Remarkable Indifference
pp. 30-32 · Read in the full issue
Shown By Australian
Businessmen To Islands
By W. R. CARNEY, Australian Trade Commissioner for the Pacific Islands.
Although Australian trade with the Pacific Islands is grow ing at a phenomenal rate, there is a remarkable indifference in Australia towards the Islands.
Most Australians are totally un aware of Islands’ problems and they tend to get confused over the owner ship and political status of a political group even when they succeed in actually identifying it on the map.
Australian businessmen cannot afford the luxury of this ignorance.
Plenty of information on the Islands is available, and now that air trans port has made them accessible, the sensible thing is for businessmen to visit them, and make on-the-spot studies. The Commonwealth Govern ment, through ta x concessions, positively encourages these visits.
Fares are “doubly deductible”.
And yet, despite this indifference, Australian trade with the Pacific Islands is growing at a phenomenal rate. In 1966-67, Australia sold 5126 million worth of goods to the Islands—more than twice as much as she sold to Canada. And tiny Nauru now buys more from Aus tralia than does Ireland, Austria or Switzerland.
The buyers
Who are the buyers in the South Pacific? What are the obstacles to trade with the Islands. And what are the regulations governing trade?
The buyers : Firms which buy through their Australian head offices are Burns Philp, with stores in P-NG, New Hebrides, Fiji, Tonga, Western Samoa, American Samoa and Norfolk Island, and W, R. Carpenter & Co. whose group includes the New Guinea Co., Morris Hedstrom, Coral Island Traders and Millers Ltd., Fiji.
Carpenters is in P-NG, Fiji, Tonga and Western Samoa. The Steamships Trading Co., a purely Papua-New Guinea concern, buys in Australia through Nelson & Robertson, Sydney.
Firms which buy through Aus tralian island agents are the British
Solomon Islands Trading Co., Honiara, the Gilbert and Ellice Islands Wholesale Society, Tarawa, Chinese and other traders in Papua- New Guinea, British Solomons, Fiji and American Samoa, and French merchant houses in New Caledonia and Tahiti.
Resident commission agents in the Islands sell Australian goods mostly to the smaller stores, the larger buyers dealing either through their Australian offices or through the island agents. However, in P-NG locally-based manufacturers’ repre sentatives promote sales to the prin cipal stores.
Problems
Some merchant stores have their own indenting subsidiaries which do agency work for other merchants Thus in Papua-New Guinea Burns Philp control BNG Traders; Steamships Trading control S. O, Svensson & Co. The agency concern Corrie & Co., Suva, is a Burns Philp subsidiary.
Problems : Because of the distances involved, the shipping services are always expensive and generally too infrequent from the importer’s view point. However, P-NG, New Cale donia and Fiji are well served.
Australia has less than 3 per cent, of the trade in French Polynesia, mainly because of the infrequent shipping service.
Refrigerated goods for Tarawa must go by deck locker because the US quarantine authorities will not allow Australian meat ships to dis charge in the US if the holds have been opened in Tarawa.
Flour, dried fruits and cake mixes sent to Honiara must be turned over quickly because of the rapid insect at tack, but the shipping intervals have
made it necessary to hold stocks be yond the optimum period. Soft fruil and vegetables destined for New Caledonia sometimes get a bad time if there is any hitch in handling al the port or airport.
The shipping companies have theii problems, too. Some at least have been losing money on Islands traffic The solution doubtless lies in speci ally designed ships wuh side-loading facilities, palletised cargo and im proved port facilities in Sydney.
Another problem is packaging Strong external packaging is always necessary in export trade but fai too often Australian exporters send goods to the Islands in the same lightweight cartons that are used ir the local Australian trade. This causes unnecessary waste. I have seer our goods in a sad state at Islands ports, and have received vociferous complaints.
For textiles, cosmetics, etc., use wood (not used cases, please, with marks such as “made in U.S.A.” or them for tariff preference); for fresh fruit, cartons —not bulge cases; foi biscuits and cakes, double cartons; for bottled goods, corrugated sep arators. In the case of heavj machinery the slinging instructions must be plainly shown.
Too many forms
Documentation is a problem, too.
The main problem here is to gel documents to the importer on time.
Almost as importan' is careful pre paration of Customs invoices. The in voice is the key document and there is still a lot of confusion about it.
Almost every Collector of Customs
W. R. Carney . . . "businessmen can afford the luxury of ignorance".
What with the Japanese on the commercial hard-sell, determined to make a co prosperity sphere out of the South Seas, and with the Islanders themselves determined to cut down on their imports and produce what they can for themselves, the South Pacific is a growing challenge, and perhaps a growing headache, for Australian businessmen. Well, serve them right, say a number of PIM correspondents whom we asked to comment on Australia’s export image in the Islands. There are, they say, a number of things Australian exporters ought to fix if they want to hold their own in what is a most competitive market. We publish their reports in a constructive mood—together with the comments on this page by a couple of Aus tralians who seem to agree that Australian businessmen really should pull up their socks in some matters.
the Islands has complained to me jout Australian invoicing. I dis ivered that one source of the trouble y in the variety of invoices being inted. I have no less than nine parate Customs invoices in my fice, all printed by the same com ercial stationer, which purport to : invoices for the Pacific Islands.
