AustraliaCommercial Overview

Introduction – USCS Australia & NZ

Canberra

PerthSydney

Wellington

Auckland

Services

Business Counseling

International Partner Search (IPS)

Gold Key Matching Service (GKS)

Single Company Promotion (SCP)

Business Facilitation Service (BFS)

International Company Profile (ICP)

Trade Missions

Trade Show support

SelectUSA

Misconceptions

Australian Market

Common Objections The Flip Side

It’s a small market. • Our 15th largest export market.

• In the Asia Pacific, China, Japan,

and South Korea have bigger

economies.

It’s very far away. • Big generalization, but it can

make an excellent regional base.

• Good market for innovative

products.

U.S. products are not price

competitive.

• U.S. – Australia FTA.

• U.S. products are highly

regarded due to quality and

innovation.

Geographical Size

Population

42% of

Australia’s

exports are

generated in the

green ring

More than 80% of

population live in

the red ring

Australia: Basic Facts

• Population: 23 million

• GDP: US$ 1.56 trillion

• GDP Growth rate 2013: 3%

forecast

• Unemployment: 6.4%

• Exchange rate: US$1.00 =

A$1.29

New Zealand: Basic Facts

• Population: 4.5million

• GDP: US$ 179 billion (Q3 2014)

• GDP Growth rate: 7.7% (Q3 2014)

• Unemployment: 5.7%

• Exchange rate:

NZ$1.00 = US$ 0.76

• Best Prospects: Agriculture

Equipment; Energy; Franchising;

ICT; Medical; Tourism

Fiji: Basic Facts

• Population: 881,065

• GDP: US$ 3.8 billion

• GDP Growth: 3%

• Unemployment: 8.8%

• Exchange rate: US$ 1=F$

2.04

• Inflation rate: 3%

• Major industries: Tourism,

Sugar, Fisheries, Agriculture

• Australia ranks just behind Canada as an economy – 12th

largest GDP in the world

• When combined with New Zealand and nearby Pacific

Islands, it is a 2nd Canada – with a larger GDP and a larger

population.

Australia: Export Trade 2014

Top Exports

• Iron ore & concentrates

• Coal

• Education-related travel services

• Natural Gas

• Gold

• Personal travel services

• Crude petroleum

• Wheat

• Aluminum ores & concentrates

• Beef

34%

18%

7%4%

3%

34%

Top Export Markets

China

Japan

S. Korea

U.S.

India

Other

Australia: Import Trade 2014

Top Imports

• Personal Travel (excluding

Education) Services

• Crude Petroleum

• Passenger Motor Vehicles

• Refined Petroleum

• Freight Transport Services

• Telecom Equip & Parts

• Medicaments (incl. Veterinary)

• Computers

• Passenger Transport Services

• Goods vehicles

21%

10%

7%

5%5%

52%

Top Import Markets

China

U.S.

