Expanding Globally During COVID-19: Risky Business or Perfect Timing?

The Coronavirus (COVID-19) is unsettling supply chains, sapping sales of products, shaking global stock markets, throwing travel into chaos, sinking businesses worldwide, and intensifying fears of a global recession. With so much uncertainty surrounding the global marketplace, business leaders who had expansion plans are asking themselves: Is now the right time to go global or is it too risky?

Going global could act as an excellent hedge against domestic, or even regional, economic, and political conditions. In these circumstances, the question is not when to expand, but how to expand successfully.

If your plans are to expand to Australasia, we provide our Top 9 “thoughts” on the Australian market and how to enter successfully.

1. Why the Australian market?

Australia is an attractive market to set up a business. Multinational companies view Australia as presenting the best case for regional headquarters to target the dynamic Asia Pacific region. Key business centres include Sydney (NSW), Melbourne (VIC), Brisbane (QLD), and Perth (WA). Australia is a leading financial centre in the Asia Pacific region. There is a strong and enduring tradition of democracy in Australia where rule of law and frameworks prevail. Australia has one of the strongest, most competitive, open, and flexible economies in the world.

Download our Guide to Setting up in Australia.

2. Due to COVID-19, is now the right time to expand to Australia?

During these uncertain times, we have seen a steady stream of international clients expanding into Australia. Azure Group have experienced an increase in the numbers of enquiries coming from abroad. Those businesses that have a unique proposition, or that are not impacted directly by COVID-19, are still setting up locally to take advantage of the market when others may be cautious to enter.

Industries showing the greatest interest in Australia include the utilities, manufacturing, and wholesale sectors, as well as software development, e-commerce and education sectors, as more people work remotely and are utilising technology to operate both their personal and professional lives daily.

3. Do you have the right product/service to offer to the Australian market?

One of the biggest considerations must be whether your business can build a strong customer base in Australia. A product or service that sells well in your home country may not have the same appeal in an international target market. Is there a need for your offering? Don’t think that there might be – know that there is. You also must understand the direction your new city is going in and leverage that momentum to support your expansion.

4. Subsidiary or Branch? Choose the right business structure when starting a business in Australia!

In establishing operations in Australia, an overseas company may choose between two options:

a) Company (“subsidiary”)
A subsidiary is a company that is owned and controlled by another company. A “company” is a separate legal entity and lets you conduct business throughout Australia. Most subsidiaries are set up as proprietary companies that are limited by shares.

b) Branch (“registered foreign company”)
A foreign company (“branch”) is one that is incorporated outside Australia. A foreign company can register with the Australian Securities and Investments Commission (ASIC), allowing it to carry on business in Australia. Upon registration, the company is issued with an ARBN (Australian Registered Body Number) and is required to provide annual reporting directly to ASIC.

5. Opening a local office

As part of your local operations you will need to have an Australian office. You can do this by either leasing an office or purchasing Australian real estate. You need to consider legislation around the acquisition of real estate by foreign companies. Generally, if the property value is less than AUD 50 million it does not need the approval of the Foreign Investments Review Board (FIRB).

6. Tax matters

In Australia, tax is governed by the Australia Taxation Office (ATO). Generally, if you are earning money in Australia, regardless of your structure, you will be required to pay tax. You must comply with a range of obligations including corporate tax, capital gains tax (CGT), duties and excise, and GST. If you have employees you will also need to manage employment tax withholding, fringe benefits tax, and superannuation.

Every company must have a Tax File Number (TFN) and an ABN (Australian Business Number). It is imperative that you understand Australian tax law and what your obligations are regarding tax. Failure to comply with the Australian governing bodies can result in heavy fines or even a criminal conviction. This is a specialised area and it is essential that you get the support and advice of a registered tax accountant.

7. Accounting matters

Setting up the appropriate systems for GST and PAYG is crucial for your local operations. Choosing the right software keeps you abreast of all legislative changes, ensuring data and systems comply. It can be difficult to set up your own system without an accounting background. Our team of fully qualified accounting professionals use best-practice accounting standards to integrate every aspect of the system with our local legislation, ensuring compliance with regulatory bodies.

8. Final decision – document your processes for next time

Even if you don’t decide to expand now, prepare a well-documented plan that can be utilised for when you are ready to launch. It is likely that once you have entered one country, you are probably considering your next move. Whilst rolling out your first global office, prepare a well-documented plan that can be utilised for your next launch. This will not only save you an enormous amount of time but will help in streamlining the steps needed for a successful new venture.

9. Finding the right support is critical for global success

We are happy to support you in doing business in Australia. Just get in contact to discuss possibilities.


XLNC MAGAZINE | No. 06 | October 2020

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