Following Australia’s decision to pull away from its contract with the French submarine builder Naval Group, a few of our European clients have raised questions over the nature of doing business here in Australia.
These questions are understandable. The French submarine deal which was signed in Australia in 2016 had been terminated after Australia decided to favour the AUKUS nuclear submarine deal in September this year. According to Australian government the first French-designed submarine was not due to enter service until the early 2030s, and prices had inflated over 50 percent in five years. It was also explained that nuclear submarines align more with Australia long term defence strategy. These political moves have propelled criticism from France, and Europe in general. France considers having been “stabbed in the back” by Australia. On a broader resonance, the ongoing free-trade agreement between the EU and Australia has been on hold by the EU considering that one of the EU members was “treated unfairly”.
Should exporters to Australia worry about the impact of this political crisis?
Whilst businesses generally don’t wait for political relationship to be on honeymoon to trade, in light of recent events, we have noticed more questions and concerns from clients or partners, mainly Europeans, Canadians and some Asians. “Are Australians trustworthy to do business with?” “Is it worth the efforts if they only see through the US and the UK?” To a lesser degree, some of our Australian exporters have questioned whether the decision can affect their export development to non-US/UK markets.
This is not surprising, the contract termination was abrupt and controversial, and raised a lot of criticism not just overseas, but also here in Australia.
Politics aside, we are here to reassure our clients and dispel some of the misunderstandings of doing business in Australia.
1. French/Australian business relationship is more than a submarine deal
Australia’s business relations with France have been positive and friendly. Over the last 25 years bilateral trade has been strengthened, with exports from France to Australia increasing from $1.3B to $3.63B. Business links continue to remain strong. Recently, French company Artelia had been engaged with the extension of Canberra’s Light Rail network. The Victorian government also signed a 300 million Euro contract with French infrastructure solutions provider Alsotm to design and engineer new trains to be rolled out throughout the city. Earlier this year, French utility company SUEZ had signed a deal with Australian company, NEC to collaborate on working towards smart cities that uses technology and data as enablers to improve the quality of life for its citizens. These are just a few examples that underpin the strong partnership between France and Australia businesses.
2. Strong Regulatory Systems
Currently Australia is ranked 15th out of 190 economies for ease of doing business. It’s transparent regulatory system, sound institutional governance frameworks against corruption as well as strong banking regulations make it a secure and reliable place to do business in.
3. Direct and Transparent Communication
There is a common matter-of-fact communication approach in business meaning that Australians will be factual and honest throughout the business negotiation process.
Whilst France and many European countries will be considered more direct than Australians (according to the Hofstede’s Matrix of Country Comparison Australia will score 51 in terms of uncertainty avoidance where France scores 86), Australians will likely be open if they disagree with you or if they find there are issues along the way. They do this in a way that is both diplomatic and respectful to maintain stable working relationships. At the same time, their openness means they are also receptive to new ideas.
4. Easy going business Culture and Relationships
Modesty and humility are strong values in Australian business culture. They appreciate people who are friendly and to the point. Australians are open to building rapport as they value long-term business relationships. In business, being down to earth, easy going and authentic often gives off good impressions.
5. Many free-trade agreements & Investment Incentives
Australia is considered to be an economy very open to global trade. There’s currently 15 free-trade agreements with 26 countries.
Foreign investment is strongly welcomed in Australia. The government provides a range of incentives for businesses wanting do business in the Australian market, including million-dollar grants. Key sectors are in infrastructure & energy, materials science medical science & technology, defence, food/beverage & agribusiness and space. There are also many state-based programs that support investment.
6. Strategic Location and multicultural
Investors and overseas exporters regard Australia a good place to do business in because of its population growth, highly skilled workforce, and strong corporate regulation. Australia’s economic strength is based on its solid services, resources, medical technology, and agriculture-based sectors. Australia is also regarded a strategic place to do business in because of its multicultural population and workforce, with one in three Australians being born overseas and about 5 million Australians speaking a language other than English. This provides huge market opportunities for businesses wishing to enter the Australian market.
For international companies with a strong growth trajectory, Australia’s market provides many diverse and undiscovered opportunities. If you are looking to expand your business overseas, you can be reassured that Australia is a good business partner.
Get practical advice on how you can expand your business in Australia
Smart Mango is a Sydney based export marketing development agency giving you access to local markets and distributors.
Our experts can provide you with market research and distributor search as well as local representation to help your brand expand Down Under. Our team of specialists will be your partner to success, overcoming the barriers of distance, travel and living cost, time zone, language and adaptation.
Contact one of our specialists today for your Australian expansion.
Phone +61 2 7903 0543