Japan

Singapore

Germany

Other

Trade with the U.S. by State

L – Top 15-50

2014 Exports from Washington to Australia

TRANSPORTATIONEQUIPMENT

COMPUTER &ELECTRONICPRODUCTSWOOD PRODUCTS

PETROLEUM & COALPRODUCTS

Products Value ($) %

Transportation Equipment $960,621,616 63.4

Computer and Electronic Products $129,570,975 8.5

Wood Products $69,452,102 4.6

Petroleum and Coal Products $69,389,490 4.6

All Others $286,197,609 18.9

Grand Total $1,515,231,792 100

4rth largest State exporter to Australia

2014 Exports from Minnesota to Australia

MACHINERY; EXCEPTELECTRICAL

TRANSPORATIONEQUIPMENT

MISC. MANUFACTUREDCOMMODITIES

COMPUTER ANDELECTRONIC PRODUCTS

ALL OTHERS

Products Value ($) %

Machinery, Except Electrical $118,759,034 25.5

Transportation Equipment $79,515,692 17.1

Misc. Manufactured Commodities $79,089,186 17

Computer and Electronic Products $53,145,329 11.4

All Others $135,613,157 29.1

Grand Total $466,122,398 100

18th largest State exporter to Australia

2014 Exports from Pennsylvania to Australia

MACHINERY; EXCEPTELECTRICAL

TRANSPORATIONEQUIPMENT

CHEMICALS

MISC. FABRICATEDMETAL PRODUCTS

ALL OTHERS

Products Value ($) %

Machinery, Except Electrical $174,493,453 23.6

Transportation Equipment $139,483,892 18.8

Chemicals $82,439,429 11.1

Misc. Fabricated Metal Products $74,412,092 10.1

All Others $269,158,866 36.4

Grand Total $739,987,732 100

11th largest State exporter to Australia

2014 Exports from Maryland to Australia

TRANSPORATIONEQUIPMENT

COMPUTER ANDELECTRONIC PRODUCTS

CHEMICALS

MACHINERY; EXCEPTELECTRICAL

ALL OTHERS

Products Value ($) %

Transportation Equipment $300,962,937 64.8

Computer and Electronic Products $35,284,448 7.6

Chemicals $32,883,210 7.1

Machinery; Except Electrical $21,372,272 4.6

All Others $74,112,350 15.9

Grand Total $464,613,380 100

19th largest State exporter to Australia

2014 Exports from New York to Australia

PRIMARY METALMANUFACTURING

MISC. MANUFACTUREDCOMMODITIES

MACHINERY; EXCEPTELECTRICAL

CHEMICALS

ALL OTHERS

Products Value ($) %

Primary Metal Manufacturing $281,239,606 27.7

Misc. Manufactured Commodities $188,451,946 18.5

Machinery; Except Electrical $144,554,691 14.2

Chemicals $128,044,027 12.6

All Others $274,247,220 27

Grand Total $1,016,537,490 100

6th largest State exporter to Australia

2014 Exports from California to Australia

COMPUTER ANDELECTRONIC PRODUCTS

TRANSPORTATIONEQUIPMENT

FOOD MANUFACTURES

MISC. MANUFACTUREDCOMMODITIES

ALL OTHERS

Products Value ($) %

Computer and Electronic Products $787,479,003 20.7

Transportation Equipment $528,015,294 13.9

Food Manufactures $356,069,182 9.4

Misc. Manufactured Commodities $323,772,035 8.5

All Others $1,809,307,958 47.6

Grand Total $3,804,643,472 100

Largest State exporter to Australia

Source: Department of Commerce, Bureau of Economic Analysis – FDI Position by Ultimate Beneficiary Owner

Largest Country Recipients of U.S. Direct Investment in 2013

Rank Market Million USD

1 Netherlands 722,786

2 United Kingdom 570,987

3 Luxemburg 416,278

4 Canada 368,297

5 Bermuda 287,004

6 Ireland 239,631

7 Caribbean 234,206

8 Australia 158,996

9 Singapore 154,438

10 Japan 123,174

Source: Department of Commerce, Bureau of Economic Analysis – FDI Position by Ultimate Beneficiary Owner

Largest Country Sources of FDI in the United States in 2013

Rank Market Million USD

1 United Kingdom 518,643

2 Japan 342,327

3 Netherlands 273,884

4 Canada 237,921

5 France 226,131

6 Switzerland 209,397

7 Germany 208,841

8 Luxemburg 201,603

9 Caribbean 80,106

10 Belgium 65,135

11 Spain 48,528

12 Australia 44,742

Australia: Business Environment

“If you want to go to a fast-growth economy where people speak

English and are nice, go to Australia.” – Jeffrey R. Immelt, GE

Chairman and CEO

Stable political environment and FTA in place

U.S. company/brand names are commonplace

Global orientation

IPR regimes in place

Australia – U.S. Free Trade Agreement

Entered into force in 2005.

Tariff Reduction (99% eliminated).

All trade in goods free of duty by 2015.

Opens all Australian state & federal govt. procurement.

Importer Must Claim Preferential Treatment.

No Certificates Required but Rules of Origin Apply.

Increased threshold of screening for U.S. FDI in Australia.

25

Australia – U.S. Free Trade Agreement Statistics

Bilateral trade in goods and services has increased by 59% since

2005:

Goods exports to Australia increased by 83%

Goods imports from Australia increased by 23%

Services exports to Australia increased by 148%

Services imports from Australia increased 74%

Australian FDI in the U.S. rose by more than 20% and is the

U.S.’s 12th largest investor.

U.S. FDI in Australia is Australia’s largest investor by more than

$50 billion.

Standards and Approvals

Heavily regulated and protected market.

No mutual recognition agreement on standards.

Different “wiring rules” for electrical products.

Chemicals need to be certified under the National Industrial

Chemical Notification Scheme (NICNAS).

Therapeutic products need Therapeutic Goods Administration

(TGA) approval.

Wood packaging and used equipment must be treated/fumigated.

Plant and animal products need to be approved by the Australian

Quarantine & Inspection Service.

Market Entry Strategies

Importers/Wholesalers: Usually small and specialized. Few

general importers.

Commission Sales Reps: Fewer and fewer. Very rare in

consumer goods and industrial equipment.

Manufacturers/End Users: Generally prefer to source locally.

E-Commerce: Australia has the 4rth highest B-2-C e-commerce

sales rates in the Asia Pacific. Growing by 6-7% annually and

represents 5% of total retail sales.

