by Nerella Campigotto

If international expansion is on your agenda, this is a great time for seriously considering Australia as a potential business destination. Australia is the only developed economy in the world to avoid the recession and record positive growth in 2009, and according to the IMF, is anticipated to show lower net debt than any other advanced economy through 2014.

In October 2009 Australia was the first in the Group of 20 to raise interest rates (and did so again in November and December taking it to 3.75%) prompted by a decrease in unemployment, and increases in the stock markets, house prices, business investments and retail sales. GDP is expected to grow above 3% in 2010.

At time of writing unemployment sits at 5.7% and is expected to decrease further next year. Close to 100,000 jobs were added in the three months to November 30. The two-year government bond yields 4.48% and the Australian dollar trades at around US$0.91.

A diversified export market has also contributed to the economy’s health. Australia’s five top trading partners – Japan, China, South Korea, India and the US – represent 57% of the country’s total export market. Continued strong demand for its resources, such as iron ore and liquefied natural gas, will sustain Australia’s economic stability. Services exports have had an average growth rate of 7.8% per annum over the past five years.

Some additional 2009 rankings that indicate a strong economy:

·         The World Economic Forum rates Australia as the second-best financial centre in the world after the UK.

·         D&B’s Global Risk Indicator places Australia as one of the world’s four safest countries in which to invest.

·         The World Bank ranks Australia 7^th among OECD countries for ease of doing business.

·         The IBM Global Locations Trend Report places Australia 6^th in the world for R&D jobs. It is also considered to have the most competitive IT industry in the Asia-Pacific region.

·         According to the Mercer Global Pension Index Australia has the second-best retirement system in the world, behind the Netherlands.

·         The Global Competitive Index ranks Australia 15^th overall out of 130 countries, and 4^th for its banking system.

·         In 2009 the UN has placed Australia second in the world for quality of life, behind Norway.

Australia’s growth rate is anticipated to continue for a few more years, underpinned by booming resources investment, rising household income and the strength of its major Asian trading partners. All in all, this is a great time to make this vibrant economy part of your international market entry strategy.

by Nerella Campigotto

Current events and their effect on our economy may prevent many businesses from considering or proceeding with expansion plans. Conventional thinking may keep your competitors close to home in a defensive posture. Consider the points outlined below and decide if this could be the best time for your business to diversify into international markets:

• Pursuing foreign markets requires a great deal of preparation and research. This time-consuming activity could be used to take advantage of a slow down in your core business. Do you and your staff now have the time available to start a new venture?

• Currency fluctuations provide challenges in doing business globally, even in the best of times. However, a lower currency in your home country means that your service or product could be much more price-competitive in the world market.

• The cost of running an office in some foreign countries can be considerably lower than in your home market. This is also sometimes true of developed markets as well. For example, if we were to look at US or Canadian businesses wanting to enter Asia, we would find that there are financial, as well as various other advantages for them to consider Australia as a stepping stone from which to locate their next Asian branch office.

• The availability, as well as the relatively low cost, of hiring trained and skilled staff in foreign countries may be a particularly attractive reason for considering expansion at this time.

• Potential partners, strategic alliances and joint ventures, all strategies to be considered when expanding into a foreign market, are much more likely to be receptive and viable in times of difficulty.

• Last, but not least, expansion may now be your only chance for survival. It’s simply a matter of thinking in broader terms and finding larger or more diversified markets, rather than concentrating on your local, diminishing market. Following the heard often leads to the slaughterhouse.

Of course, we know that times of economic uncertainties come and go. The challenge is to ride out the cycles and take advantage of the opportunities that the economy may provide, so that we can emerge in an even stronger position once the cycle is complete.