Australia is often poised as a great trading partner with the UK, especially in the run-up to Brexit. But British brands have to plan carefully to trade successfully in Oz
By the time payment scaleup GoCardless decided to expand its services Down Under, Joseph Robins had already acquired extensive experience that made him perfect as the company’s Australia and New Zealand country lead. “Before moving into my current role leading GoCardless’ expansion into [the Southern hemisphere], I was managing the company’s growth into emerging European markets, notably France, Germany, Spain and the Nordics,” he says. From the outset it looked easy given the nation’s close relationship with the UK, the fintech startup’s massive knowledge about working across different borders in Europe and how its research suggested its services would be heavily in demand in the nation. However, when Robins began to explore the different growth options in the sunburnt country as well as the challenges, he soon realised that venturing into Oz would come with many challenges, the biggest of which was the distance. “Entering any new market is tough but entering one so far away from your HQ adds another layer of complexity,” Robins explains. Navigating these challenges is paramount for any UK SME looking to expand their services and export to Australia.
There are plenty of reasons why they should be. For instance, in the run-up to Brexit government representatives have consistently suggested divorcing the EU will enable Britain to move closer to the Commonwealth. As such, countries like New Zealand, Canada and, indeed, Australia are at the top of the list of nations UK entrepreneurs should be looking into outside of the EU. In fact, Liam Fox, the international trade secretary, has pushed for Britain to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which includes Japan, Canada, Mexico, Peru, New Zealand and Australia. As part of his charm offensive, the minister travelled to The Great Southern Land in November 2017 to promote trade between the two nations. And Fox made no secret as to why he thought it was a good idea. “The UK and Australia already have a strong economic and cultural relationship – based on our shared histories, language and open liberal economies,” he said at the time.
While Fox’s plan to join the CPTPP has been overshadowed by doubt due to uncertainties surrounding what the final Brexit deal will look like, the chaotic uncoupling from the EU has made exporting a better opportunity, at least in the short run. “The overall weakness of the pound has created a huge opportunity for UK SMEs to export to countries like Australia by making their products and services more competitive on price,” suggests Lee McDarby, corporate IP managing director at moneycorp, the foreign exchange expert. The trade has certainly grown. Between 2016 and 2017, UK exports to Australia rose from $5.368bn to $5.755bn, according to Statista, the statistics portal. However, McDarby warns UK entrepreneurs from blindly relying on their domestic currency remaining weak. “Any British business that imports and exports goods should consider having a concrete currency plan to ensure they’re not left exposed to volatile currency rates,” he explains.
Moreover, there are many ways for UK SMEs to expand into the Lucky Country and offer their services. For instance, thanks to the Australian population having reached 25 million in mid-2018, a decade earlier than expected, the nation is in dire need of infrastructure improvements. Recognising this demand, the government has announced investments roughly worth £113.18bn to be put into those projects in the next decade. It’s not difficult to see how a savvy British enterprise could make a buck by offering its expertise in this area. And that’s just the beginning – similar opportunities can be found in key industries like finance, business consulting, metals and mining, energy and utilities as well as healthcare.
The Australian e-commerce sector offers another promising opportunity for UK entrepreneurs. “It’s slightly unique to other e-commerce markets,” says David Nicholls, director of enterprise development at OFX, the international money transfer scaleup. “It’s been closed for quite a while to cross-border commerce.” This isn’t really a shock to anyone who’s heard about the sunburnt country’s history of protectionism, which essentially saw it being closed down to international competition during huge chunks the 20th century, according to KPMG, the professional services firm. While the nation has increasingly opened its borders, there are still some remnants of this policy. When it comes to e-commerce, this is exemplified by the fact Amazon didn’t enter the country until late 2017. Instead, Nicholls suggests that most e-commerce has taken place on eBay and Shopify. Therefore, before you set up shop in that sector it’s important to know which platform will suit your needs the most. But given Statista estimates that the e-commerce sector was worth roughly $18.628m in 2018, doing that research is time well spent. “It’s a really fast-growing e-commerce market,” argues Nicholls.
Once you’ve decided to go into Australia, you need to start planning. “You won’t want the move to be a flash in the pan venture, so plan for every eventuality,” advises Zoe Morris, chief operating officer at Frank Recruitment Group. “Do your market research, either internally or by outsourcing it to another business.” This means looking at the competition, ensuring that you offer a service people can relate to and defining your business plan. “This structured plan should outline the costs and time it will take to break into this new market, which can have a more positive impact in the long term,” she argues.
A big part of the planning should be around ensuring compliance with local laws. “With any international move, it’s important to understand the regulatory processes that need to be adhered to when trading in that market,” argues Robins. This research should look into everything from labour legislation to payment laws.
Once you set up shop in Australia, it’s usually a good idea to investigate the many networking opportunities the country has to offer. “One thing that we were really pleasantly surprised by was the reception we’ve received,” says Robins. “Australia is super advanced in the way companies here collaborate with one another, with countless meet-ups and groups.” So whatever industry you’re in, make sure to do a quick web search, see what events are on offer that suit your business and attend them to see what contacts you can make. “It also helps that the weather is great and the coffee even better,” Robins quips.
Once you’ve done your research and made these important contacts, British businesses have every chance to make a success Down Under. “Brand Britain is a benefit in all markets,” concludes Nicholls. “But Australia is going to be a very significant one. They’ve got so much nostalgia and affinity for everything that has to do with Britain. So British brands are going to do very well down there.”