Why Expanding Your Business into Australia Is a Wise Move

Part 1: What Does the Market Look Like?

Every business owner should be considering business expansion. After all, as a business owner, you want to grow your business, not shrink it, right? With that in mind, it’s essential to consider not only the places in which you can expand domestically but internationally as well. We’ve written a number of these intensive international business expansion articles as of late, and we’ve pointed out several different countries and regions in the world that would be a good fit for a business looking to expand internationally. Now, we’re going to take a deep dive into a particular country that is rife with opportunity for international business expansion—Australia.

In this intensive, 3-part series, we’ll do our due diligence and bring you right into the heart of the current opportunities that exist in the Australian marketplace. And while you might be thinking to yourself, “Australia is just an island country — what kind of opportunity could exist there for my business?” Well, you might find yourself surprised.

First, we’ll tackle the current market situation in the country. We’ll then look at the potentialities of expanding into Australia in terms of the benefits and the competitive edge you could give yourself.

Lastly, we’ll talk about some of the potential challenges that may arise when expanding into Australia. It’s important to note that while none of these potential challenges is detrimental, they’re still worth considering as you begin to construct your broader international business expansion strategy.

Let’s begin our journey to Australia with an in-depth look into the current market condition.

Australia Is a Rich, Diverse, and Globally-Connected Market

It’s interesting to look at Australia after considering some of the regions that we’ve written about in the past. For instance, regions like the Middle East and Africa, while they are part of the global economy, still have relatively new markets that are still just beginning to emerge. Australia, on the other hand, already has a rich and diverse market, with some substantial global connections that international expanding businesses could potentially take advantage of.

Again, we’ll get into the benefits of expanding into Australia in the next article, but it’s essential to at least note here that Australia’s market is already quite developed and relatively healthy.

This should bode well for an international business because it means that you won’t necessarily have to fight to create a new market or to energize a customer base.

Instead, you can hit the ground running—but only if you’ve got the right plan.

Australia Has a Major Mining Sector

While you might not be aware of it, Australia’s most developed sector is easily going to be the massive mining industry that it has worked hard to develop over the years. With that said, it’s important to note than the mining sector contributes more than 7% of the country’s GDP, which is undoubtedly a substantial percentage that needs to be considered. Whether or not you’re a business that could deal in part with the massive mining industry in the country, you could still reap the benefits of what the mining industry has helped to build within the broader Australian market—a global connection.

Australia Is a Global Market

Australia is already an established global marketplace because it has an open trading economy, which has allowed it to become a global hub of business. Australia also has many critical trade agreements with a variety of countries from all around the world, so conducting business in the country is virtually seamless.

If you’re a US-based business, you’re uniquely positioned to take advantage of Australia’s massive global trade market because the country exclusively trades everything from beef, aircraft parts, alcohol, and so much more with the US. And in terms of its relationship with the UK, the country trades everything from gold, to lead, and even coal. Remember, with the massive mining industry, the country is rich in precious metals and natural resources, which helps to generate income for what amounts to a sizeable economy for an island country.

What This Means for You

As you can see, the Australian marketplace is already rife with opportunity for a business interested in expanding internationally. With a clear global market connection, a booming mining industry, and a number of critical trade agreements with countries from around the world, entering into the Australian market can be quick and seamless, and in some instances, you may even be able to hit the ground running.

Next, we'll cover some explicit benefits that are mostly by-products of the genetic makeup of the Australian market. For that very reason, it only adds to our point that expanding into Australia would be a wise move.

Part 2: The Potentialities of Expansion

When we say the word “potentialities,” we’re referring to the potential business opportunities that come along with expanding into this country. You could consider the benefits if you’d like, but they are only true benefits if you’re able to leverage each potential opportunity to your benefit.

In 2017, Forbes penned a comprehensive article that took a long look at why a massive company like Amazon was expanding into Australia. They wrote, “The eCommerce market in Australia is strong and growing rapidly, and a strong economy and high internet penetration are fueling eCommerce Growth. According to eMarketer, Australia’s total eCommerce sales in 2017 are forecast at $32 billion, making it one of the top ten eCommerce markets globally. Around 65% of people in Australia reportedly shop online, and this figure is rising.”

It’s clear that there’s more to Australia than just mining—and a company like Amazon understood how to leverage the potential opportunity for expansion back in 2017. This should give you some more hope when developing your international business expansion strategy moving forward. Once you finish reading this article, you’ll have even more reasons for understanding just why expanding your business into Australia is a wise move.

Australia’s Market Offers Simple Entry Points

It’s always nice to see when a market offers a seamless entry point. In terms of expanding into Australia, there are numerous entry points that your business can take advantage of. Bizlatinhub.com says, “With four distinct business structures (sole traders, partnerships, companies, and trusts), you can effectively set up a business and begin trading within the country overnight, and its reasonable tax rates (Australians pay no tax on their first $18,200 earned, and then 19% on money over that up to $37,000 before reaching the highest bracket of 37% on each $1 over $87,000) are another benefit to entrepreneurs looking to enter a new territory.”

