Characteristics of Australian services exporters
Services industries conduct international business differently from merchandise exporters. Rather than producing and shipping a physical product from the place of manufacture to the customer, exporting services involves delivering solutions to clients’ problems.
As categorised by the General Agreement on Trade in Services (GATS), the delivery of services typically fall into four modes of supply (see below). Services exporters may also need, or may be required by the regulatory environment in the foreign market, to set up a commercial presence offshore and/or to work in collaboration with a local affiliate in the foreign market.
Across the four modes of delivery, services exporters have much in common:
- Services exporters tend to have international business clients rather than specific geographic markets, and clients often take them into different geographic destinations on a one-off basis.
- Client needs are not static. Building a services export reputation is about building international relationships, nurturing a culture of customer focus and client confidence, and developing aptitudes to recognise emerging opportunities and respond rapidly with new, innovative solutions offerings.
- The intangibility of services requires that mutual trust must be built, generally through a long-term relationship between buyers and sellers. This is because services exports cannot be examined on the spot for quality and the provision of fit-for-purpose services often requires an in-depth understanding of the clients’ business (culture, history, structure, risk appetite, etc.).
- Services exports tend to be project-based. Every client has different specific needs, and each export project tends to require a different services offering. This means services firms can rarely find additional export markets without innovating – rather than promoting an existing ‘product’ they need to promote their capacity to diagnose client needs and create individual services offerings for new international clients.
- Each export project is likely to require a slightly different implementing team of talent and ideas, so services firms often need to move people around quickly, including across borders.