WHK Business Growth

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Exporting to Australia

With a significant network of firms across Australia and New Zealand and an increasing Trans-Tasman client base, WHK Business Growth are intimately aware of the myriad of issues that many Australian and New Zealand business owners encounter trying to enter each countries respective markets.

NZ to Australia

While entering the Australian market is a logical growth option for NZ companies; building a successful, competitive and profitable business remains a challenge and requires a significant commitment of time and resources to make it work.

Close proximity, ease of doing business and a larger market size (20 million people) are key reasons cited by successful exporters alongside the benefits afforded to NZ companies under the Closer Economic Relations (CER) agreement.

While CER has reduced the number of barriers to free trade between New Zealand and Australia, the practical implementation of 'setting up' requires a good understanding of the market realities and regulatory framework.

Market Entry

As our understanding of the Australian opportunity increases, NZ exporters are exploring their market entry options and asking themselves 'what is the optimal method of distribution into Australia?'. More traditional business models have seen a preference to use an agent or distributor coupled with regular market visits to support sales activity.

However, an increasing number of New Zealand exporters are investigating establishing some degree of physical presence in the market. There are several commercial advantages in setting up a business in Australia including direct access to end users and customers and access to local knowledge and expertise. The process, however, is costly and complex.

The most appropriate market entry method depends largely on:

• the nature of your product / service
• existing market distribution channels
• your company's goals / objectives
• resources, including staff and funds

Issues New Zealand exporters need to consider when discussing entry options with their legal and accountancy professional include:

• business structure options
• staffing
• taxation, fees and other costs
• regulations
• financial controls and audit requirements
• location
• intellectual property
• insurance
• banking
• distribution
• repatriation of profits
• location

Business Structures and Regulatory Matters

Having settled on the most appropriate market entry model, we can now turn our attention to determining the right business structure that will allow us to conduct business, confident in the knowledge that all compliance and legislative aspects have been addressed and the right systems have been set up.

The market entry model will inform what structure will be used. A key determinant in this process is defining your 'presence' in the market for tax purposes i.e. who will be importing the products? And, at what point will you be required to pay Australian income tax, GST etc?

Advice at the outset on this matter is essential to ensure potential double-taxation is, at a minimum, factored into decision-making, and, ideally, legitimately minimised. 

In addition to tax, exporters of various products also need to ensure their existing products comply with Australian regulations to avoid costly mistakes and delays. Three common regulatory areas include:

• labeling
• warranties and refund policies
• product safety and liability.

NZ businesses must also be aware of any particular State regulations in addition to Federal regulations.

Marketing Issues

While there are many similarities between New Zealand and Australia in our outlook, lifestyle, business and marketing practices there are also significant differences. And it is these differences which can trip companies up and make their first foray into exporting more complex and costly than it needs to be.

It is important to consider that although Australia is one country, for marketing purposes it is more accurately considered many markets with different regional characteristics.

Greater distances, diverse and dispersed populations, competition and costs are just some of the marketing challenges to be overcome.  As such, exporters entering the Australian market need to have a thorough knowledge of the market opportunity - size, structure, customers, competition and pricing for market credibility.   Reliable market research and intelligence is critical to achieving success.

Some Facts about our Trans - Tasman Capability:

• WHK is the 5th largest accounting business in Australasia (Source: Business Review Weekly).
• WHK employs over 3,000 leading people throughout six Australian states and across New Zealand.  WHK also provides quality services to over 200,000 clients through its network of over 100 offices. WHK is a member of Crowe Horwath International, one of the top 10 global accounting affiliations.
• 19 major accountancy firms, with a specialist financial services division in each Australian firm.

Our team recently completed a guide that explores "doing business in Australia" in more detail. For more information on this guide, or if you require assistance with your Australian venture please contact me (Heta.Hudson@whk.co.nz).