"the toolbox to the bric" coface australia
DESCRIPTION
The BRIC countries (Brazil, Russia, India and China) with their booming economies and rapidly growing middle class consumers, offer unprecedented and exciting new opportunities for Australian exporters. However, as with any emerging market, they come with risks, challenges and problems which will be unfamiliar and sometimes daunting to companies of all sizes and experience. So, how much do you know about the BRIC countries and their influence on the Australian economy? What are the opportunities? How do you identify and manage the risks? To hear from leading experts on the relevant issues, who can share their on the ground experiences, stories and case studies, come along to learn more about doing business in the BRICs.TRANSCRIPT
The toolbox to the BRIC05 201230
In collaboration with:
Coface Australia05 201230
Al H ll S i C R l i hi M C f A liAlex Hall, Senior Customer Relationship Manager, Coface Australia
Agendag
C f hCoface, who we areCountry Risk according to CofaceCoface risk overview: BRIC countriesHow to minimize risks and trade safelyHow to minimize risks and trade safely
3 www.coface.com.au
Who is Coface?
● Coface is the 3rd largest credit insurer worldwide, offering companies around the globe solutions for trade receivables management.
● Direct subsidiaries in 66 countries and able to provide credit insurance and credit management services in 95 countries via CreditAlliance network.
● Each quarter, Coface publishes its assessments of country risk for 157 countries, based on its unique knowledge of companies' payment behavior and on the expertise of its 250 underwriters.
● Common risk system -‘Atlas’, a unique worldwide database which flags payment incidents in 370 billion euros of trade flows.
● 39 000 li t i dit i ld id● 39, 000 clients in credit insurance worldwide
● The manager of the French government export guarantees.
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Coface in Australia
● 2000 Coface entered the Australian market through a managing agent that underwrote Coface policies on behalf of Coface SA
● 2004 Coface Services Australia was launched.
● 2008 Coface Australia started operating as an APRA authorised local branch, subject p g , jto Australian regulatory rules.
● 2008 A Credit Alliance agreement was signed in 2008 with Veda Advantage, our key information supplier and Easy Number partnerinformation supplier and Easy Number partner.
● 2010 New strategy: Coface Australia focus on its core business Trade Credit Insurance and maintain relating business lines (Debt Collection and Business I f ti ) i l f i t l d ithi th i tiInformation) mainly for internal needs within the organisation.
● Direct presence in Australia:
S d (h d ffi ) d M lbSydney (head office) and Melbourne
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Coface global offer in credit insuranceAvailability in 95 markets
Coface offers credit insurance directly50 countries
www.coface.com.au6
Coface offers credit insurance by using partners to front policies45 countries
Coface global offer in credit insuranceAvailability in 95 countries
Europe Europe Middle East Africa Americas Asia-PacificWest-North-South Central-East / CIS North Africa
B l i A t i Al i B i A ti A t liBelgium Austria Algeria Benin Argentina AustraliaCyprus Bulgaria Bahrain Burkina Faso Brazil Bangladesh
Denmark Czech Republic Egypt Cameroon Canada BruneiFinland Estonia Iran Chad Chile ChinaFrance Hungary Israel Djibouti Colombia Hong Kong
G K kh t J d G b E d I diGermany Kazakhstan Jordan Gabon Ecuador IndiaGreece Latvia Kuwait Gambia Mexico IndonesiaIreland Lithuania Lebanon Guinea Panama Japan
Italy Poland Libya Mali Paraguay MalaysiaLiechtenstein Romania Morocco Nigeria Peru New ZealandLuxemburg Russia Mauritania Senegal United States PakistanLuxemburg Russia Mauritania Senegal United States Pakistan
