From its stunning beaches and vast Outback to its thriving metropolises, Australia’s diversity means it has a lot to offer businesses that want to expand their operations globally. But before you take the plunge, there are a few things you need to know. Here’s a quick rundown of what you should keep in mind when considering the move down under.
The Business Environment
Australia is a stable, business-friendly country with a strong economy. In recent years, Forbes magazine has ranked Australia as one of the top 10 countries to start a business in. The government regulations for businesses in Australia are highly supportive of foreign investment, and in recent years has actively encouraged it to stimulate economic growth.
According to projections, real GDP will grow by 4.2% in 2022 and 2.5% in 2023. Wage and price pressures will rise, given the already tight labour market and strains on global supply chains, before moderating in 2023.
To that end, the government has implemented several initiatives to make it easier for businesses to operate in Australia. These include simplifying the process for setting up a company, providing more streamlined access to government services, and workshops for small businesses.
If you’re planning to expand your business into Australian territory, it’s worth considering applying for visas.
The Australian economy is highly diversified, with strong sectors including mining, agriculture, banking, tourism, and manufacturing.
The diversity provides Australia businesses opportunities for a wide range of industries. On top of that, Australia is a developed country with high living standards, meaning it can be an attractive market for luxury goods and other high-end products.
Labour Costs and Regulations
One potential downside to doing business in Australia is the relatively high labour cost. Wages are higher than in many other countries, and strict regulations govern subjects such as work hours and paid leave. These regulations can add to businesses’ operating costs.
When considering expanding your business into Australia from New Zealand, it’s important to remember that Australia had the highest minimum wage of 32 countries surveyed in 2020. Meanwhile, New Zealand was ranked 5th on this same survey.
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Australia uses the modern award system approved by the Fair Work Commission to set out the minimum terms and conditions of employment on top of the National Employment Standards (NES). The modern award system provides a layout of entitlements, such as pay and required work hours, based on your role and industry.
The modern award system can confuse those who have not encountered such a concept before. It’s important to note that this system does not apply to companies that have already established registered agreements. Each industry’s award system could be different; use this tool to find out if it exists in your industry.
When expanding your business into a new country, it’s also important to be aware of cultural differences that could affect your operations. In general, Australians are quite laid-back and casual; they dress informally (even when doing business) and use informal language when talking to others. These cultural differences can affect how your brand might be perceived in Australia.
Suppose your company’s brand and narrative are built around being New Zealand-made or of Māori origin. In that case, it may not resonate in Australia, and it may not create the connection with the target market that you desire. You might have to adjust your branding strategy or create an entirely new one for the Australian market. It’s important to research similar companies to see how they have re-branded their product or service to suit the wants and needs of the Australian market. Looking into local businesses in Australia is a good way to start.
The costs of living and doing business in Australia
The cost of living can vary depending on your location in Australia. Some areas are more expensive, affecting your company’s expenses and ability to attract new talent.
For example, if you are based in a major city like Sydney or Melbourne, your company might face the impacts of higher housing costs and other expenses. On the other hand, smaller towns may have lower living costs overall but also lower demand for certain products. Think about it this way, if we compare the size of Australia to New Zealand, Australia is 29 times bigger! Population-wise, New Zealand only has ~4.9 million compared to Australia’s 25.69 million people. This significant difference could affect your ability to find the right talent or generate sales in Australia.
Still, despite these potential challenges, there are many benefits to expanding your company into Australia. Because of its advanced economy and high standard of living, Australia is often seen as a great destination for international business. If you can adapt to Australian business culture and manage costs effectively, your business could experience great success in this thriving market.
How to set up a business in Australia
1. Deciding on your business structure is important to decide when expanding into Australia
This decision will have tax implications and determine which government regulations your business must comply with. The most common business structures in Australia are:
- Sole traders: if you’re the only owner and operator of your business
- Partnerships: if your business is owned by two or more people
- Companies: if your business is a legal entity separate from its owners
- Co-operative: if your business is owned and operated by its members
- Trust: an entity acts as an agent on behalf of another party to transfer assets to its recipients
You can learn more about setting up a company in Australia on the Australian Securities and Investments Commission (ASIC) website, the perfect resource for businesses registering as foreign companies.
2. You’ll need to open a bank account when establishing a business in Australia
The process is relatively simple and can be done online. You’ll need to provide the following documents:
- A certified copy of your company’s Certificate of Registration from ASIC
- Your company’s Australian Business Number (ABN)
- A certified copy of your company’s constitution (if you have one)
- The names, dates of birth and addresses of your company’s directors
If you are already a customer of a New Zealand banking entity, such as ANZ, ASB (Commonwealth Bank), Westpac, or BNZ (National Australian Bank/NAB), setting up a business bank account in Australia will be a seamless process as these banks are also Australian-based.
3. VAT Registration
You must also charge VAT on your invoices if your business is registered for GST in Australia. The current VAT rate in Australia is 10%. You can find more information regarding VAT on the Australian Taxation Office (ATO) website.
4. Importing and exporting goods
If you plan on importing or exporting goods to and from Australia, you’ll need to obtain an import/export permit from the Department of Home Affairs. With regards to New Zealand, you’ll be glad to hear that long-standing free-trade agreements make importing from or exporting to New Zealand easier than it is with other countries. The ANZCERTA set into force in 1988 increased two-way trade by an average of 6.6% annually and was valued at $A23.7 billion by 2014-15. New Zealand is currently Australia’s eighth-largest trading partner.
If you’re a New Zealand-based business looking to expand into Australia, it’s worth joining myNZTE which provides an Australian Market guide for New Zealand businesses.
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Expanding your business into Australia? There’s a lot to like about this thriving country—from its strong economy to its supportive government policies—but there are also some challenges you’ll need to be aware of before moving down under. By keeping these factors in mind, you can ensure that your expansion plans get off on the right foot—and set your business up for success in this promising market!