In its new Business Balancing Act survey, HSBC found that 58 per cent of Australian mid-market enterprises (MMEs) — firms with annual turnover of US$10 million to US$500 million — plan to expand offshore in the new year and enter a new foreign market.
The survey canvassed CEOs and CFOs from more than 2,100 businesses in 14 markets globally. In addition to expansion, Australian MMEs are confident their strong balance sheets (40 per cent) and increasing international demand (30 per cent) will help them achieve growth in an uncertain economic environment.
Scott Bannon, head of client coverage for HSBC’s commercial bank in Australia, said: “Whilst a majority of Australian companies expect international trade to be more difficult in the coming year, their relative strength leading into the pandemic has ensured they are well positioned to pursue growth and their desire to expand is likely to remain strong in 2023.”
Mr Bannon explained that as a general rule, local companies are going further offshore and doing it earlier in their life cycle — be it healthcare in Asia, professional services in North America, or the food and beverage sector finding new markets in the UK and broader Europe.
“It is also a trend that has included global expansion through digital means since COVID-19, where tech-enabled firms have been able to break down geographic barriers in quick time,” he said.
Expectations of growth
According to the survey, Australian companies were more bullish about their growth prospects than their global counterparts, with 84 per cent expecting to grow in 2023 versus 76 per cent globally.
A total of 75 per cent of Australian firms forecast sales growth of at least 10 per cent, despite respondents reporting concern over inflation and the cost of living (32 per cent), rising interest rates (26 per cent) and the skills shortage (25 per cent).
The HSBC research — carried out by polling company Toluna — also found that Australian firms face a balancing act between finding opportunities to drive growth and managing a combination of challenges next year.
Nearly half (47 per cent) will focus on making their supply chain more secure, but nearly one-fifth (18 per cent) are concerned there is a lack of quality suppliers and goods.
A third (31 per cent) will expand to new digital platforms and channels. However, concerns exist about a decrease in demand and reduced consumer spending (15 per cent).
“Mid-market enterprises are the backbone of industry, old and new. They remain at the forefront of innovation and continue to refocus their business models despite ongoing economic uncertainty,” added Mr Bannon.
Fewer Australian companies said they would seek external investment to support growth (33 per cent) than global firms (40 per cent), while more are looking to sell their whole or part of their business (40 per cent) than the global average (33 per cent).
The study surveyed MMEs in Australia, Mexico, Singapore, UAE, UK, US, mainland China, Hong Kong, India, Canada, France, Indonesia, Malaysia and Germany from 28 September to 24 October 2022.
