Brought to you by New Zealand Trade and Enterprise, the New Zealand government’s economic development agency.

www.nzte.govt.nz

Focus Australia 2010 Lessons from New Zealand companies for New Zealand

companies on market entry into Australia

In June 2009 NZTE ran 20 workshops throughout New Zealand for 250 companies

currently exporting or looking to export to Australia and their trusted advisors.

During the workshops six New Zealand case studies were assessed and

information was also gathered from the participating companies and advisors.

The following is a capture of the key findings from the workshops, highlighting

the dos and don’ts to consider when entering or expanding in the Australian

market.

DO

Stage one: Strategic planning

� Make sure you have a clear idea of why you’re entering the Australian market

• Can you describe what success will look like in say 5 years?

• Given your 5 year plan, what does year one look like, year two etc.

• Are you ready to invest the resources required to meet your success

targets?

• Is now the best time?

• Do you have a true point of differentiation in the market?

Stage two: Operational Planning

� Know:

• who your customers are

• what they need (not necessarily the same as NZ)

• who your competition is

• your price point - don’t just assume it is the same as NZ, it could be a lot

higher or at a point to low to make the investment worthwhile

• the best location for you to set up in

• what is going to be your best channel to market

• what all your costs will be

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• transportation/logistics

• business regulations

• Intercountry banking/ finance

• tax

• legal implications

� Research how your industry operates in the Australian market – what are the

differences with NZ, any regulations/legislation you need to be aware of, how

to customers access your type of product/service in Australia?

� Check that the brand you are using in NZ is appropriate for the Australian

market

� Consider all the different market entry models available to you (purchasing an

existing, complimentary business, setting up your own office, hiring Australian

sales staff, using agents/distributors, partnering with an Australian company

finding an Australian investor.)

� Seek professional advice – particularly around complying with regularities for

you industry, tax and legal

� Understand that Australia is a far more litigious country than NZ

� Investigate if IP protection would be sensible for your product/service

Stage Three: First Steps

� Visit the market as often as possible to get an understanding of the feel of the

location you are considering.

� Remember Australia is made up of 8 states each of which can be considered a

market in its own right.

� Build relationships in Australia with experts in your industry – they can help to

give you credibility in the market and can provide useful networks

� Consider a staged approach, location by location – remember some Australian

cities are the same size as the whole of NZ. In most cases it is better to

tackle one location at a time.

� Consider first location carefully- it may be better to look at one of the large

regional towns.

� Hire Australian staff or partner with an Australian business – and listen to

their advice about the market. They will bring with them networks and market

knowledge – make use of it

� Make sure you understand the legal and tax implications for the type of

operation you wan to set up

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www.nzte.govt.nz

Stage Four: The Commitment

� Be prepared to pull back if you are not happy you have all the information you

need.

� Ensure you have sufficient funds available to support the setting up of your

Australian presence – allow up to two years and realise that you may not

make money straight away

� Ensure you have commitment from your management team – they need to

provide strategic leadership and may also need to work in market for a time

to really build the business

� Choose a location close to your customers and/or partners

� Assess your progress on a regular basis – are things going to plan/budget? If

not, you may need to adjust your strategy

� Think creatively about what networks you have or might be able to tap into

(both in Australia and back in NZ) – including expat kiwis, business and

professional associations

� Carry out due diligence on any other party you are going to work with

� Make sure you are sending over the right staff for the job and locate them in

the right place

� Look at how you can leverage your NZ business and clients – your Australian

operation may provide benefits to your NZ customers

� Persevere – becoming successful in the market may take some time

Stage Five: Expansion within Australia

� Know who your new customers are.

� Reassess your business model (purchasing an existing, complimentary

business, setting up your own office, hiring Australian sales staff, using

agents/distributors, partnering with an Australian company finding an

Australian investor.)

� Ensure you have commitment from your management team – they need to

provide strategic leadership in the new state/area and may also need to work

there for a time to really build the business

� Understand the issues around transportation/logistics

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DON’T

� Make assumptions – in particular, don’t assume your NZ model/operations will

work in Australia

� Underestimate the amount of funding required to set up a credible presence in

Australia – don’t forget about the ongoing costs (i.e. it may take some time

before you start making money)

� Underestimate the size of Australia – distance between major locations (this

will have cost / time implications)

� Take verbal agreements as final confirmation – get everything in writing

� Rush in before you have done your market research and are prepared – it will

cost you money and may make the difference as to whether or not you are

successful