Business Culture

Importers are very cautious about changing suppliers.

Avoid excessive bargaining. Offer your best price early.

Direct and informal negotiating style. Committing to minimum

volume orders can be problematic.

Highly regulated market with a rigid enforcement of standards.

Don’t try and go around requirements.

Avoid The Tall Poppy Syndrome. Stay humble.

Market Tips

Distributors struggle against online retailers so work out your wholesale discount/margins.

U.S.: High volume/low margin; Australia: Low volume/high margin

Cost of doing business in Australia is relatively high.

Scale expectations to market size.

One rep or distributor may be able to cover the market.

It’s a very small market and people talk.

Leading Sectors for U.S. Exports

• Education

• Travel and Tourism

• ICT

• Medical Equipment

• Aircraft and Parts

• Automotive Parts

• Agricultural Equipment

• Mining Equipment

• Oil and Gas Equipment

• Renewable Energy

Education

4,377 Australian students in US during

2013-14 academic year.

6% increase over 2012-2013 and 25% in

the last 5 years.

44% U/Grad; 24% Grad

Many Asian students who attended

Australian high schools have an interest

in university study in the US.

Sports scholarship opportunities are

popular.

Popular undergraduate courses: Liberal

Arts and Sciences, Business,

International Relations, Film, & Music.

Travel and Tourism

Australians traveling to and spending

in the U.S. in record numbers.

1.21 million visitors in 2013.

Spent $6.1 billion.

8th-largest market for visitor spending.

10th-largest market for international

visitors.

Australians stay 20 days – longer than

other international travelers.

Information & Communication Technology

Mature, middle-class economy.

U.S. brands are market

leaders. Social is very large -

More Facebook users per

capita than anywhere else in

the world.

Federal Government is

significant buyer of IT products

and services.

Key industries: finance,

insurance, retail, transport,

mining, telecommunications,

and media.

Medical Equipment

Australia is the ninth largest export

market for U.S. manufacturers of

medical products.

90% of medical devices are imported.

U.S. is the major supplier followed by

Europe and Japan.

Government-funded healthcare scheme.

Healthcare market is mature,

competitive, and sophisticated.

Good prospects exist for new and

innovative medical technologies.

Aircraft and Parts

U.S.-made aircraft comprise

the majority of military,

commercial ,and general

aviation fleets (66% of

13,500 aircraft).

Opportunities exist in:

MRO - parts and

components for aircraft

maintenance, repair, and

overhaul

Advanced avionics, display,

communication, and control

and navigational

instruments

Automotive Parts

Australia has the third highest

vehicle ownership rate in the

world.

From 2017, Ford, GM and

Toyota will cease manufacturing

in local market.

The U.S. is the leading source of

aftermarket parts supply

followed by Japan.

Opportunities exist for

aftermarket equipment,

accessories, parts, and tools,

especially in the racing and SUV

markets.

Agricultural Equipment

3rd largest export market for

US-made equipment (2014).

Export sales totaled US$ 0.64

billion, behind Canada US$

2.64 billion and Mexico US$

0.92 billion.

Agricultural “Field Days”

provide great promotional

opportunities.

Mining Equipment

Largest exporter of black coal, diamonds,

iron ore, lead, rutile, zinc and zirconium;

2nd largest exporter of gold; and 3rd largest

exporter of aluminum and bauxite.

U.S. is a leading supplier of major capital

equipment but domestic manufacturers are

esp. competitive in some areas e.g. mining

software

Mining sector has slowed since late 2012

and now a strong focus on reducing costs

Opportunities exist for U.S. suppliers of:

Maintenance products/services, esp.

that lower operational costs

Automation technology – trucks, drills,

excavation equipment

Oil & Gas Equipment

US$ 135 billion of projects scheduled to

start-up between 2015 and 2017.

Global operators in Australia: Apache,

BHP-Billiton, Chevron & ConocoPhillips.

Local production: natural gas = 62%

(offshore), oil= 27%, CSG = 8%

Products and services that are important

to the success of future projects include:

LNG processing equipment and services

Deepwater exploration and production

technology

Coal seam methane production

equipment

Technology that reduces labor or

increases operational safety

Renewable Energy

20% renewable energy

target by 2020 is a potentially

good driver but under some

uncertainty.

Approx. 13% of electricity

generation currently sourced

from renewables. Most of

this is hydro.

Wind energy has been the

fastest growing area but

almost no new projects in

2015.

Thank You

Joe Kaesshaefer

Senior Commercial Officer

U.S. Commercial Service, Sydney

Email: Joe.Kaesshaefer@trade.gov

Website: http://www.export.gov/Australia