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Risk and challenges

Know how to identify and manage risk when exporting.

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  • Understand how to identify risks when exporting

As with all business activity, when exporting, a certain degree of risk is inevitable. Successful exporters manage a range of risks that may not be present in domestic markets. You should be thinking about how you deal with the following.

Culture

Differences such as language, religion, ethical standards and negotiation styles can influence business decisions and processes.

Political environment

The political environment of the market you are considering may pose new challenges to your business. Political instability may affect the ability of the government to implement policy and enforce law. Civil unrest may also affect personal security. Before travelling, consult the Department of Foreign Affairs and Trade website for up to date information.

Legal systems

It is likely that overseas legal systems are different to Australia. It is important to understand what you need to do to comply with legal requirements through the export process, such as taxation, employment practices, currency dealings, property rights, protection of intellectual property and packaging/labelling requirements.

Human resources

Moving beyond the domestic market may place pressure on your businesses’ resources, such as capacity and productivity constraints and the need for new specific skills.

Finance

Exporting will involve additional expenditure which may initially impact on cash flow - along with export financing/currency issues and the added risk of potential non-payment for goods and services supplied to foreign buyers.

IP

Protecting intellectual property in overseas markets can be difficult and complex. High quality advice is available from the federal organisation, IP Australia.

Funding

Additional funding is usually required for export, trading terms and dealing in foreign currencies may place pressure on your cash flow and financial situation.