This month, Biz Latin Hub’s Chelsea Heywood was privileged to connect with Dr Nicholas Baker, Trade Commissioner and Counsellor Commercial for Australia’s Trade and Investment Commission (Austrade), based in Mexico, Central America and the Caribbean.
Dr Baker shares his insights on Austrade’s new client services and trade opportunities in Latin America post Covid-19.
Learn about Dr Baker’s experience as a trade professional and the efforts of Austrade to strengthen trade ties in Mexico, Central America and the Caribbean.
You have extensive experience in supporting Australia’s trade relations from a number of posts in Europe, South America, and now Central America and the Caribbean. What drives your passion to develop Australia’s trade relations?
Helping Australia increase its exports, encouraging productive foreign investment and attracting more international students to be part of Australia’s amazing education sector seem like pretty lofty goals; or almost like motherhood statements. In reality, what has driven me and continues to drive me is that trade, investment and education are linked to people, to aspirations, to innovation, to values, building relationships and bringing something new or different to a country or a region.
Then there is the prosperity it creates, not only in monetary terms but also the exchange of new ideas and transfer of technology that international trade and investment can create. International business is all about expanding ideas, connecting people and learning and that’s what I love. I also like assisting clients, understanding their needs. I enjoy providing insights and advice on how to navigate markets, how to prepare, how to connect and be fit for purpose. Equally important, too, is telling a client that their product or service isn’t the right fit for a particular market and to give frank, evidenced-based advice so they don’t waste their time.
In some ways, guiding a client away from a market that may not be appropriate can have a bigger impact financially on a client’s business than helping them with the usual market entry advice. As a government agency, our task is to help clients succeed or achieve success in whatever form required. This could include very tailored services, providing advice on local culture and business practices, or 24/7 information digitally.
Unlike some of the major private consultancies, we are not driven by revenue. Our success is due to the amazing teams of local business development managers that we have in our overseas offices. I love that they have developed such great networks and relationships, and their insights into the market are indispensable. It’s something I have really appreciated throughout all my postings.
As the Trade Commissioner for Mexico, Central America, and the Caribbean, how do Australia’s trade connections in this region differ from the rest of the world?
With the exception of the mining and education sectors, Australia is still relatively unknown in Mexico and Central America.
Over 80% of Mexico’s trade is with the USA. Central America is also very Americas-focused and Australia’s footprint in the region is relatively small. That said, Mexico and Central America do offer Australian businesses diversity in terms of new or green-field markets if the products are either unique or competitive. The size and scale of Mexico shouldn’t be underestimated. As Latin America’s largest Spanish-speaking market, it does have a significant number of aspirational consumers, some very advanced industry clusters and amazing access to trade and investment from the USA.
Covid-19 will impact the economy quite severely I believe, but it could also open new opportunities for Australian businesses in areas such as more sustainable and safer mining, better health devices and services, digitisation of government services and e-commerce. Central America has its challenges as the markets are often small, fragmented, and have issues around security and governance. Panama and Costa Rica are the two stand out Central American markets in my view as both are investment-friendly and open to new ideas and innovation and they promote themselves as hubs.
We are also a long way away from Australia so potential exporters really want to make the most of their market visit and sometimes expect to seal a deal or make a sale after one visit. This isn’t usually what happens, and return visits on a regular basis are really essential. Our region is all about building trust and personal relationships. That is why having a credible local presence or representative on the ground is essential.
What key projects are you working to develop in this region to further strengthen these connections, and how have these efforts evolved to adapt to Covid-19 pressures?
The most useful things Austrade can do is to help identify real opportunities for Australians in our markets, promote our capabilities to local supply chains, buyers and distributors and then connect them. Covid-19 has meant that we are rethinking how we interact with both our Australian clients and local customers. Obviously, with working remotely and travel restrictions we need to be agile and develop projects that are digital, offer virtual B2B meetings, virtual showcases, and pitching sessions and allow us to connect on-line rather than physically attend trade shows. This will make up the bulk of our main projects for the rest of 2020. We also need to provide insights through our communication channels on how the market is being impacted by the pandemic and where new opportunities might lie. We have to work hand-in-hand with key stakeholders and other allies. We will focus on one-to-many activities with our partners. So far we have run webinars, virtual networking, and video insight pieces and there’s more to come.
A really good example has been the Study With Australia campaign we ran in May and June in Latin America. Austrade partnered with Future Learn, a platform run in the UK with Seek.com, to offer short on-line courses and micro-credentials from a selection of Australian universities free of charge. Some courses even led to certificates or credit points and the range of subjects was really varied. The idea was to remind those students unable to study (or those considering studying) of the quality, flexibility, and technology Australia’s education offers. We received great media coverage –TV interviews, extensive local print, and social media coverage – as it was very topical given Covid-19. We achieved 80,000 enrolments globally for this virtual initiative. The six key Latin American markets, including Mexico, were in the top 20 countries globally in terms of enrolments and four markets were in the top 10.
In your opinion, what are key opportunities for Australian traders in Mexico, Central America and the Caribbean?
We see the greatest opportunities for exporters to Mexico and Central America in resources and energy, premium food and agriculture (including agtech), education, international health, and advanced manufacturing (defence and aerospace).
Australia is regarded as offering the best solutions for Mexico and Panama’s mining businesses in innovative technology, corporate social responsibility and good governance. We hope to also reach middle-class consumers in order to supply education services and premium food across our markets. Australia has a solid reputation in land and water management and these are areas important for Mexico as well as Costa Rica.
In Mexico, we have seen a tangible increase in the number of Australian businesses established here in a bid to access the supply chains of Mexico’s key industry sectors. Interestingly with the current global trade tensions more Australian companies are looking at re-shoring their manufacturing in Mexico as labour is low cost, the manufacturing facilities are first class, and access to the US market is very attractive.
What would you consider to be the greatest challenge(s) Australian businesses face when doing business in this region?
In addition to the distance from Australia, the biggest challenges are security, social unrest, governance and transparency. Direct sea freight is also an issue; however Panama is a great platform into the region and services Australian freight. Language can pose a problem. Although, Mexican executives often speak English and are very amenable to operating in English.
It is sometimes frustrating for exporters who send emails to businesses and often get no reply. Australians don’t realise that cold call emails in English will not work in this market. A phone call or WhatsApp are much more effective here.
What would your advice be for overcoming these challenges?
Businesses need to do comprehensive due diligence and carefully choose their local partners. We have very good referral partners who can assist with the legal and administrative challenges exporters might face. As far as Spanish goes, we recommend that material be translated into Spanish and businesses use an interpreter in sectors such as agriculture and mining because English isn’t always spoken by the buyers or supply chain managers they need to connect with. The business culture across the region is often more sophisticated than people might think. In terms of cultural differences, apart from a more relaxed attitude to punctuality, Latin Americans are generally very open, warm and enjoy the same things that Australians do. Titles are important and so too are strong handshakes and hugs – although, sadly, not in the time of Covid-19!
Biz Latin Hub supports businesses making their mark in Latin America and the Caribbean
Mexico, Central America and the Caribbean show promise as emerging business and trade destinations. When expanding into the region, make sure to find qualified specialists to assist with market entry, company formation and importing and exporting procedures.
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