'Identify potential growth opportunities for Australian SMEs post-Brexit' David McCredie
While the United Kingdom works to negotiate its exit from the EU, it’s on the hunt for new trading partners and to work with businesses from around the world in the lead up to and post Brexit.
Australia’s relationship with its second largest foreign investor, the UK, is also beginning its own journey. Led by the Government-to-Government Trade Working Group last September, Australia and the UK are looking to refresh long traditional ties and explore the exciting new opportunities both countries are developing.
This is an excellent opportunity for Australian companies of all sizes, particularly SME’s looking to expand their portfolios and strengthen their connection with the UK market.
Australia is at the front of the queue for a Free Trade Agreement (FTA) with a post-Brexit UK and is keen to seal an ambitious and comprehensive arrangement. Depending on the result of the negotiations there will inevitably be opportunities that will spring forward for those nimble and prepared.
The UK hasn’t been the obvious trading partner for Australian businesses, especially given the strong growth and proximity to our Asian neighbours. Although the interest in Asia takes the headlines, the UK is still a significant opportunity and in the top four markets of interest according to the Australian International Business survey in 2016.
Do you want to investigate expanding your small business to the UK?
So why the UK?
There are many reasons to choose the UK as a destination for selling your product and services. Firstly, there is the shared history, which brings the ease of business relationships, common law, similar (but not identical) business regulation and a shared language. In addition, low corporate tax rates, connectivity to a large domestic UK market with Europe on its doorstep make the opportunity an attractive first step to many.
The UK presents a great market for Australian businesses to cut their teeth in exporting, before taking on more challenging environments with more complexity and challenges of differing languages, cultures and legal structures. The demand for many retail products and services in the UK is very similar to Australia, so often these are readily transferable with little modification.
However, it is important you understand your market and use the help of organisations such as the Australian British Chamber of Commerce (ABCC), or Government entities such as the Department for International Trade (and Austrade) to provide advice on how to approach the market.
What opportunities are there?
Like Australia, the UK has been evolving as an economy. Australian businesses have been successful in entering the market in the UK, particularly where they have been able to leverage innovative and disruptive business models, as well as in areas of the UK market that have been slower to evolve.
Innovation particularly led by technology that promotes productivity in existing businesses has been a successful opportunity seized by a number of small and medium sized businesses. Their agility, and ability to evolve their business models makes them great candidates for causing disruption and providing the outcomes that established larger firms often find hard to replicate. When coupled with the highly competitive marketplace in the UK, the point of difference that niche businesses from Australia can provide is often favoured.
The additional opportunity for Australian businesses is that the UK is a country keen to engage beyond its own borders. This can be of great value given the global reach of many UK businesses, forming part of a global supply chain through the UK can provide a substantial boost to your exports.
How can Australian small and medium businesses benefit?
There are significant opportunities for growth between the two countries. Statistics vary, but some give a figure of as low as 2% of Australian SME’s export to the UK. Studies also show businesses that export successfully tend to have greater turnover, employ more people, grow more quickly and importantly have a greater profit at the end of the year.
What do Australian businesses need to be know and be wary of?
Australia and the UK currently operate under World Trade Organisation rules.
· There is no current Free Trade Agreement, however there are some sector specific allowances, notably for the wine industry (which has about 20% market share in the UK).
· Australian businesses looking to expand into the UK need to be aware of the immigration laws. While Australians have freedom to enter the UK for 6 months as a visitor or for business meetings, you are instantly allowed to work in the UK. This is an area you should seek advice on before departing to the UK.
· It is important to understand your commitment to the UK, and what if any business structure and legal reporting requirements and VAT (GST in the UK) requirements may need to be considered.
As always, seek professional advice before embarking on your journey. Seek information through the ABCC, Government resources and through international trade advisors.
The ABCC is well positioned to provide insights of government connections, commercial opportunities and avenues for strong strategic networks through its membership and affiliate programs across two countries.
Click here to read original article published in Kochies Business Builders.