Guides

Doing Business in Australia

Featuring a large, diversified, open and highly flexible economy, Australia is one of the wealthiest countries in the world. The geographically massive and culturally diverse nation has enjoyed more than 20 years of uninterrupted economic growth and sustains important trading ties with many of the key countries in the Asia-Pacific region.

Though Australia's economic record is generally sparkling, overall growth has tapered off somewhat in recent years. Australia made a major investment in mining and gas extraction in an effort to increase commodities exports, with a focus on coal, iron ore and liquefied natural gas. China and other Asian nations are key markets for these commodities. Rapidly falling prices in the commodities sector, however, have significantly diminished the revenue flowing from mining and gas exports.

Despite this and other challenges, Australia remains an attractive place for U.S. firms to do business.

Reasons for doing business in Australia

Australia regularly ranks among the world's most business-friendly environments. The following are a few key reasons why Australia has earned this pro-business reputation.

Australia is business friendly

One of the primary reasons why companies may wish to focus on Australia is the overall ease of doing business. Australia manages to have an exceptionally vigorous regulatory landscape while still rating as one of the world's most business-friendly nations. Australia is recognized for the soundness of its banks, legal system and corporate debt. The country's stock market earns very high marks for efficiency, and the country's finance and banking regulations are among the world's strongest.

Additionally, Australia scores very highly in terms of overall quality of governance. In 2012 the World Bank's Worldwide Governance Indicators ranked Australia 10th among all nations in quality of governance. Because of all of these factors, Australia ranks 13th out of 189 countries for ease of doing business. It takes just 2.5 days, on average, to start a new venture in Australia.

Australia has deep connections with the Asia-Pacific

Situated near many vitally important Asian-Pacific trading markets, Australia is well positioned to reap the benefits of trade. Australia's trade, investment and cultural links with countries in the Asia-Pacific region are longstanding and deeply rooted.

Australia has a number of key trade agreements in place with vital markets such as China, Japan, South Korea, New Zealand, Singapore, the United States, Thailand, Chile, Malaysia and the Association of South East Asian Nations (ASEAN).

These legally binding trade agreements are critically important, as they guarantee privileged access to the markets of trading partners for goods, services and investments. The interdependence of Australia and other major Asia-Pacific markets is emphasized by the fact that nine of Australia's top fifteen trading partners are located within the region.

Excellent infrastructure

Australia has world-class infrastructure. Its network of roads, ports, and transport networks and logistics chains were designed with the needs of the business community in mind.

Highly skilled workers

Australia offers businesses access to a diverse and highly skilled workforce. According to the Global Talent Competitive Index, Australia ranks in the top 20 for the talent of the people it produces, attracts and retains.

The country is also lauded for its top-ranked education system, high research quality and ability to retain top talent. The country also gets credit for the diversity of its worker base—more than 30-percent of Australia's workers were born overseas.

Commitment to innovation

Australia ranks among the global heavyweights in terms of research and development spending. These expenditures, along with its large number of researchers, rank Australia with other worldwide innovation heavyweights, including Japan, the U.S., France and Germany.

Australia is a research leader. Across 22 scientific research fields, almost 80 percent of the country's top research publications have a relative impact of at least 20 percent above the global average. Australia's strongest areas in terms of published research include engineering, space science, physics, clinical medicine, geosciences, ecology and materials science.

Challenges for doing business in Australia

While Australia undoubtedly offers significant positives for any business considering a move, the country isn't without challenges. The following are a few of the most prominent hurdles businesses must clear when operating in Australia.

Logistical issues

Australia is a large nation that is geographically isolated from key markets outside the Asia-Pacific region. This can cause difficulties related to time zones and lengthy travel times. Most of the country's commercial areas are located on Australia's east coast, particularly the prominent cities of Sydney and Melbourne. Export opportunities are also available in Perth, Adelaide and Brisbane. Another prominent city, Canberra, has little manufacturing activity and is instead heavily involved in federal administration of government departments and serviced-based industries.

Australia's robust oil and gas sector is largely based in the states of Western Australia, Northern Territory, and Queensland. Opportunities featuring ports and rails can be found throughout Australia.

Weather

Australia's weather can oscillate wildly, which can have an effect on business. Because of the country's vast size, Australian climates vary by region. The seasons are also opposite to those found in the Northern Hemisphere.

Labor costs

Low unemployment levels — driven partially by the labor-hungry resources sector — have created wage pressure in certain industries. The employer contribution rate (currently 9.5 percent) is scheduled to rise to 12 percent by 2025.

Transportation

Given Australia's vast size, the distances between city production centers and the areas providing raw materials are often considerable. This means transportation costs may be elevated, and account for a significant portion of overall manufacturing and distribution costs. Because of the importance of moving goods quickly—and the difficulty of using air freight across Australia's massive spaces—the country has made heavy investments in its road networks.

Conclusion

It can sometimes take years for a company to accrue enough local knowledge to operate without needless difficulty. This interval can be greatly shortened by partnering with experts who have a deep awareness of local laws and regulations. This is doubly important when it comes to the more challenging aspects of expanding operations in this region.
 

LEARN MORE

To learn more about how CT can help you better manage your global compliance needs, contact a CT representative at 844-318-1457 (toll-free US). Access the full series of Global Business Expansion Guides.

Join the conversation. Follow us on Twitter, LinkedIn, Google+ and Facebook.

Request a Custom Quote

Have a specific question about a product? A CT Specialist will follow up with a custom quote along with a comprehensive assessment of your needs.