New Zealand: Doing business in Australia, does being close neighbours make it easier or harder?

Last Updated: 26 February 2014
Article by Andrew Scott

Walking down the average street in Australia, you would bump into a Kiwi once for every forty people and in south-east Queensland the rate is higher.

And while Muldoon found humour in the situation we all know the compelling reasons why young, qualified Kiwis are crossing the ditch. Historically Australia has been economically prosperous, offering employment in most, if not all, sectors, not to mention the endless space and amazing beaches. No wonder Russell, the Finn brothers and Phar Lap all skipped town.

For those of us that call New Zealand home, however, it is likely that the earth, sea and sky, full of grounded, self-reliant, proudly antipodean family and friends offers a greater draw card. But New Zealand is small, and for Kiwi businesses looking for greater challenges and growth, tapping into the Australian market seems a natural fit – perhaps more so than China. In 2013 Australia was knocked off as New Zealand's number one export destination by China, but Australia remains of prime importance to many New Zealand non-dairy exporters.

But Australia is not New Zealand (collective sigh), and it is important to make yourself aware of both the differences as well as the similarities between the two cultures before dipping your toe in the West Island's market. In that respect, while Australia is very important to Kiwi exporters, in 2012-20131 New Zealand ranked ninth on the list of merchandise importers to that country. In other words Aussie is more important to New Zealand, than New Zealand is to Aussie.

Now for the disclaimer: I grew up in Australia... but if you are still reading this piece then let me assure you that I call New Zealand home now and am able to provide some perspective on both cultures. I think the recent America's Cup® campaign in San Francisco acts as a useful metaphor (too soon?). Oracle® might have branded its crew as Team USA but we all recognized Jimmy Spithill's accent in the press conferences - abrasive, cocky, full of swagger. Australian. While Dean Barker spoke softly and calmly of the strong self-belief within the team that Emirates" Team New Zealand® could win that elusive final race, Jimmy Spithill defied logic saying that he believed that his team could win the series from 8-1 down. We all know the result - Oracle® Team USA changed tactics, both with their crew and modifications to the boat's handling, and sailed away victors. The drive to win is ingrained in Aussies from an early age, which is why Aussies are such bad losers (don't mention the Rugby).

That's the market you are operating in.

In recent years, the Australian dollar has remained buoyant due to the growth of the mining sector and the insatiable Chinese economy, but most people will recognize that this growth has now slowed. Nonetheless the Australian consumer has become accustomed to strong buying power, competitive pricing and value-for-money. This scenario is often coupled with high operating costs - Woolworths can attract a 40% margin on groceries in its stores, and expects the goods provider to pay for regular promotions and discounting.

However, on weight of numbers, the Australian consumer continues to represent a prime target for the savvy businessperson, especially if you accept that the average Aussie household has a disposable income approximately 32% higher than the average Kiwi household2. Furthermore, New Zealand has a reputation in Australia for producing high quality products and services, often worth paying a premium for.

So what tactics can you employ to make sure you extend your New Zealand success to Australia?

Here are a few tips.

Know your target market

Sounds like a good opportunity for a trip to Aussie! Just make sure you don't spend all your time on the beach. Get a feel for how the consumer thinks, how business is done and what legal requirements must be met.

Get physical!

Depending on the size of your business and your level of experience, this may involve engaging an Australian agent or distributor, or establishing a physical presence in Australia. It can be difficult directing traffic from this side of the Tasman, so having someone on the ground might help avoid costly mistakes and may also streamline your marketing.

Protect your brand and your goods and/or services

Do you know what your intellectual property is worth? IP is often thought to represent as much as 80% of the value of a company's assets3. Do you know how to establish ownership of your IP and control it? Remember we are playing for keeps here. Relying on the courtesy of your fellow Kiwi doesn't wash in Australia. Unless you are well-positioned, adaptable, and ruthlessly aggressive (and even then) you could easily be out-maneuvered by a more capable competitor.

Kiwi's are exceptionally innovative – it's the number 8 wire mentality. But unfortunately that attitude doesn't always produce sustainable business growth4. In some industries being first-to-market might be the best strategy, but in many industries blindly rushing to make your first dollar severely hampers your ability to make your millionth. A well thought-out intellectual property strategy allows you to deter would-be competitors, increase value through licensing and define boundaries for joint ventures.

Registered trade marks and granted patents are business tools that allow you and your business partners to operate in markets such as Australia with some degree of surety that you will not be ripped-off by the sharp business practice of a competitor. As with all aspects of intellectual property, seeking professional advice at an early stage will help you avoid making the same mistakes as those before you.

This article was written by Andrew Scott, Associate, James & Wells. Based in Christchurch, Andrew is a registered patent attorney in both Australia and New Zealand specialising in chemical, biological, agri- and food-technologies. Like the Kiwi5, Andrew arrived from Australia a number of years ago, and now works in Christchurch assisting South Island firms to own and control their intellectual property.

Footnotes

1Source - Department of Foreign Affairs and Trade (Australia)

2Source - OECD better life index

3 See Kate Wilson's article on developing an IP strategy

4 See Ian Finch's article on why New Zealand's "Number 8 Wire" mentality is bad for the economy

5 Source - Flinders University blog (Australia)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

James & Wells Intellectual Property, three time winner of the New Zealand Intellectual Property Laws Award and first IP firm in the world to achieve CEMARS® certification.

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