Exporting To Australia Getting it right!Scott StrainDirector for Trade at UKTI Australia & New Zealand

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What we will be covering in today’s Webinar

• A very brief overview of Australia & UK-Australia trade

• What to expect

• Ways to market

• Typical distribution costs & quoting & getting paid

• Preparing for success & visiting the market

• Next steps and how UKTI can help

• Overview of customs & importation – Diane Tipping

• Q&A

What we will not be covering today

• The various stages of exporting. If you are new to exporting go to www.opentoexport.com

• A sector by sector breakdown of the Australian economy. Go to Slideshare.net and look for our “Doing Business in Australia & New Zealand” Webinar slides.

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Why Australia?

• You’ll feel at home immediately:

– Over 1,000 UK companies and more Brits than in any other country

– Very similar business, legal and regulatory culture

• Best performing OECD country economically, with good growth prospects

• Strong Australian & NZ dollar making UK goods and services more affordable

• Closely linked to fast growing Asia-Pacific nations

• Massive opportunities for UK companies in oil and gas, health, ports, infrastructure, ICT, education, low carbon, financial and business services

• Free trade agreements with China, the ASEAN nations and Singapore

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Australia & NZ - an economic snapshot

NZ Australia UK

Population 4.4 million 22.5 million 62 million

Global GDP ranking 55th 13th 7th

GDP growth est. 2012 2.3% 3 % 0.6%

GDP per capita ($US 2011) $36,648 $40,800 $36,600

Ease of doing business (World Bank 2011)

3rd 15th 7th

Unemployment (Sept 2012) 6.5% 5.1% 8.1%

Land mass – sq kms 263,310 7 692 000 000

242 000

Australia – A brief geographical overview

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Australia- States & Territories

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Another perspective

Top 7 Cities

Population in Thousands

Where the market is...

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UK/Australia trade links

• UK exports to Australia grew by over 60% from 2007 - 2011 (to more than £10 billion)

• UK’s overall exports contracted first half of 2012, to Australia rose

• 7th biggest market for services exports and 18th largest for goods

• UK is 2nd biggest foreign direct investor in Australia

Australia: what to expect

• A sophisticated multicultural market

• Pacific area- fast growing- self-sufficient

• Regional vs. National factors

• Traditional sources of supply have changed

• New ways of doing business

• E Commerce

• GST

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What to expect from Australian importers

• Value for money over price

• Cautious about changing suppliers

• Australian products preferred but they are open to international goods & services

• Go with your best price – avoid haggling too much

• Expect familiarity and a direct approach

• Rigid enforcement of standards and practices – get it right first time!

Import Channels & Distribution

• Importers & Wholesalers: usually small & specialist. Few general importers,

• Commission Agents/Fulfilment Houses: few and far between

• Manufacturers & End users

• Retailers: usually source locally & use importers for smaller orders

• Internet retail: the fastest growing market

Ways into the MarketCombined Agent & Distributor Network

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UK FIRMState State

Ways into the MarketIndustrial ProductsThe Licensing Agreement

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Ways into the MarketThe Subsidiary

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Approximately 2000 UK Subsidiaries in Australia

Typical Distribution Channel costs in Retail

• Overseas buying agents/commission agents 3-6% FOB

• Importers & Wholesalers selling volume consumer goods 40-80% on landed duty paid goods

• Discount Department Stores 35-40% of the selling price

• Department Stores 40-75% of the selling price

• Small Retail 50-100% of the selling price

• Supermarket Chains 15-35%

Quoting & Getting Paid

• US dollar the most common currency

• Most exporters expect Free On Board or Free Carrier quotations but;

• Those importing commodities often prefer Cost & Freight terms

• Most Australian importers take out their own insurance so don’t expect Cost Insurance and Freight or Cost Insurance Paid terms

• Remember that any customs duties will be based upon the FOB price

• Offer your best price, don’t haggle too much.

• Letter of Credit common place

• Remember to factor in delivery times to tour terms of payment

Key Elements for Success

Set medium / long term strategies

Set reasonable marketing plans and sales targets and review them regularly

Committed distributor - right for your product

Committed supplier

Complete openness - pricing / margins

Service is paramount

Get involved

Allow sufficient time

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Key Lessons from the Market Visit

• Think Australian - NOT POM, sell to Australians for volume

• Add value vs. local offering

• Support distributor

• Price-points (understand margins and currency)

• Need to innovate

• Create volume / increase rate of sale to win both trade and distributor support

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How can UKTI help you?

• Provide grants to help you research the market through our Export Market Research Scheme (EMRS)

• Conduct market research & contact finding for you through our Overseas Market Information Service (OMIS)

• Help you attend Exhibitions through our Tradeshow Access Programme (TAP)

• Help you successfully visit the market as part of a Trade Mission through our Visit Scheme (MVS)

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Next Steps

• If you are interested in learning more about opportunities here then get in touch with your local UKTI International Trade Adviser. You can find your local ITA through our website www.ukti.gov.uk

• or contact myself at Scott.Strain@fco.gov.uk and I will do what I can to help.

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