toward audits and tax enforcement for overseas giants is expected to help massively with the country’s budgetary issues, freeing up more money for spending on necessary public services.
At the same time, China’s government has indicated that it will promote its own rapidly-growing e-commerce platforms by relaxing its rules on imported products. This move was announced just prior to Chinese Premier Li Keqiang's arrival in Australia, and will have the effect of further opening up the Chinese market to foreign exporters in countries like Australia.
Word of the deregulation came in the form of a Chinese Ministry of Commerce announcement, which declared that low-value products, imported for personal use via e-commerce, would be considered as a separate category and not liable to strict rules for imports. Australia’s e-commerce stocks responded instantly to the news, sharply rising in anticipation of the new market potential.
China’s trading platform Alibaba has recently established a presence in Melbourne, with an eye toward expanding further. The company also plans to bring 7 leading e-commerce influencers on a tour to visit many of Australia’s leading brands. This promotional visit could boost the perception of Australian products and lifestyle across China, leading to better awareness and confidence in Australian goods.
These auspicious signs are particularly welcome given the nature of Australian business. Estimates put a very high ceiling on the Chinese e-commerce market, where Australian goods are already held in high esteem by consumers. The newly-opened door to this market could well lead to a wave of success stories for Australian businesses. Small and medium-sized businesses already employ nearly 5 million Australians, and contribute roughly $379 billion to the country’s economy. If some of these are able to generate hit products on the Chinese market, the result could be very exciting news for the Australian economy.
Diversified and adapted economies are always in a better position to weather an economic storm. Australia’s positive movements in the online sector have allowed it to be better protected from occasional volatility in other markets.
(primary source: http://www.theaustralian.com.au/business/technology/opinion/why-crossborder-ecommerce-is-the-future-for-australian-businesses/news-story/e8d570b7fe56931b88b622e76793f0eb)