What are the opportunities for UK businesses exporting to Australia?

22nd June 2021

In 2020, Australia was the UK’s 14th largest export market. There is hope that it will climb even further up the ranking as the UK has now secured a trade deal in principle with Australia eliminating tariffs on all UK goods and boosting jobs and businesses across the country. The UK government estimates that a free trade deal could eventually increase British exports to Australia by almost £1 billion.

So, why should UK businesses consider Australia for their next export venture? 

Strong economy

Australia is the 5th largest economy in the Asia-Pacific region, and the 12th largest economy in the world. Australia’s economy has avoided recession for the last 25 years and while economic conditions are now more challenging, strong cultural ties means Australia is an excellent place for British companies to do business. 

Australia also benefits from having strong trade links with affluent markets in Asia. The country’s biggest two-way trading partner is China, followed by Japan and the US. 

Australia is a strong supporter of trade liberalisation. It has ten free trade agreements (FTAs) in place: with China, Japan, Korea, USA, New Zealand, Singapore, Thailand, Chile, Malaysia, and the Association of South East Asian Nations (ASEAN). It is also pursuing agreements with the EU, India and Indonesia and is also one of the 12 members of the Trans-Pacific Partnership

Australia’s GDP per capita at current exchange rates make its citizens among the world’s top five wealthiest. 

Demand for British products and services  

The leading UK goods exports to Australia are motor vehicles, pharmaceuticals, machinery and equipment, scientific instruments, clothing, and beverages. Services exports account for more than half of total exports to Australia and are led by travel and transportation, financial, and professional/other business services.

Australia’s financial services sector is the largest contributor to the economy, contributing around AUD $140 billion to GDP in 2016 (Australian Government). 

The fintech sector in the UK is also growing rapidly, with FinTech investment activity in the UK increasing by an average of 113% over the past 5 years. This presents opportunities for UK fintech companies looking to expand. 

Technology is also a lucrative sector because of the high demand for digital products and services to transform and innovate business and government. 

Infrastructure companies in the UK may also find opportunities. By 2029, the Australian government is expected to have invested AUD $100 billion in transport infrastructure.

Food and drink businesses in the UK can also expect to find success in a market that has similar taste to the UK.

Hamish Renton, Managing Director of HRA Global, food and drink consultancy firm said:

“With food and drink and cosmetic products, you can use the same imagery and it means the same thing, which you can’t say for a lot of markets.

However, he says it's important to recognise that the supply chains for Australian fresh food differ greatly to the UK’s:

“It's tough for a fresh food manufacturer to get into the market. The Australian fresh supply chain is effectively made up of three points, meaning food must travel greater distances without the means of proper refrigeration. Most of the supply chain is suitable for frozen or shelf stables.”

Despite this logistical issue, Hamish says doing business in Australia is relatively easy due to the cultural similarities:

“There’s a shared business culture, they’re very straight forward and trustworthy. Their retail set up is also similar. 

“There’s also a shared culinary palette, so British brands translate very well in sensory terms. 

“We’ve grown up with a lot of the same brands. While a brand might be new, we’ve all grown up with similar products, like Marmite vs. Vegemite.”

 

Similar language, culture, and business practices 

Australia is ranked by the World Bank as the 13th easiest country in which to do business. For the UK, this ease comes partly due to sharing a common language and culture, as well as business and legal practices such as intellectual property (IP) and the rule of law. 

Trade and investment patterns between the UK and Australia remain strong with the UK being the second largest foreign investor after the US, with stock worth almost AUD $500 billion.

Australia success in the South West

Precision Dippings Manufacturing, who specialise in the development of rubber-dipped products for a range of different industries, have successfully exported their products to Australia.

The global environment has proven conducive to Precision Dippings Manufacturing’s growth and expansion overseas as Kate Richards, Director of the company explains:

“We’ve recently started selling our healthcare products to the US. We also export to Australia and various countries in Europe and our export sales have grown by a third in the last three years.” 

Read more of their export journey here.

Take the next steps to exporting downunder

To discuss your own export growth into Australia and find out more about the support available from DIT,  call 01275 370944, email ditsw@mobile.trade.gov.uk or visit www.great.gov.uk/market/australia

DIT’s services in the South West are delivered by Business West. For further information, click here.

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