Many foreign companies which have registered a business in Australia in the last two years are growing steadily. In 2020 the Australian government instituted measures to protect businesses during the COVID-19 pandemic. As a result, the Australian economy entered 2021 very well-placed and it is set to become the world’s 12th largest economy in 2021, up two places from 2019, according to the International Monetary Fund.
Australia is among the countries with the largest GDP worldwide, and thus one of the largest economies. In 2020, GDP in Australia amounted to about AUD 1.9 trillion (GBP$1.02 trillion). Australia is home to just 0.3% of the world’s population, but accounts for 1.6% of the global economy. Though only 25 million Australians live in 3 million square miles (more than three hundred times the UK), Australia is the gateway to the Asian and Pacific markets, including China. The major of minerals, wool, cotton, meat and rice are exported to Japan (Australia's largest export market), China, the United States, the Republic of Korea and New Zealand. That’s hundreds of millions of potential consumers!
There are so many good reasons why UK companies should consider expanding into the Australian marketplace.
What's the attraction of Australia for a UK business?
Starting a business on the opposite side of the planet can be a gamble at the best of times. Apart from the financial risks, there are cultural adaptation, language barriers and differences in business etiquette to factor in. However, selecting Australia as your new business environment will let you bypass these problems altogether.
Besides an abundance of natural resources and a world-class transport and telecommunications infrastructure, Australia boasts enviable weather and isolation from many of the world's diseases, plant infestations and social problems.
Due to our common history, the UK and Australia share common legal systems, language and structures of society. The two countries are also politically and economically linked and are close partners in international affairs. The UK sells more to Australia than to India or China, and Australia is the UK’s 5th largest market for goods outside the EU. Materials and communications require little adjustment as technical standards are often similar, which is particularly important for the engineering and industrial areas.
"Australia and the UK have a strong trade and investment relationship, and it’s not a historic or traditional relationship but very much a contemporary and growing one. About 22 per cent of the UK’s foreign direct investment offshore goes to Australia, and over the last three years the UK was the second biggest growing investor in Australia, remaining our second biggest investor.", David Crook, Senior Trade and Investment Commissioner, Austrade UK
Right across industry sectors people and businesses from the UK are involved in investment and trade in Australia. Australia has an extensive and diverse economic market offering substantial opportunities for British companies expanding or licensing a business in Australia.
- Agriculture: wheat has the greatest production and value to the Australian economy. The high rainfall zone of Tasmania may offer chances in the dairying and beef production.
- Mining: more than half of the exported iron ore goes to China. Nickel, gold, diamond, uranium, zinc and coal are developed markets of interest. Particularly noteworthy areas are the Goldfields and Pilbara regions in the southeast and northwest of Western Australia respectively. The sector is highly technologically advanced: services, equipment and technology exports are over AUD $2 billion annually.
- Oil and gas: Australia is the 28th largest producer of petroleum in the world. Natural gas extraction is expanding.
- Information and communication technology: due to the continent’s vast distance between population centres, Australians have been investing in this sector for a long time, and it is now a driving force behind the Australian economy. The Australian Information Industry Association (www.aiia.com.au) provides companies with tools, advisory services and market intelligence to accelerate business growth.
- Biotechnology: there is a dramatic increase in interest in the potential of this industry. Australian scientific research has pioneered breakthroughs in many fields.
- Creative and media: highly qualified personnel and a competent audience suggest the Australian can be a valuable market to test products.
- Marine and railways: again, Australia’s vast distance between population centres has driven growth in these sectors since the arrival of the British in 1788.
- Food and drink: this sector continues to grow due to its world-class wine industry, non-GM foods and boutique alcohol and farming businesses.
- Recreation and leisure: with its steady temperate to tropical climate and its outdoor culture, the Australian recreation and leisure sector is an ideal one to invest in.
- Aerospace: The Avalon Australian International Aerospace and Defence Exposition is a signal that the sector is expanding.
Where to Invest?
The majority of the population inhabits just eight urban centres situated on the coast and these are the best places to start your business in Australia.
Sydney (NSW) is the largest, closely followed by, Melbourne (VIC), then Brisbane (QLD), Perth (WA) and Adelaide (SA) are the next largest. Mining regions are Goldfields and Pilbara, the Hunter Valley, the Bower Basin and Latrobe Valley.
What are the Challenges?
The commercial environment is regarded as exceptionally friendly and attractive to international companies starting a business in Australia, with room for growth. The challenges are those of any business in Western countries. You shouldn't have to alter your business mindset too much when expanding into Australia – you may just have to learn to appreciate Vegemite!
Australia does have its own standards and not all products as they are used in the UK are suitable for Australians. ‘Australianise’ is the keyword used to explain how to successfully resolve .
It is also important to consider the pandemic and the world we live in today. After almost two decades of continuous economic growth, the recovery from the international crisis may be slow and fragile. Be prepared to invest for the long haul so timing is essential.
Your One Stop Shop for setting up and maintaining operations in Australia
As a leading accounting and advisory firm, the Azure Group have built a strong reputation on assisting offshore clients set up and maintain their operations in Australia. We can provide you with a full range of advice and support to ensure that you make the right decisions from the beginning. 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."