Expanding Globally during COVID-19: Risky business or perfect timing?


The Coronavirus (COVID-19) is unsettling supply chains, sapping sales of products, shaking global stock markets, throwing travel into chaos, sinking businesses worldwide, and intensifying fears of a global recession. With so much uncertainty surrounding the global marketplace, business leaders who had expansion plans are asking themselves: Is now the right time to go global or is it too risky?

Going global could act as an excellent hedge against domestic, or even regional, economic and political conditions. In these circumstances, the question is not when to expand, but how to expand successfully.

If your plans are to expand to Australasia, we provide our Top 9 ‘thoughts’ on the Australian market and how to enter successfully:

1. Why the Australian market?
Australia is an attractive market  to set up a business. Multinational companies view Australia as presenting the best case for regional headquarters to target the dynamic Asia Pacific region. Key business centres include Sydney (NSW), Melbourne (VIC), Brisbane (QLD) and Perth (WA). Australia is a leading financial centre in the Asia Pacific region. There is a strong and enduring tradition of democracy in Australia where rule of law and frameworks prevail. Australia has one of the strongest, most competitive, open and flexible economies in the world.


2. Due to COVID-19, is now the right time to expand to Australia?
During these uncertain times, we have seen a steady stream of international clients expanding into Australia. Azure Group have experienced an increase in the numbers of enquiries coming from abroad. Those businesses who have a unique proposition or that are not impacted directly by COVID-19 are still setting up locally to take advantage of the market when others may be cautious to enter. 

Industries showing the greatest interest in Australia include the Utilities Sector, Manufacturing and Wholesale sectors as well as software development, e-commerce and education sectors as more people work remotely and are utilising technology to operate both their personal and professional lives daily.

3. Do you have the right product / service to offer to the Australian market?
One of the biggest considerations must be whether your business can build a strong customer base in Australia. A product or service that sells well in your home country may not have the same appeal in international target market. Is there a need for your offering? Don't think that it might be – know that there is. You also must understand the direction your new city is going in and leverage that momentum to support your expansion.

4. Subsidiary or Branch? Choosing the right business structure when starting a business in Australia!
In establishing operations in Australia, an overseas company may choose between two options:

a) Company (‘a subsidiary’)
A subsidiary is a company that is owned and controlled by another company. 'A company' is a separate legal entity and lets you conduct business throughout Australia. Most subsidiaries are set up as proprietary companies that are limited by shares.

b) Branch (‘registered foreign company’)
A foreign company ('a branch') is one that is incorporated outside Australia. A foreign company can register with the Australian Securities and Investments Commission (ASIC), allowing it to carry on business in Australia. Upon registration, the company is issued with an ARBN (Australian Registered Body Number) and is required to provide annual reporting directly to ASIC.

5. Opening a local office
As part of your local operations you will need to have an Australian office. You can do this by either leasing an office or purchasing Australian real estate. You need to consider legislation around the acquisition of real estate by foreign companies. Generally, if the property value is less than $50 million it doesn’t need the approval of the Foreign Investments Review Board (FIRB).

6. Tax matters
In Australia tax is governed by the Australia Taxation Office (ATO). Generally, if you are earning money in Australia regardless of your structure you will be required to pay tax. You must comply with a range of obligations including corporate tax, capital gains tax (CGT), duties and excise and GST. If you have employees you will also need to manage employment tax withholding, Fringe Benefits Tax and Superannuation.

Every company must have a Tax File Number (TFN) and an ABN (Australian Business Number). It is imperative that you understand Australian tax law and what your obligations are regarding tax. Failure to comply with the Australian governing bodies can result in heavy fines or even a criminal conviction. This is a specialised area and it is essential that you get the support and advice of a registered tax accountant.

7. Accounting matters
Setting up the appropriate systems for GST and PAYG is crucial for your local operations. Choosing the right software keeps you abreast of all legislative changes ensuring data and systems comply.

It can be difficult to set up your own system without an accounting background. Our team of fully qualified accounting professionals use best practice accounting standards to integrate every aspect of the system with our local legislation ensuring compliance with regulatory bodies.

8. Final decision – document your processes for next time
Even if you don’t decide to expand now, prepare a well-documented plan that can be utilised for when you are ready to launch.

It's likely that once you have entered one country, you’re probably considering your next move. Whilst rolling out your first global office, prepare a well-documented plan that can be utilised for your next launch. This will not only save you an enormous amount of time but will help in streamlining the steps needed for a successful new venture.

9. Finding the right support is critical for global success

Azure Group have long established themselves as a leading accounting and advisory firm in Australia. We have adopted sophisticated IP and Technology that allows us to streamline the way we work with international clients.

Azure Group have advised many clients in managing Governance and local Australian regulatory requirements. We have a dedicated International Client Service Team with the necessary experience and knowledge in the Australian Corporations Law and other Compliance & Regulatory requirements in Australia to assist your company establish and maintain its Australian presence.

Our experience working with a range of businesses from significant global entities to smaller enterprises throughout Australia and Asia allows us to add value to the growing demands of global business. Get in touch.

Have you noticed our #FridayExpertTips... here's one that relates to #International

"One common problem that INTERNATIONAL ENTREPRENEURS encounter is that they don't have all of the resources supporting them in a foreign country. Finding the right support could be critical for GLOBAL SUCCESS."


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About Author

Azure Group
Azure Group

Azure Group is the leading Chartered Accounting, Business Advisory and Strategic Advisory firm supporting the growth & success of fast growing entrepreneurial businesses.

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