Zinc Group
Zinc Group is a global marketing agency specialising in relationship and promotional marketing, digital and strategy planning.
Need
Zinc Group needed finance to support its cash flow cycle to further expand into China.
Solution
We provided Zinc Group with a $4 million Overseas Direct Investment loan to help the business expand.
Zinc Group leveraged our support to form a joint venture to expand into the lucrative Chinese market – and beyond.
In 2018, Australian marketing company Zinc Group made it into the Australian Financial Review’s 100 Fastest Growing Companies in Australia list – achieving an average year-on-year growth of 40% over the previous three years. That’s extraordinary progress for a small business launched from a single office in Melbourne in 2005.
Export Finance Australia is not like an adversarial trade big four bank approach… they operate with a partnership mentality.
Peter Cleary
Managing Director & Group CEO, Zinc Group
Peter Cleary, Managing Director & Group CEO, said the company now has 14 offices across nine different countries, including the USA, China, Indonesia, Singapore, New Zealand, Taiwan, Thailand and Vietnam. The company works for a wide range of businesses delivering a variety of marketing services, including relationship marketing, promotional marketing, digital, strategy and planning.
So what makes Zinc Group stand out? Peter said it’s all about the principle of “Shared Value”.
“Profit is not the ultimate reward, it's about being able to create value as a business and then share that value with our team, our other stakeholders and with our clients,” he said.
“We attract the best people, then nurture and reward our team so that we can produce the best work – and this purpose-led culture has always been the cornerstone of Zinc.”
Partnering with a local
The team at Zinc Group was keen to crack the Chinese market. After some initial unsuccessful attempts, the business decided that a joint venture with a local partner would be the best way to go forward. Iain Andrew, Chief Financial Officer explained the journey.
“We registered a wholly foreign-owned entity joint venture, where we were 50/50,” he said.
“In the first nine months we were flooded with international contracts with major companies, such as Siemens, and the cash flow of the group grew quite a lot.”
But, while business was booming, Zinc Group ran into funding issues.
“The problem with China is the cash flow cycle,” said Iain. “Local trading terms are quite long – 60 or 90 days and in some cases, five months.”
Funding growth
To secure more funding, Zinc Group decided to bring in another partner, who bought 10% of the business. Then the original partner decided to leave the business.
“We decided to buy them out – and to try to fund further growth.”
However, as an Australian company with a turnover of under $150 million and no fixed assets, its banks were unable to assist with a loan.
“In terms of security, we're a trading company,” said Iain. “Our assets are purely the IP and the people that we have – the team.”
Iain said Peter had heard about Export Finance Australia through a networking group and decided to approach us.
“We were initially unsure if Export Finance Australia would be able to help because Zinc Group was a service provider rather than an exporter of products.
“However, talking to the team, we were able to secure the funding to buy out the joint venture partner in China,” he explained.
We provided Zinc Group with a $4 million overseas direct investment loan.
“It's been a game changer for us in terms of taking over that business and owning 90% and controlling it – and to our expansion strategy throughout Asia and the US,” said Iain.
Without our funding, Iain said it would have been much harder to grow the company.
“Dealing with Export Finance Australia has been quite refreshing, compared to dealing with standard banks,” Iain said. “They're very easy to deal with and encouraging – and they try to come up with solutions for funding problems that we have.”