To break this down a bit, Australia essentially provides entrepreneurs with a cost-effective entry point through four different modes: sole traders, partnerships, companies, and trusts. This cannot be overstated because it allows entrepreneurs to enter the market with considerably less risk when compared to elsewhere in the world.

Australia Has Numerous Trade Agreements

Throughout the last number of years, Australia has been very useful in negotiating critical trade agreements with a number of countries and regions throughout the world. For example, Australia has a trade agreement with the UK to export gold, lead, and other precious metals. With the US, Australia trades in consumer goods, alcoholic beverages, and consumables. In Latin America, Australia has a comprehensive trade agreement with Columbia, where US $31 million of Columbia’s trade with Australia comes from coffee beans.

Australia Allows You to Future-Proof Your Business

When it comes down to it, Australia’s economy is just so diverse, so robust, and so extensive that it genuinely allows you to future-proof your business. And yet, Australia isn’t exactly on the radar of many businesses interested in expanding internationally. Much of that is due to the fact that it’s located in the middle of the Pacific Ocean, far away from some of the central business hubs of the world. However, this is one of the biggest strengths of the Australian market. It knows it’s on its own, and that’s why it has learned to become a self-sufficient market. And remember, if Australia can draw the eyes of a massive giant like Amazon, then the case that we’re making in this article certainly has some merit to it.

The Opportunity Is There

If you gain anything from this article, it should be the understanding that there is a plethora of opportunity for business expansion in Australia. Again, it’ll all boil down to the ways in which you go about leveraging these opportunities and turning them into a competitive business advantage.

Part 3: The Challenges of Expansion

Before we bring to light some of the potential challenges that might come alive throughout your expansion planning process, we’d like to take a moment to reiterate the fact that owning a business is difficult, and it never comes without its challenges. Expanding your business, even domestically, comes with a process, some challenges, and some struggles. Expanding your business internationally is always going to come with some holdups, some obstacles, and some roadblocks—that’s simply the nature of the business. With that said, we’d also like to make note that while we do foresee some challenges of expanding into Australia, we do not believe that any of these challenges would prove to be detrimental to your expansion efforts. Instead, we recommend maintaining a keen awareness of these challenges so that you can factor them into your international business expansion strategy moving forward.

Let’s look at some of the challenges that we foresee arising when expanding your business into Australia.

A Shifting Working Culture

It’s important to remember that no matter where you’re located in the world, workers and employees have different working cultures. In Australia, the working culture amongst employees is quite different from elsewhere in the world, and that’s something that every business leader should consider when expanding into Australia.

Australiapeo.com.au says. “Australian working culture is very different from other major countries in the world. Locals are world-renowned for their modesty and work ethic. Decisions can also take a lot longer than you’re used to as the decision-making process funnels from the bottom of the food chain to the top. Office culture is laid back, but busy and focused, and you’ll find that after-work social events are usually casual and less business-like.”

While some might argue that this is a benefit and not a challenge, it really might not be that simple, especially when you're used to the most formal business environment of places like the US, the Pacific, and even the UK. Australia's working culture is nonetheless extremely productive and passionate; they understand that work is work, and play is play.

Australia Is Quite Far Away

If you’re a US-based business, a UK-based business, or a business based in China, Japan, or elsewhere in the Pacific, it’s essential to consider just how far away your new international operations will be from home base. Remember, Australia is, quite literally, an island in the middle of an ocean, and the distance between your new operations and home base should certainly factor into your overall expansion strategy.

Not only will you experience gaps in communication due to the time-shift factors, but you might also deal with supply chain challenges and logistics hurdles. Not to worry though, Australia has already prepared for this, and it hasn’t turned away too many businesses just yet. However, it is also essential to consider that there is a reason why so many businesses officially rule Australia out in terms of international business expansion.

Taxes

As with establishing a business anywhere else in the world, dealing with tax law is complicated, complex, and intricate, and Australia is no different. Determining your tax liability in your new host country is critical before beginning your expansion process. You’ll want to make sure that you understand your tax liabilities and can still establish a viable business while fulfilling those liabilities right from the onset.

However, don’t forget about the tax breaks that Australia offers individuals. While that might not necessarily be enough to quell your worries, it should still offer you some breathing room in terms of taxes.

Nervous About These Challenges? Partner with a Global PEO

If you’re worried about managing your new international workforce who follow a different workplace culture, nervous about your tax liabilities, or the distance between your home base and your new host country, then it might be a wise idea to look into partnering with a Global PEO.

A Global PEO is essentially an HR outsourcing partner; however, they do so much more than simple HR services.

PEOs are local organizations that serve as Employer of Record (EOR) for your organization, allowing them to tap into their talent pool and hire your workers on your behalf—and on their payroll. Automatically, this reduces your tax liability because you won’t be required to incorporate into Australia formally, and it relieves some pressure on dealing with employees who follow a different workplace culture.

While a Global PEO might not be able to help too much in terms of the distance that exists between your home country and the host country, they still provide you with a knowledgeable, capable, and experienced regional partner who can help you solve day-to-day problems and challenges related to your workforce, tax liabilities, government compliance, and so much more.