Australia
offers opportunities for new overseas suppliers
because it depends on a wide range of imported
products which either cannot be economically
produced in a country of under 17 million or
which are simply not locally produced. These
opportunities will increase as the level of
import protection is reduced. By mid 1992 the
maximum import duties on the great majority
of products from developing countries will be
only 5 or 10% on the FOB value.
On the other hand, Australia is a
very challenging market for new overseas suppliers.
The average Australian importer will require
reasonably small volumes but will expect to
be off red lower prices than buyers in the USA
or most European countries. In addition, the
Australian importer will he strict about delivery
on time and has very high quality standards.
Australia is a large country with
a small population. In size it is almost the
same as mainland USA (7.7 million square Kilometers)
and has a coastline of 36735 kilometers. With
most of the population of 6.8 million living
in the major cities and towns along the coastline
of the eastern states, much of the country is
almost not very populated. The climate of Australia
ranges from tropical in the north to temperate
in the south. In the southern states the winters
are cool to cold but snow is restricted to the
highlands.
Like many other developed economies,
the services sector of the Australian economy
has expanded rapidly over the last 10 years
and now accounts for over two-thirds of GDP.
The manufacturing sector contributes less than
18% of Australia's GDP, while agricultural and
mining continues to account for around 10% of
GDP one of the highest shares among developed
countries.
Mining is one of the major sectors of the Australian
economy. A variety of energy resources are found
in Australia.
Australia produces a surplus of light
crude oil, but imports heavy crude to balance
refining requirements. Domestic oil production
amounted to 557,000 barrels per day in 1987/88
or about 80% of the country's refining needs.
This proportion was higher in the early 1980s
and is expected to fall to about 50% by the
mid 1990s. Production of black coal remains
substantially higher than in the early 1980s.
World demand for both cooking and steaming coal
is strong, steaming from increased demand for
steel and electricity. This has translated into
strong growth in export volumes for Australia.
Cooking coal prices rose by 8% from mid 1988,
while steaming coal price negotiations recently
resulted in a 21% rise in prices (In US dollar
terms): The Australian gold industry has expanded
rapidly in recent years .
Agriculture is another major sector
of the Australian economy. Its traditional exports
are wool, wheat, beef and sugar and this continue
to dominate farm output. The medium term outlook
for Australia's beef exports improved with overseas
markets, particularly Japan and Korea opening
their doors. The services sector of the Australian
economy has expanded significantly in recent
decades and now comprises about 70% of the total
economy.
Overseas suppliers will find that
the main concerns of Australian importers are
price, quality and delivery on time and minimums.
Some experienced overseas suppliers have actually
claimed that there are three golden rules about
selling to Australia and these are 'price, price
and price'.
While this is not completely accurate, it is
true that the average importer's first question
to a new overseas supplier will usually relate
to the FOB price of the product. Importers of
sophisticated machinery and similar equipment
will, of course, be equally interested in the
quality of the product, but importers of consumer
products will be most concerned about the FOB
price. Australian importers will usually be
prepared to pay less than their US or European
counterparts, will expect consistently good
quality will insist on deliveries on time and
will place smaller orders than importers in
most other markets.
Most Australian importers are conservative
and are slow to change to new overseas suppliers.
They are, on the other hand, prepared to work
closely with their established suppliers to
keep the business going and are not likely to
suddenly drop a regular supplier.
The Australian importer will, however,
not accept their supplier breaking any agreement
nor to sell to other importers - "going
behind the back" of the Australian importer
can be a serious mistake in this small market,
because the importer will soon discover what
is happening.
Another important characteristic of the Australian
importer is his dislike of bargaining. The Australian
tariff is essentially a two-tier tariff the
general rate of duty is five percentage points
higher than those applying to developing countries
(that is, when the general rate is 15% the developing
country rate is 10%). Under the Australian system
of tariff preferences for developing countries
all internationally recognized developing countries
are eligible for the tariff preference. The
Australian tariff regime also allows duty free
entry of products which are not produced in
Australia or when similar "substitutable"
products are not manufactured locally. The costs
of operating a business in Australia, particularly
labour costs, are relatively high. Sales tax
in Australia is placed on the last wholesale
price of certain products, not the retail price.
The prices on products selling in retail stores
already include any sales tax. Most products
are subject to a sales tax of either 10% or
20%, except for the necessities of life such
as clothing and basic food lines which pay no
sales tax. It should also be noted that because
of the relatively mild Australian climate there
is no thing like considering only summer and
winter as distinct buying seasons and usually
do not buy specially for spring and autumn.
Retailers may refer to "early summer"
or "late summer" but there is little
difference in the products they buy for the
one overall summer season.
The following organisations can offer advice
on Commercial information
Trade and Investment Promotion Service,
Department of Foreign Affairs and Trade,
PARKES, ACT 2600
Tel: (616) 2612337
Fax:(616)2613262
Telex:62011 Foreign
Australian Chamber of Commerce and Industry,
Queen Victoria Terrace,
P.O. Box E14 CANBERRA, ACT 2600
Tel :(6I6) 2732311
Fax: (616) 2733196
