How to Do Business in Australia
The land Down Under offers significant business potential. Australia has a GDP of $1.3 trillion, an economy growing at a rate of 3.6% per annum and about 60% of the population lives in the four major cities, making the key markets within the country easier to reach.
Let’s delve deeper into the intricacies of doing business in Australia to improve your chances of success in that economy.
Business culture in Australia
Australians are typically upfront in business and are receptive to foreign investment and new ideas. Transactions and deals can be concluded even on first-time business relationships without needing long-term build-up.
They often appreciate modesty and honesty, so aggressive sales methods may work against you. You’re better off being factual and straight to the point about your business with no hint of self-importance.
Similarly to the British, small talk about the weather or sports is often acceptable and welcomed. To show your involvement during business interactions, maintain eye contact.
What you need to know when doing business in Australia
Here are some key factors to bear in mind when doing business in Australia:
Be patient. If you try to rush the conclusion of a deal, you may lose out on valuable contracts.
Decisions are typically slow because of the synergistic working relationships— the top people within the company will often confer with subordinates before making a final decision.
Prepare for logistical challenges
The distance between Australia and the UK comes with challenges in terms of logistics. It’s more expensive to ship goods over a longer distance, so your pricing must cater to the increased costs. In addition, Australia’s time zone - 7-11 hours ahead - can create problems when scheduling meetings and carrying out business transactions.
Apply for intellectual property rights
Intellectual property (IP) rights are restricted to the particular territory of origin. In light of that, apply for local IP protection without an Australian Business Number (ABN). Consider getting in touch with British IP attachés, who work in the main export markets, to get more help and support.
Manage your payments
Depending on the business structure, B2B transactions will often involve payment terms of up to 60 days. You can manage the risk factors by using letters of credit and partial payments in advance. If the price of your goods is in pounds, it's easier to manage risks.
However, it’s often practical for Australian companies to prefer Australian dollar purchases, which brings exchange rate risks. To get better exchange rates, use an international currency specialist such as Clear Currency. Learn more about mitigating foreign exchange risk here.
The Australian Government regulates all goods moving into Australia through the Australian Border Force. You will be required to declare goods, show all documents and pay import taxes. The Free Trade Agreement provides easier ways to export to Australia.
Non-resident suppliers in Australia will also pay Goods and Services Tax (GST) unless where exempt. Ask about your specific product from the relevant offices.
Australia uses international standards for most products. However, there are some instances where Australian standards will have no international equivalent, meaning you will have to modify your product before entering the market.
Review the standards and codes of practice to ensure your offering meets legal requirements. Get guidance on food labelling and product packaging to meet Australian consumer, health and environmental legislation.
If you plan to conduct your meetings in person, you will need to apply for a business eVisitor visa. You can easily secure your visa in 24-48 hours. It allows you to enter and exit Australia for 90 days at a time for up to one year.
Be sure to arrive on time (even a little early) for business meetings. Keep the tone casual but serious and always stick to the schedule - wasting time will give the wrong impression. The dress code may be formal or more laid back, depending on where you are, so perhaps wear smart casual to be safe.
VAT on exports
You don’t charge VAT for goods exported to Australia. Keep the evidence that shows proof of export which you must get within three months of the sale.
Communication is typically direct and blunt so stick to the point when negotiating contracts. English is the mode of communication, but slang is used in abundance, even in business conversations, so it's worth familiarising yourself with the lingo ahead of any business dealings.
Use Clear Currency when sending money to or from Australia
Logistical challenges and managing time zones can be a headache when you expand into the Australian market - receiving your funds should not be. Clear Currency provides a fast and efficient way to send money to and from Australia at an affordable cost. Sign up with Clear Currency for all your international trade business foreign exchange transactions today.
How to Mitigate Foreign Exchange Risk
Currency risk can have a significant effect on the efficiency and profitability of any international business. Each exchange rate movement affects how much you receive from sales and what you pay to suppliers.
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