Malta Slovakia Niger South Africa Uruguay Philippines
Netherlands Slovenia Qatar Sudan Venezuela SingaporeNorway Saudi Arabia Uganda South KoreaPortugal Syria Taiwan
S i T i i Th il dSpain Tunisia ThailandSweden UAE Vietnam
Switzerland YemenTurkey
United Kingdom
www.coface.com.au7
Bold: Coface direct presence
Coface Country Ratings: BRIC
● The BRIC countries include:● The BRIC countries include:
- BRAZILBRAZIL- RUSSIA- INDIA- CHINA
www.coface.com.au8
Merchandise trade levels by BRIC country
AUSTRALIAImports volume Imports Exports volume ExportsImports volume
(AU$million)Imports
growth (%)Exports volume
(AU$million)Exports
growth (%)Brazil 758 20.40% 1,574 70.80%Russia 370 2.90% 854 45.30%India 2,083 12.90% 15,742 -2.70%China 41,109 13% 64,835 39.40%TOTAL volume of BRIC trade levels 44 320 83 005trade levels 44,320 83,005Percentage of BRIC trade levels (%) 20.20% 33.72%TOTAL volume of trade levels (world) 218 968 7 40% 246 713 17 30%levels (world) 218,968 7.40% 246,713 17.30%
Source: Department of Foreign Affairs and Trade 2010/2011
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Country Risk according to Coface
● Country Risk measures the influence of a country macroeconomic and institutional evolution on companies credit risk
● Country risk assessmentAssesses the average risk of payment defaults by companies in a given country To rate countries, Coface combines economic and political prospects of the country, Coface
payment experience and business climate assessment This rating has 7 grades: A1, A2, A3, A4, B, C, D
● Business climate assessmentAssesses overall business environment and more precisely whether corporate information is
available and reliable and whether the legal system provides fair and efficient creditor protectionp
This rating has 7 grades: A1, A2, A3, A4, B, C, D
Coface Country Risk Conference 201110
BRICs: Risk Assessment
Business ClimateCountry Risk
January2007
January 2008
January 2009
January 2010
January 2011
March 2011 June 2011 September
2011January
2012Brazil A4 A4 A4 A4 A3 A3 A3 A3 A3 A4Russia B B B C B B B B B BI diIndia A3 A3 A3 A3 A3 A3 A3 A3 A3 A4China A3 A3 A3 A3 A3 A3 A3 A3 A3 B
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BRAZIL Risk Assessment: A3
● STRENGTHS- Scale and potential of the domestic market p- Abundant natural resources - Significant manufacturing industry - Primary budget surplus y g p- Considerable currency reserves (12 months of imports)
● WEAKNESSES● WEAKNESSES- Dependence on raw materials and foreign capital - Deficient infrastructures (energy, transport) - Lack of skilled labourLack of skilled labour - Shortfall in household savings rate and high cost of credit - High taxes primarily devoted to operating expenditures - Corruption and crime flourishing on inequalities- Corruption and crime flourishing on inequalities
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Brazil: Overheating is over, not the temptation of protectionism…….
80
100
p
40
60
0
20
-40
-20
2007 2008 2009 2010 2011p 2012p
Portfolio investments (Bns $)Net foreign direct investments (Bns $)Current account balance (Bns $)
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Current account balance (Bns $)
RUSSIA Risk Assessment: B
● STRENGTHS- Abundant natural resources (oil, gas, metals…)( , g , )- Skilled labour force - Low public debt and sizeable currency reserves - Confirmed regional and energy power g gy p
● WEAKNESSES- Accentuation of the rentier nature of the economyAccentuation of the rentier nature of the economy - Poor competitiveness of the industrial sector - Fragile private banking sector - Poor infrastructure basePoor infrastructure base - Population decline - Continuing shortcomings in the business climate
www.coface.com.au14
Russia: Consumers and credit are back!