Now this is nonsense. Prescribed jstoms invoices were originally de nned for British tariff preference id only apply in certain areas.
French and American territories d New Hebrides do not require em; for these areas you use an ord ary commercial invoice. Fiji and mga use one form showing c.i.f. lue —as that is the way they value r Customs purposes—and the rest the islands (P-NG, British lomons, Gilbert and Ellice Islands d Western Samoa) use another. ius, at the most, only two forms ; required for the Islands, one for ii and Tonga (Smith and Lane rm 8), and one for the rest (Smith d Lane Form 27).
Import Licensing ; Import licensing plies principally in the French ritories, New Caledonia and Poly da, but exchange control, which a form of import licensing, applies Tonga, Western Samoa and the ok Islands. In the French terri ies the quantitative control of ma rts serves a protective purpose, stering the tariff which already es preference to Common Market )ds. Manufactured goods are hit st, but certain foodstuffs—for mple, flour, rice, wine, corned f—are also affected. There is not y discrimination in favour of ince and the Common Market but > in favour of the US, Canada, gapore and Hong Kong (for tor cars, textiles, etc.).
"he French meet Australian pro s about the validity of their nsing restrictions by pointing to favourable balance of trade Aus ia enjoys in France, New Cale ia and Polynesia. In Australian 5 that has nothing to do with principle involved.
• Last year, Australian exports to the Pacific Islands rose. Good news for Australia? Not especially. In this article, Alan Harper, editor of "Australia International", says that it is likely that Australia's share of the market has diminished. Trouble could be that . . .
...They don't know a good thing when they see it
“ Yes, well we sell a bit of stuff in the Pacific Islands and New Guinea you know, but we aren't really in the export business”
A startling statement, but one that is frequently repeated in more or less the same words in the offices of Australian manufacturing compan ies as I move around the traps in the business of export promotion.
For better or for worse, the simple fact is that a number of Aus tralian companies simply do not con sider the Pacific Islands a real export market, but rather as an extension of their Australian trade.
In a lot of cases, the sales are made by the Australian sales man ager who makes a periodic trip to the Islands, or depend upon the orders which come in from the trad ing companies who are, in fact, Aus tralian customers of the companies concerned.
Share down
There is no doubt that the Pacific Islands is an important market for Australia—we sold SAI26 million worth there in the last financial year.
However, although this represented a rise in sales, it is very likely that when the figures are taken out it will be seen that our percentage share of the market has diminished. There is no room for complacency.
Unfortunately a lot of Australian goods which are sold in the Pacific Islands, and in Papua-New Guinea
specifically, are not otherwise offered on the export market, and so the basic rules followed by keen export companies are unknown and un heeded by the suppliers.
Fill the gap
Often, the export sales depend upon the search of the Islands trading com pany for a suitable product to fill the gap in supply for its local stores or customers. The initiative is left to the trading company, which buys in Australia, and does the entire ex port job. Thus the so-called “ex port” sale is simply a local sale.
Documentation, shipping, deliv ery, and most importantly, promotion at the point of sale, are left to the trading company.
The Australian Department of Trade and Industry is naturally con cerned at the inroads which Japan is making into Australia’s traditional markets in the Pacific Islands.
Japan's progress
Residents of the Islands are fully aware of the advertising space taken in consumer publications by the Japanese, probably through the export agency, JETRO.
This promotion is having its effect, and the Japanese products are mak ing steady progress. This is probably not at the expense of established sales of Australian goods, but rather, more subtly, at the expense of expan
sion of Australian sales in tune with the expansion of the Pacific Basin’s economy.
The point at which the Australian attitude falls down most is that of promotion. The trading company will market the goods only, it will not create the market, and this is where a further effort by the manufacturer is necessary.
Export managers of established international trading companies in Australia have said that their job on a Pacific Islands tour differs from that in other parts of the world. In other areas they contact their agents, offer new products, clear up mis understandings and perhaps make new agency arrangements. In the Pacific their distribution is estab lished through one of the few main lanes, and their task is to create cus tomer demand for the new product.
Above all, service
Advertising plays an important part in this, as instanced by the Japanese successes, but of great im portance also are personal visits by the manufacturer’s representative and, above all, service.
Once the trading company has an inquiry for an Australian product, there is no doubt that it will try it out, and the way to a successful sales record is established.
There are two categories of Aus tralian companies, then, which trade with the Pacific Islands: those who look at them as part of an overall export market and those who do no other international trading but see the opportunities of extended markets via the export merchants.
A quickening of interest in the Islands as a market is evident among the serious exporters. The area’s active Trade Commissioner, W. R.
Carney, is quick to hammer home the importance of the market to ex porters at every opportunity, and there is a definite sign of response to his enthusiasm.
Lamentably, in the South Pacific the markets are so diverse and scat tered, and the individual volumes so small, that concerted effort towards better shipping services is difficult to organise.
Although many Australian busi nessmen are aware of the import ance of the Islands as a market, many of them could do more, much more, in the Pacific than they are doing, and overall Australia could bring her sales in line with the pace of the total growth of the market.
The present situation is no cause for satisfaction among Australian ex porters.