Scott Strain UKTI 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 2

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A comparison with Australia

Australia UK

Population Global GDP ranking GDP growth est. 2013 23 million 12 th (IMF 2012) 2.5% (OECD May 13) 62 million 7 th 0.89% GDP per capita ($US 2012) $67,700 ($US 2012 IMF) $28,032 Ease of doing business (World Bank 2011) Unemployment (April 2013) Land mass – sq kms 10 th (WB 2012) 5.5% (May 13 ABS) 7 692 000 7 th 7.8% 242 000 3

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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% •7 th biggest market for services exports and 18 th largest for goods • UK is 2 nd biggest foreign direct investor in Australia 6 500 6 000 5 500 5 000 4 500 4 000 3 500 3 000 2 500 2 000

UK Exports : Goods v Services

Goods Services 2007 2008 2009 2010 2011 2012

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Australia: it’s bigger than you think

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Rail Projects in Australia

Projects 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 announced Expected 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.;

In partnership with:

The Nation Building Programme

Leah Gartner Senior Trade Development Manager

Railways, Advanced Engineering and Marine [email protected]

Potential 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.

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Major Road Projects

Major Road Projects

West Connex, NSW East West Link, Victoria Bruce Highway, Queensland

Antonia Yendell Senior Trade Development Manager

UKTI Melbourne [email protected]

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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Resources

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Major offshore LNG projects

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Richard Goldsmith Senior Trade Development Manager

Richard.Goldsmith

@fco.gov.uk

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 12

Projects: QLD & WA

Carmichael 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 .

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 13

Australian opportunities: ICT

ICT 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 (5 th best in the world) Contact [email protected]

for more information 14

Australian opportunities: e-commerce

Australians 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 [email protected]

for more information 15

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Australian opportunities: hospitals

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 [email protected] 16

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 17

Biotechnology Industry

─ Australia is the leading biotechnology location in the Asia Pacific Region. 6 th 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 18

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Routes to Market

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 Paid

US 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 Success

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Set medium / long term strategies

Set reasonable marketing plans and sales targets and review them regularly

Committed distributor - right for your product

Committed supplier

Complete openness - pricing / margins Service is paramount

Get involved

Allow 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 UNCLASSIFIED

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

[email protected]

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