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Scott StrainUKTI Australia Director Trade

A presentation on the Australian Business Horizon for the World Trade Fair in the Black Country

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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 dollar making UK goods and services more affordable

• Closely linked to fast growing Asia-Pacific nations

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

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A comparison with AustraliaAustralia UK

Population 23 million 62 million

Global GDP ranking 12th (IMF 2012) 7th

GDP growth est. 2013 2.5%  (OECD May 13)

0.89%

GDP per capita ($US 2012)

$67,700 ($US 2012 IMF)

$28,032

Ease of doing business (World Bank 2011)

10th (WB 2012)

7th

Unemployment (April 2013)

5.5% (May 13 ABS)

7.8%

Land mass – sq kms 7 692 000 242 000

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UK Exports to Australia• UK exports to Australia grew by 80% from 2007-2012 to £10.3 billion

• Total UK goods exports growth was flat in 2012, but to Australia still increased 6%

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

• UK is 2nd biggest foreign direct investor in Australia

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Australia: it’s bigger than you think

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Rail Projects in AustraliaProjects with committed funding

Australian Rail and Track Corporation: Upgrades to the Northern Sydney Freight Line between North Strathfield and Newcastle, Commenced in 2012, Expected Completion: 2016; Cost: $1110m

Australian Transport and Energy Corridor: Construction of an inland railway from Surat coal basin to the Port of Gladstone, Construction to commence in the coming months, Expected completion: 2014; Cost: $1000m

Queensland DTMR: Cross River Rail – 18km north-south rail line in the Brisbane CBD, Plans announcedExpected Completion: N/A; Cost: $4500m

The North West Rail Link A 23 kilometre extension –including 16.9 kilometres in tunnel- to the existing City Rail network from Epping to Rouse Hill .Estimated capital cost of the project is $7.5 to $8.5 billion.

Perth Rail Public Transport Package $500 million over 10 years to deliver a public transport project in Perth", either the $1.8 billion MAX light rail system or the $1.9 billion rail line to Perth Airport.;

The Nation Building ProgrammePotential Projects

NSW State Light Rail -project cost is an estimated $1.6 billion.

NSW State Rail Authority: Western Express City Rail Service – new underground platforms at several central stations,Start date 2015, Expected Completion: N/A Cost: $5430m

Melbourne Metro - $3 billion contingent on matched funding from the Victorian Government, flagged for delivery as an availability Public Private Partnership (PPP), with the Commonwealth Government also noting an additional provision to support future availability payments;

$75.0 million for the Port Botany rail line upgrade to improve access and connectivity between the port and the future Moorebank Intermodal Terminal and future planning for the Metropolitan Freight Network. Access and connectivity between the port and the future Moorebank Intermodal Terminal and future planning for the Metropolitan Freight Network.

Leah GartnerSenior Trade Development ManagerRailways, Advanced Engineering and MarineLeah.Gartner@fco.gov.uk

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Major Road ProjectsMajor Road Projects

West Connex, NSW

East West Link, Victoria

Bruce Highway, Queensland

Opportunities

Construction

Design,

Project Management

Engineering,

Project Finance & PPP

Drainage,

CCTV,

Road safety management and providers of building equipment, materials, and supplies.

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Antonia YendellSenior Trade Development ManagerUKTI Melbourneantonia.yendell@fco.gov.uk

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Resources

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Major offshore LNG projects

Richard GoldsmithSenior Trade Development ManagerRichard.Goldsmith@fco.gov.uk

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Projects we are targeting

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Australian opportunities: mining─ As the mining boom moves from

phase 2 to 3 in 2013, the nature of opportunities is shifting

─ The focus on cost-control is critical for identifying opportunities

─ Hi-tech machinery, eg. Automated, remote-control equipment.

─ UK export potential is not limited to mining-specific goods

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Projects: QLD & WACarmichael Coal Project ($6.8bn)

Adani Mining. Feasibility Stage.

Alpha ($10bn) and Kevin’s Corner ($4.2bn) Coal Projects

GVK/Hancock Coal. First coal 2016. Work package on ICN Gateway

Galilee Coal Project ($8.8bn).

First coal 2016

Waratah Coal. First shipment 2015

South Galilee Coal Project ($4.2bn). At Feasibility stage

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Roy Hill Iron Ore Mine & Infrastructure ($9.5bn)

Hancock Prospecting. Production expected 2015.

Oakajee Midwest Development ($4bn)

WA State Govt/private. On hold pending review.

West Pilbara Iron Ore Project ($6bn)

Australian Premium Iron JV. First shipment 2015

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Australian opportunities: ICTICT contributes 4.6 % of Australia’s GDP (AU $82 billion) IBSA Dec 2010

Building v fast broadband network to cover 95% of population (in 8-10 yrs)

At A$35.7 billion it’s the most expensive infrastructure project in Australia’s history

Opportunities in e-Health, e-Learning, digital entertainment, e-commerce for mobile

Internet usage in Australia is 90% penetration (5th best in the world)

Contact Jim.Thompson@fco.gov.uk for more information

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Australian opportunities: e-commerceAustralians spent around £7 billion online in 2011

Online sales grew 90% from 2010 to 2011

Opportunities in sporting and outdoor goods, cosmetics and beauty products, books, media and fashion

Goods under $1,000 bought overseas do not attract 10% GST

Contact joanna.olivera@fco.gov.uk

for more information

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Australian opportunities: hospitals

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Major projects

New South Wales Hospital building programme will see $10 billion spent over the next 5 years on new and redeveloped hospital facilities.

Projects and programs already underway:• Major hospital upgrades at Blacktown (due 2016), Campbelltown (2016), St George (2014), Hornsby (2016), Bega (2016), Dubbo (2014), Wagga Wagga (2017), Tamworth (2016), Lismore, Port Macquarie (2015) and Kempsey (2016).

• Planning is underway for new hospitals in Byron Bay, Maitland and Sydney’s Northern Beaches to meet the future health demands of these regions.

More info: http://www.hinfra.health.nsw.gov.au/projects/capital-projects?5701_p=1

Contact: Joe Dodd at Joe.Dodd@fco.gov.uk

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Pharmaceutical Industry─ No major R&D facilities for major pharmaceutical

companies in Australia other than clinical trials

─ Large pharmaceutical and generic manufacturing capabilities

─ In 2012, Australian pharmaceutical market was valued at A$13.84 billion - forecast to reach A$16.1 billion by 2016

─ Pharmaceutical imports A$10.5 billion and exports A$3.5 billion

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Biotechnology Industry─ Australia is the leading biotechnology location in the Asia

Pacific Region. 6th largest in the world behind the US, UK, Canada, Germany and France

─ Around 450 core biotechnology companies amongst an industry total of 1200 enterprises

─ World class scientific, medical and agricultural research base

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Routes to Market

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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•Internet: sell online through a .com.au site

•Licensing your product or service

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

•Distributors: numerous, small and usually specialist

•Manufacturers & End users

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

•Establish a local presence and sell directly

Typical Distribution Channel costs (Retail example) 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 PaidUS 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 your terms of payment

Key Elements for SuccessSet medium / long term strategiesSet reasonable marketing plans and sales targets and review

them regularlyCommitted distributor - right for your productCommitted supplierComplete openness - pricing / marginsService is paramountGet involvedAllow sufficient time

Key Lessons for a 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 UKTI can help?Passport to Export

Gateway to Global Growth

Export Market Research Scheme

Overseas Market Information Service

Trade show Access Programme

Trade Missions

Check out our presentations on

WWW.Slideshare.net

Scott.Strain@fco.gov.uk

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