At one level, Macquarie Bank is the perfect example of how a successful
Australian business should emerge and grow. Born out of an English
merchant bank in the early 1970s, Macquarie’s Australian executives
broke free from these shackles and then successfully competed against the
world’s biggest players in the domestic investment banking market.

Having grown as big as was possible in Australia, Macquarie then exported
their model overseas and are now generating an increasing amount of
offshore income for its Australian shareholders. One telling statistic
from yesterday’s result was that the Asian stockbroking business
out-performed its Australian counterpart for the first time.


Wouldn’t it be nice if all those happy players in Australia’s domestic
service-sector oligopoly, like Coles Myer, Woolworths, Telstra,
Tabcorp and the big banks, could make the same claim. Sadly, they
all just sit back with their powerful domestic market shares and
generate huge returns gouging the long-suffering Australian consumer. A
few of them venture across the ditch to do the same in New Zealand, but
there are still way too many government-dependent large companies in
Australia.

Sure, the likes of CSL, Billabong, Computershare, Resmed, Rinker,
Cochlear, Westfield and News Corp are examples of Australian companies
that have succeeded overseas. Unfortunately, there are far more examples of
companies whose share prices would be higher today if they had stayed
domestically focused. AMP, Pasminco, Telstra, Westpac, NAB,
Multiplex, Village Roadshow, Hoyts, Pacific Dunlop, Brambles and
Foster’s are just a few examples.

Even more damning is the industries where Australia has no discernible
global presence, such as shipping, pharmaceuticals, electronics, IT
and hotels.

In an increasingly globalised world, any home-grown business which can
withstand foreign incursions is to be
congratulated. Investment banking is dominated by the multinationals,
yet the likes of Citigroup, Morgan Stanley, CS First Boston, JP Morgan,
Deutsche Bank and ABN Amro have had their lunches completely cut by
Macquarie in Australia. Only Swiss-based UBS has a comparable franchise.

Macquarie has then used its local knowledge and networks to
successfully expand offshore on a scale that only Westfield, News Corp,
Rinker and BHP-Billiton have done in a bigger way.

Harold Mitchell’s media buying empire is the stand-out
example of a local survivor holding onto a leading domestic position in
a globalised industry. The Packer-backed Seek.com is another because
Monster.com, the world’s biggest online jobs site, has fared poorly in
Australia. The contrast with e-Bay is stark because no Australian
auction site has got near them, although at least PBL clipped the
ticket for a $100 million-plus profit along the way.

So what are the other industries where Australia has successfully
fended off the foreigners and what industries have we failed to compete
in? We doubt there’s a better example than Macquarie Bank but send your
suggestions to [email protected]