Company: COLLY COTTON

State: NEW SOUTH WALES

Sector: AGRIBUSINESS

Colly Cotton, based in New South Wales, is one of Australia's largest
exporters of raw cotton. For over a decade, Colly has exported cotton to
India, which is now Colly's fifth largest customer taking about 10 per
cent of total export volume. Australia supplies about 25 per cent of
India's cotton imports; the other major competitors are West Africa and
the United States.

Although India is a large cotton producing country, largely outdated
harvesting and processing equipment reduces the quality of harvested
cotton, causing problems for the quality conscious textile and dying
industries, particularly exporters. Consequently, mills increasingly
import high quality foreign cotton over time for blending purposes. Colly
Cotton's strategy targets export oriented firms that typically use high
proportions of foreign yarn in order to meet overseas customers' quality
requirements.

Colly's India considers its strategy of running its business through
a single agent is critical to the success of its business venture in
India. The agent connects well with the mills, is a long established
trader in a variety of commodities and came with excellent
recommendations. As a result of this strong relationship, Colly has had
minimal problems in expanding its business in India. However, Colly notes
that not every trader has had the same positive experience; less reputable
and inexperienced agents are not uncommon; delivery and contract
difficulties can be frequent. It advises interested exporters to research
the market and potential agents closely, build strong agent relationships
and identify key customers and likely hassles very early on in the
business operation; a conservative approach to business management pays
dividends.

Colly Cotton considers the future of their Indian exporting operations
to be very good. They note the low cost base and recent industry reforms
should further increase the competitiveness of Indian textile mills,
expanding demand for cotton and creating future export opportunities for
Colly.

Source: Colly Cotton, 2001.