Consumption and Unemployment Banking Credit Growth
12
14
15
20Unemployment rate
Private Consumption growth (%,
60%
80% Credit tocorporatesCrédit toHousehold
Annual nominal growth (%)
6
8
10
5
10
20%
40%
0
2
4
10
-5
0
-20%
0%
7 8 8 9 9 0 0 10
1996
1998
2000
2002
2004
2006
2008
2010
2012
-10
déc-
0
juin
-0
déc-
0
juin
-0
déc-
0
juin
-1
déc-
1
juin
-1
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INDIA Risk Assessment: A3
● STRENGTHS- Diversified drivers of growth g- Solid fundamentals: high savings and investment rates - Competitive private sector in industry and services - Moderate foreign debt and satisfactory foreign exchange g y g g
reserve ● WEAKNESSES- Lack of infrastructures and deficient educational system - Skilled labour wage rise threatening to erode competitive
advantage - Increasing private corporate debt - Weak public finances - Persistent uncertainties over the Kashmir question
www.coface.com.au16
India: Financial weaknesses
0% 12%GDP Growth (%) RH scale
-3%
-2%
-1%
6%
8%
10%
GDP Growth (%) RH scale
Current account balance / GDP (%) LH scale
-6%
-5%
-4%
0%
2%
4%
76% 73% 74% 73%69% 68% 68%
80%
100%
2006/07 2007/08 2008/09 2009/10 2010/11e 2011/12p 2012/13p
40%
60%
Public debt service / revenue (%) Public debt / GDP (%)
34.6% 32.2% 35.4% 37.1% 34.4% 34.5% 35.6%
0%
20%
2006/07 2007/08 2008/09 2009/10 2010/11e 2011/12p 2012/13p
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CHINA Risk Assessment: A3● STRENGTHS- External accounts benefitting from competitiveness and industrial diversification
Ri k f f i i d bt d li it d th k t th hi h l l f f i h- Risk of foreign over-indebtedness limited thanks to the high level of foreign exchange reserves and to the current account surplus
- Sovereign risk contained: public debt mostly domestic and denominated in local currency - Infrastructure development spurred by the stimulus packageInfrastructure development spurred by the stimulus package - Very high corporate savings rate that funds most investments
● WEAKNESSES● WEAKNESSES- Growing social tensions linked to mounting inequalities - Aging of the population and gradual drying up of the pool of abundant cheap labour
Overcapacity in industry and trade- Overcapacity in industry and trade - Weakness of Chinese banks due to credit dynamism and uncertainty as to the level of
non-performing loans - Environmental problemsEnvironmental problems
www.coface.com.au18
Will 2012 be a Chinese business-friendly year?
Main risks for Chinese businesses in 2012
30.1%30%
35%
Tighter monetary policy and access to creditHigher commodity price and rising inflationIntensified domestic competitionIncreasing wages & salary demand
26.6%
20.1%20%
25%Increasing wages & salary demandLarge & rapid yuan appreciationOthers
15.9%
10%
15%
6.4%
0.9%0%
5%
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BRICs: Growth is under control
BRICs: GDP growth (%)
8
10.49.2
7
8China
8.56.9
3.5
7India
f4
2 8
3.7
3.2Bra il
Russia 2012f2011e2010
7.52.8
0 2 4 6 8 10 12
Brazil
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How to minimize risks and trade safely
● INFORM: Know who you are dealing with● INSURE your customers through Trade Credit Protection● INSURE your customers through Trade Credit Protection
Effective control of bad debts Balance sheet protection and cash flow relieve Alternative to LCs Trade safely in existing and new markets Secure increase levels of finance Secure increase levels of finance
● MANAGE your debts effectively: Directly Outsource to b2b debt recovery agency Coface TCI includes debt collection services as part of the policy
www.coface.com.au21
Info available: www.coface.com.au
www.coface.com.au22
Coface Country Risk Handbook
Economic review and 2012 outlook
for 157 countries
● Coface assessments
● 2012 outlook
● Economic indicators for each countryEconomic indicators for each country
● Payment incident trends monitored by Coface
● P t th d d ll ti ti● Payment methods and collection practices
www.coface.com.au23
Coface Australia
Sydney (Head Office)Sydney (Head Office)Phone: +61 (0)2 8235 8600E-mail: [email protected] Address: Level 10, York StreetSydney NSW 2000
Thank You! y y
MelbournePhone: +61 (0)3 9691 7600E-mail: [email protected]: Level 18, 600 Bourke Street
Sydney
Melbourne
Melbourne VIC 3000
www.coface.com.au
24 www.coface.com.au
The toolbox to the BRIC05 201230
In collaboration with: