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U.S. Department of State
Australia 1996 Country Commercial Guide
Office of the Coordinator
AUSTRALIA
1996 COUNTRY COMMERCIAL GUIDE
TABLE OF CONTENTS
CHAPTER I: EXECUTIVE SUMMARY
CHAPTER II: ECONOMIC TRENDS AND OUTLOOK
A. MAJOR TRENDS AND OUTLOOK
B. PRINCIPAL GROWTH SECTORS
1. MINING AND ENERGY RESOURCES
2. AGRICULTURAL RESOURCES
3. VALUE ADDED PROCESSING, MANUFACTURING
4. HIGH TECH INDUSTRY
5. SERVICES
6. TOURISM
C. GOVERNMENT ROLE IN THE ECONOMY
1. BUDGET PRIORITIES
2. ECONOMIC REFORMS
D. BALANCE OF PAYMENTS SITUATION
E. INFRASTRUCTURE SITUATION
1. OVERVIEW
2. AIR TRANSPORT
3 ELECTIONS; AND ORIENTATION OF MAJOR POLITICAL PARTIES
CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES
A. RETAILING TRENDS
B. DISTRIBUTION AND SALES CHANNELS
C. USE OF AGENTS AND DISTRIBUTORS
D. FINDING A PARTNER - HOW THE U.S. COMMERCIAL SERVICE IN
AUSTRALIA CAN HELP
E. FRANCHISING
F. DIRECT MARKETING
G. JOINT VENTURES AND LICENSING
H. STEPS TO ESTABLISHING AN OFFICE
I. SELLING FACTORS AND TECHNIQUES
J. ADVERTISING AND TRADE PROMOTION THROUGH MAJOR
NEWSPAPERS AND BUSIN ESS JOURNALS
K. PRODUCT PRICING
L. SALES SERVICE AND CUSTOMER SUPPORT
M. SELLING TO THE GOVERNMENT AND LOCAL INDUSTRY
DEVELOPMENT ENCOURAGEMENT
N. PROTECTING YOUR PRODUCT FROM INTELLECTUAL PROPERTY
RIGHTS INFRINGEMENT
O. NEED FOR A LOCAL ATTORNEY
CHAPTER V: LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT
A. EXPORTS
1. COMPUTER SOFTWARE (CSF)
2. COMPUTERS AND PERIPHERALS (CPT)
3. MEDICAL EQUIPMENT (MED)
4. AUTOMOTIVE PARTS AND SERVICE EQUIPMENT (APS)
5. EDUCATION AND TRAINING SERVICES (EDS)
6. TELECOMMUNICATIONS EQUIPMENT (TEL)
7. TELECOMMUNICATIONS SERVICES (TES)
8. HEALTHCARE SERVICES (MCS)
9. DEFENSE EQUIPMENT (DFN)
10. SECURITY AND SAFETY EQUIPMENT (SEC)
11. AIRCRAFT AND PARTS (AIR)
12. LABORATORY AND SCIENTIFIC EQUIPMENT (LAB)
13. BIO-TECHNOLOGY (BTC)
14. FOOD PROCESSING/PACKAGING EQUIPMENT (FPP)
15. CONSTRUCTION EQUIPMENT (CON)
B. AGRICULTURAL SECTORS
1. FROZEN VEGETABLES
2. BEVERAGE BASES
3. SNACK FOODS
C. SIGNIFICANT INVESTMENT OPPORTUNITIES
1. PRIVATIZATION
2. MAJOR INFRASTRUCTURE DEVELOPMENT PROJECTS
BY SECTOR/BY STATE
a. AIR TRANSPORT
b. RAIL/ROAD TRANSPORT
c. SEA TRANSPORT
d. TELECOMMUNICATIONS
e. ENERGY
f. WATER AND SEWERAGE
g. BUILDING AND CONSTRUCTION
3. OPPORTUNITIES ARISING FROM MULTILATERAL
DEVELOPMENT BANK-FUNDED PROJECTS
4. OUTWARD FOREIGN DIRECT INVESTMENT
CHAPTER VI: TRADE REGULATIONS AND STANDARDS
A. TRADE BARRIERS
1. TARIFF
2. NON-TARIFF BARRIERS
3. IMPORT TAXES
B. CUSTOMS VALUATION
C. IMPORT LICENSES
D. EXPORT CONTROLS
E. IMPORT/EXPORT DOCUMENTATION
F. TEMPORARY ENTRY
G. LABELING, MARKING REQUIREMENTS
H. PROHIBITED IMPORTS
1. PHYTOSANITARY RESTRICTIONS AFFECTING IMPORTS
OF FRESH FRUITS AND VEGETABLES
I. STANDARDS (E.G. ISO 9000 USAGE)
J. FREE TRADE ZONES/WAREHOUSES
K. SPECIAL IMPORT PROVISIONS
L. MEMBERSHIP IN FREE TRADE ARRANGEMENTS
CHAPTER VII: INVESTMENT CLIMATE
A. OPENNESS TO FOREIGN INVESTMENT/INVESTMENT BARRIERS
B. CONVERSION AND TRANSFER POLICIES
C. EXPROPRIATION AND COMPENSATION
D. DISPUTE SETTLEMENT
. ROAD/RAIL TRANSPORT
4. SEA TRANSPORT
5. TELECOMMUNICATIONS
6. ENERGY
7. WATER AND SEWERAGE
8. BUILDING AND CONSTRUCTION
CHAPTER III: POLITICAL ENVIRONMENT
A. NATURE OF POLITICAL RELATIONSHIP WITH THE UNITED STATES
B. MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE
C. A BRIEF SYNOPSIS OF THE AUSTRALIAN POLITICAL SYSTEM;
SCHEDULE FOR
1. INVESTMENT DISPUTES
2. COMMERCIAL DISPUTES
3. POLITICAL VIOLENCE AFFECTING INVESTMENT
E. POLITICAL VIOLENCE AFFECTING INVESTMENT
F. PERFORMANCE REQUIREMENTS AND INCENTIVES TO SUPPORT
LOCAL INDUSTRY DEVELOPMENT
1. SELLING TO THE GOVERNMENT
2. BOUNTIES
3. FIXED TERM ARRANGEMENTS FOR INFORMATION
TECHNOLOGY AND TELECOMMUNICATIONS COMPANIES
4. RESTRICTED SYSTEMS INTEGRATION PANEL
5. GOVERNMENT BUSINESS ENTERPRISES
6. LOCAL INDUSTRY DEVELOPMENT IMPACT
7. EXPORT MARKET DEVELOPMENT SCHEME GRANTS
G. RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
H. PROTECTION OF PROPERTY RIGHTS
1. PATENTS, TRADE SECRETS, DESIGNS
2. TRADE NAMES AND MARKS, PARALLEL IMPORTS
I. REGULATORY SYSTEM: LAWS, PROCEDURES AND TAXES
J. FOREIGN INVESTMENT REVIEW BOARD
K. BILATERAL INVESTMENT AGREEMENTS
L. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
M. LABOR
1. WORK FORCE CHARACTERISTICS
2. LABOR RELATIONS
N. FOREIGN TRADE ZONES AND FREE PORTS
O. CAPITAL OUTFLOW POLICY
P. MAJOR FOREIGN INVESTORS
CHAPTER VIII: TRADE AND PROJECT FINANCING
A. BRIEF DESCRIPTION OF THE BANKING SYSTEM
B. FOREIGN EXCHANGE CONTROLS AFFECTING TRADING
C. GENERAL FINANCING AVAILABILITY
D. HOW TO FINANCE EXPORTS AND METHODS OF PAYMENT
E. TYPES OF AVAILABLE EXPORT FINANCING AND INSURANCE
(COMMERCIAL, BILATERAL, MULTILATERAL AND LOCAL SOURCES)
F. PROJECT FINANCING AVAILABLE
G. LIST OF BANKS WITH CORRESPONDENT U.S. BANKING ARRANGEMENTS
CHAPTER IX: BUSINESS TRAVEL
A. BUSINESS TRAVEL
B. BUSINESS CUSTOMS
C. TRAVEL ADVISORY AND VISAS
D. HOLIDAYS
E. BUSINESS INFRASTRUCTURE
CHAPTER X: APPENDICES
APPENDIX A: AUSTRALIA COUNTRY DATA
1. POPULATION
2. POPULATION GROWTH RATE (%)
3. RELIGION(S)
4. GOVERNMENT SYSTEM
5. LANGUAGE(S)
6. WORK WEEK
APPENDIX B: AUSTRALIAN DOMESTIC ECONOMY STATISTICS FOR
1994, 1995, 1996
1. GDP
2. GDP GROWTH RATE (%)
3. GDP PER CAPITA
4. GOVERNMENT SPENDING AS A % OF GDP
5. INFLATION (%)
6. UNEMPLOYMENT RATE (%)
7. FOREIGN EXCHANGE RESERVES
8. AVERAGE EXCHANGE RATE FOR USD1.00
9. NET FOREIGN DEBT
10. DEBT SERVICE RATIO (%)
11. U.S. ECONOMIC MILITARY/ASSISTANCE
APPENDIX C: U.S. AND AUSTRALIAN TRADE STATISTICS FOR
1994, 1995, 1996
PART I: GOODS AND SERVICES TRADE STATISTICS
1. TOTAL AUSTRALIA EXPORTS (G&S)
2. TOTAL AUSTRALIA IMPORTS (G&S)
3. AUSTRALIA'S EXPORTS OF MERCHANDISE GOODS
4. AUSTRALIA'S IMPORTS OF MERCHANDISE GOODS
5. U.S. SHARE OF MERCHANDISE IMPORTS (PERCENT)
6. AUSTRALIA'S IMPORTS OF MANUFACTURED GOODS
7. U.S. SHARE OF MANUFACTURED IMPORTS (PERCENT)
8. MANUFACTURED GOODS TRADE BALANCE WITH U.S.
9. TRADE BALANCE WITH THREE LEADING PARTNERS 1994
10. PRINCIPAL U.S. EXPORTS TO AUSTRALIA 1994
11. PRINCIPAL U.S. IMPORTS FROM AUSTRALIA 1994
PART II: AGRICULTURAL TRADE STATISTICS
1. AUSTRALIAN AGRICULTURAL IMPORTS
2. AGRICULTURAL TRADE BALANCE WITH U.S.
3. AGRICULTURAL TRADE BALANCE WITH 3 TOP PARTNERS
4. PRINCIPAL AUSTRALIAN EXPORTS TO THE U.S.
5. PRINCIPAL AUSTRALIAN IMPORTS FROM THE U.S.
APPENDIX D: FOREIGN DIRECT INVESTMENT STATISTICS
1. TABLE 1: FOREIGN DIRECT INVESTMENT IN AUSTRALIA
2. TABLE 2: STOCK OF FOREIGN DIRECT INVESTMENT IN AUSTRALIA
AT FYE BY SELECTED COUNTRIES
3. TABLE 3: STOCK OF FOREIGN DIRECT INVESTMENT IN AUSTRALIA
AT FYE BY INDUSTRY
4. TABLE 4: TOTAL EXPECTED INVESTMENT BY COUNTRY OF
INVESTOR AND INDUSTRY SECTOR
5. TABLE 5: AUSTRALIAN FOREIGN DIRECT INVESTMENT ABROAD
APPENDIX E: KEY CONTACTS IN THE U.S. AND AUSTRALIA
1. U.S. GOVERNMENT OFFICES IN AUSTRALIA
2. AMCHAM AND BILATERAL BUSINESS COUNCILS
3. KEY AUSTRALIAN TRADE ORGANIZATIONS AND
INDUSTRY ASSOCIATIONS
4. KEY AUSTRALIAN GOVERNMENT OFFICES
5. SOURCES OF MARKET RESEARCH AND BUSINESS
FACILITATION SERVICES
6. COMMERCIAL BANKS IN AUSTRALIA
7. NEWSPAPERS, PERIODICALS AND BUSINESS DIRECTORIES
APPENDIX F: MARKET RESEARCH 1995 - 1996
1. KEY INDUSTRY SECTOR MARKET RESEARCH
2. AGRICULTURAL MARKET RESEARCH
APPENDIX G: 1996 TRADE EVENT SCHEDULE
CHAPTER I: EXECUTIVE SUMMARY:
This Country Commercial Guide (CCG) presents a comprehensive look at
Australia's commercial environment through economic, political and
market analyses.
The CCGs were established by recommendation of the Trade Promotion
Coordinating Committee (TPCC), a multi-agency task force, to consolidate
various reporting documents prepared for the U.S. business community.
Country Commercial Guides are prepared annually at U.S. Embassies
through the combined efforts of several U.S. Government agencies.
The United States Mission regards the commercial environment in
Australia as exceptionally "friendly", attractive to American business
and with room for more of the same. With the United States' only
significant bilateral trade surplus in Asia ($7+ billion), and with
American names commonplace in the market, Australia's receptivity to
U.S. goods and services is well-documented. Moreover, Australian
willingness to give "new" things a try recommends the country as a good
market in which to test the international appeal of a product or
service. The well-developed media and advertising sectors, combined
with the use of English, can mean that copy and other promotional
material require little adjustment. The countries' relatively
comparable positions on the scale of technology implementation can mean
that, if an offering finds the American market "ready", it will probably
find that of Australia ready as well.
To these factors, one should add that of geography. While location, in
the high-tech world of the majority of American exporters, may not be as
important as in real estate, new-to-Asia/Pacific companies should
consider that Australia is physically closer to many emerging markets
than is the United States.
This fact will not mean the same to every firm, but it well behooves any
U.S. business initiating relationships with ASEAN or Indian Ocean
markets to consider whether headquartering part of their regional
operations in Australia makes business sense. The roster of American
and other companies that have done so is impressive. Those same new
companies might also look at Australia as a source of like-minded
potential joint-venturers.
The similarities in the economies of Australia and the U.S. are
striking. Among them are: the current account situation; a chronic
trade deficit; a low savings rate; declining union membership; an ever
more important service sector; a strong focus on the Asia/Pacific
Region; ready acceptance of innovations in product and marketing; the
availability of a major money center; and privatization as a watchword.
To these, a similar language further contributes to the "at home"
feeling, as do the many familiar marquee corporate names.
To help cope with a budget deficit, the Labor government raised the
company tax from 33 to 36 percent, and is forecasting a modest surplus
for 1995/96. With one notable exception, the states in Australia are
also in the red. A trade account deficit sounds familiar to most
Americans, although the bilateral side of the ledger is distinctly in
the United States' favor. As in North America, the service sector is
gaining in importance, and that of manufacturing declining, although it
is not a zero sum situation. At this writing, the savings rate in
Australia is about 2.5%, lower even than the U.S. level. While these
similarities have some negative connotations, most Americans will find
compensating comfort in the ease with which day-to-day business life
progresses. Many familiar products and service providers are at hand
and, as in the United States, firms are encouraged to look toward Asian
markets as the source of business growth.
The similarities make it easy to assume that the business environments
are identical. They are not. Perhaps the most striking variance is the
different role of government, and attitudes toward that role, in the
conduct of day-to-day business. In Australia, the Federal and State
governments have traditionally been more overt players in the economy
than their American counterparts. While privatization, and an evolving
philosophy toward what government's role should be, are narrowing the
gap, in general, American managers will find that they have to take
officialdom into account to a greater degree here than they do at home.
The Australian economy is more dependent than that of the United States
on commodity exports and, consequently, is subject to more precipitous
changes of direction. It is hoped that moves to broaden the economic
base will put an end to the boom and bust tradition. The distances that
businesses must cope with in both countries are similar, though what
lies between any two points in terms of population centers and
customers, is apt to be very different. Networking is no less crucial
in Australia than in the U.S. in getting business done, but there seems
to be a greater importance attached to the "old boy" network.
In summary, Australia's is as competitive a marketplace as any, but one
of opportunity for American companies, where barriers both formal and
informal are few, where innovation is welcome, and where one might find
an attractive port of entry to Asia.
Country Commercial Guides are available on the National Trade Data Bank
on CD-ROM or through the Internet. Please contact STAT-USA at 1-800-
STAT-USA for more information. To locate Country Commercial Guides via
the Internet, please use the following World Wide Web address:
WWW.STAT-USA.GOV. CCGs also can be ordered in hard copy or on diskette
from the National Technical Information Service (NTIS) at 1-800-553-
NTIS.
CHAPTER II: ECONOMIC TRENDS AND OUTLOOK
A. MAJOR TRENDS AND OUTLOOK
The Australian economy is enjoying a period of sustained, moderate
growth. Over the 1994 calendar year, real gross domestic product grew
5.1 percent, due mainly to a significant rebound in business investment.
In the 1995 calendar year, real average GDP growth is expected to slow
to 4.2 percent. This is due to a consolidation in the business sector,
and the moderating effects of a tightening of monetary policy in late
1994. Growth in the mid-3 percent level is expected in the medium-term
thereafter. Australia currently is well-positioned for continued solid
economic growth, with very little in the way of unfavorable indicators.
With increasing links to the dynamic economies in the region, and a
continuation of economic reform, Australia's trade and investment
climate will be attractive for the foreseeable future.
The economic recovery over the past two-three years has effectively
thrown off most of the lingering effects of the severe recession of
1990-92. During that period, weak world demand, combined with
government efforts to rein in an overheating economy, saw company
profits tumble and economic conditions sour. The recovery, initially,
was relatively weak, with considerable stimulus from the Government
failing to have any effect. This was especially prevalent in the labor
market, with Australia posting unemployment levels not seen since the
Great Depression.
However, a significant drop in mortgage interest rates soon led to a
housing boom, with finance approvals rising to record highs. As the
main locomotive force for the recovery, private dwelling investment
pulled the economy forward, assisted by strong exports and low
inflation. It was not until mid-1994 that the housing boom began to
subside.
Fortunately, at that stage, business investment began its resurgence.
The Federal Government predicted in its May, 1994 Budget that business
investment would rise by an unprecedented 14.5 percent, with plant and
equipment outlay forecast to rise an even higher 18.5 percent.
Commentators were at first skeptical, despite signs of strengthening
business confidence and profit.
It is now apparent that even these optimistic forecasts have been
exceeded. For the 1994-95 financial year, business investment is
estimated to have grown by 18 percent, with plant and equipment
investment up 23 percent on the year before. Higher mortgage interest
rates have had an opposite effect on private dwelling investment, which
is estimated to have grown only 4 percent in FY 1994-95, with a 13
percent decline predicted for the following financial year. This is
indicative of the fact that consumer interest rates are currently around
their highest real values in Australian history.
Economists agree that the threat of economic overheating has now
subsided, and more substantial forces are at work to assist economic
growth. Export performance continues to strengthen as global demand
firms, and the Australian farm sector is once again expected to make a
significant contribution to economic growth as drought and seasonal
conditions improve. Employment also will be assisted by positive
economic growth, with the unemployment rate slowly returning to pre-
recession levels. Inflation is predicted to remain relatively low, with
only moderate upward pressure from wages and the effect of a weaker
currency.
Australia's main concern is its high external deficit, driven by
continued foreign borrowing, and a high domestic propensity to consume
imported goods. The current account deficit is forecast to change
little over the next year, as the gains from stronger net exports are
eroded by higher debt service payments. Despite a significant reduction
in the Federal Government's Budget deficit for FY 1995-96, Australia's
balance of payments will continue to weigh down a buoyant economy.
B. PRINCIPAL GROWTH SECTORS
1. MINING AND ENERGY RESOURCES
Australia's mineral and energy resource sector is vast, with great
potential for expansion. Australia is the world's largest producer of
alumina, bauxite and mineral sands, and among the top producers of lead,
zinc, nickel, gold and uranium. In addition, Australia is easily the
world's largest exporter of coal, its second largest exporter of iron
ore, and is a major regional exporter of liquefied natural gas.
Australia's resource sector provides around 5 percent of production-
based GDP, and almost half of the nation's merchandise export earnings,
and offers attractive opportunities for American investors and vendors
of mining machinery, equipment and technology.
2. AGRICULTURAL RESOURCES
Australian agriculture suffered from a massive drought in the eastern
winter grain belt in 1994, which saw a reduction in the gross value of
farm production of over four percent, and a loss in Australia's export
grain earnings. This consisted of a large decrease in the value of crop
output, coupled with a slight increase in the gross value of livestock.
Farm income, as measured by the net value of farm production, decreased
by 36 percent, as compared with the previous year.
An excellent pattern of autumn rains throughout most of the drought
affected areas has caused great optimism, with the net value of farm
production tipped to increase by around 49 percent. Widespread rains
have boosted pasture growth and the prospects for all sectors of
livestock production, while the planting of winter grains has increased
dramatically from 1994. Follow-up rains, however, still will be
necessary for the 1995 crop to reach its full potential.
The more positive agronomic and climatic conditions for the agricultural
sector are coupled with favorable world prices for most major crops
produced by Australia. Wheat prices are expected to remain strong as
demand from China, coupled with crop problems in North America, point to
a tight supply and demand picture. Cotton is at record high price
levels, although Australia's ability to capitalize on them is hampered
by frequent shortages of water. The rise in international dairy prices,
which grew steadily throughout the first half of 1995, is expected to
continue, with positive effects on that sector.
3. VALUE ADDED PROCESSING, MANUFACTURING
The Government's economic development strategy focuses on continued
economic reform to encourage expansion of value-added production in the
minerals and agricultural sectors; manufacturing in high-technology
products; and, expansion of the services sector (including services
exports to the region). Manufacturing production has continued to
outpace other sectors in the economy, growing almost 11 percent in 1994.
This is an indication of a growing emphasis on increasing the share of
manufactured goods in Australia's international trade, combined with
stronger economic growth and a resurgence in profitability. The growth
in elaborately transformed manufactures is set to continue, as
Australian firms expand into broader markets, particularly in Asia.
Traditionally, Australia's earnings have been based on primary products
- minerals, grains, meats. Today, the government's economic
development strategy focuses on continued macro and microeconomic reform
to encourage expansion of value-added production, particularly in the
minerals and agricultural sectors, and in manufacturing of high-
technology products.
4. HIGH TECH INDUSTRY
Australia, as a nation, has the level of sophistication and buying power
to use hi-tech products in a number of industry sectors. Hi-tech
products are used in industries such as medical, health, communications,
information technology, security and defense. Although Australia has
its own small, but vigorous, high tech industry, particularly in the
fields of information and medical technologies, the U.S. is seen as a
world leader for many hi-tech products, and Australia normally looks
first to the U.S. for purchases.
Australians are keen to maintain a leading technological edge and
continually are updating their technology to avoid obsolescence. This
means that Australian firms often are open to propositions for capital
investment, joint ventures and other strategic alliances, both to
capture a larger share of the Australian market, and to gain a
competitive advantage in developing products for export to other
markets, particularly in the Asia Pacific region.
Information Technology (IT) innovators perceive the opportunities within
the Australian market, and pursue this market zealously with their
products. The average annual growth rate of hi-tech IT products is
expected to be around 20 percent for the duration of the decade. Twenty
IT firms, of which 18 are American, have chosen Australia as their
regional headquarters. Their choice is based on the ease of market
penetration (second largest per capita user of PCs in the world after
the US) and the technical sophistication of the Australian IT market.
With all these considerations, Australia provides a relatively small -
but highly active and attractive -market for hi-tech products from the
U.S.
5. SERVICES
Asia's dramatic regional growth is reshaping global markets, with the
services sector in the lead. Australia's credentials as a regional
platform for the provision of services in support of manufacturing,
processing, support and management in Asia are based on unique
comparative strengths. These include a sophisticated, educated,
anglophone human resource base unequaled in the region; and, the
availability of extensive technology-based support services for both
domestic and international usage. Continued economic vigor, business
profitability, increased foreign investment, and domestic consumer
confidence are expected to sustain increased growth in demand for
services in Australia in the management, commercial, legal, financial,
educational, health and community, recreational and personal areas. The
1994 services sector growth rate was 10.9 percent over 1993.
6. TOURISM
Australia's excellent climate and natural endowments make tourism a
growth sector with continuing potential to attract foreign visitors,
especially from the increasingly affluent countries of North and
Southeast Asia. Accordingly, all of the industry sectors associated
with the provision of tourism facilities, products and services should
prosper.
The tourist industry is a vital component of the services sector,
contributing greatly to overall GDP. The industry grew by 7 percent in
1993, and by 3 percent in 1994, with tourist accommodation receipts
totaling over $2.8 billion.
Excluding airline passenger earnings, the Bureau of Economic Analysis
(BEA) estimates that Australian tourists contributed US$1.4 billion to
the U.S. economy in 1994. The BEA forecasts increases of 2.8 percent in
1995, and 5 percent in 1996. In 1994, over 400,000 Australians came to
the U.S. for business and/or pleasure. While this number is lower than
in previous years, due partly to the lingering effects of recession on
consumer spending, Australian Bureau of Statistics data confirms that
the U.S. remains the number one long-haul destination for Australian
travelers, with 31 percent of market share. The U.S. Travel and Tourism
Agency forecasts an increase in Australian visitor arrivals over the
next four years - with growth in the 6-7 percent range each year through
1998.
Many investors, both domestic and abroad, already have gotten into the
action, with considerable tourism infrastructure expansion taking place,
particularly on the Queensland coast. Other major developments are
associated with the 2000 Olympics in Sydney.
C. GOVERNMENT ROLE IN THE ECONOMY
1. BUDGET PRIORITIES
The Commonwealth Government uses both fiscal and monetary policy to
influence the economy. Previously, in an effort to overcome the effects
of the early-1990s recession, the Government undertook an expansive (and
expensive) program of fiscal stimulus, aimed mainly at the labor market.
The results, at least initially, were disappointing from the perspective
of cutting unemployment. Combined with a subsequent easing of monetary
policy, however, economic growth responded strongly.
With the recovery complete, the Government is now reducing the amount of
fiscal and monetary stimulus it injects into the economy. In the recent
FY 1995-96 Budget, the Government announced a reduction in this program
of expenditures. This, combined with an increase in official interest
rates of 2.75 percent in the latter half of 1994, has reduced the chance
of economic overheating.
The Government also has responded to calls to reduce its budget deficit.
The FY 1995-96 budget announced a $9.5 billion turnaround in the Budget
balance to a surplus of around $500 million. Although some commentators
are skeptical of the Government's ability to deliver the surplus, its
efforts to achieve this result are significant.
Official interest rates are perceived as being at, or near, their peak,
with the possibility of an easing of monetary policy when the Federal
election is announced. The current government has the option to call an
election any time before mid-1996, and will do so when it believes
economic and social factors are ripe.
2. ECONOMIC REFORMS
Australia commenced a basic reorientation of its economy more than 10
years ago, and is transforming itself from an inward-looking, import-
substitution country to an internationally competitive, export-oriented
one. Key reforms include the unilateral reduction of high tariffs and
other protective barriers; floating the Australian dollar exchange rate;
deregulating the financial services sector (including a decision in late
1992 to allow liberal access for foreign bank branches); rationalizing
and reducing the number of trade unions; efforts to restructure the
highly centralized system of industrial relations and labor bargaining;
better integration of the State economies into a national federal
system; improvement and standardization of the national infrastructure;
and privatizing many government-owned services and some public
utilities.
The ultimate goal is for Australia to become a competitive producer and
exporter, not just of traditional farm and mineral commodities, but of a
diversified mix of value-added manufactured products, services and
technologies. While progress has been made on this economic reform
agenda (such as in the oligopolistic telecommunications market, now
responsive to competition), much remains to be done. Herein, lie some
of the most promising opportunities for American business and
investment.
While the near-term outlook is for continued economic expansion,
Australia's longer-term prospects depend heavily on continued
fundamental economic reform. There is a general consensus among the
major political parties, management and labor on the necessary features
of this reform, but significant divergence of views on the methods, pace
and degree of change required.
D. BALANCE OF PAYMENTS SITUATION
Both Australian imports and exports are set to grow strongly in coming
years. The Government, in recent economic forecasts, has predicted that
export growth will eclipse import growth in the 1995-96 financial year.
This reverses the trend of the past few years, as higher economic growth
saw a boom in the consumption of imported goods. A return to a
merchandise trade surplus would be a welcome development, especially in
helping to deal with the current account deficit.
Trade is important for Australia: merchandise exports in 1994 totalled
$47.7 billion, about one fifth of the nation's gross domestic product.
Australia imported $50.1 billion worth of merchandise goods in 1994,
resulting in a balance of trade deficit of $2.3 billion. This follows a
surplus of around $300 million the year before, and reflects the growing
level of imports as the economic recovery promotes domestic demand.
Nevertheless, Australia's growing export orientation is one of the
country's success stories and will continue as a major factor
contributing to the nation's economic health.
In 1994, around 60 percent of Australia's exports went to Asia, with
East Asia being the fastest growing regional market for both exports and
imports. Japan is Australia's largest trading partner, taking around 25
percent of Australian merchandise exports ($11.8 billion in 1994), and
supplying 17.8 percent of its imports ($8.9 billion in 1994).
Australia's major exports to Japan are coal, iron ore, and meat.
The United States is Australia's second largest trading partner, but has
been relegated to fourth among its export markets; China/Hong Kong is
second; and, South Korea third. The U.S. remains, however, Australia's
single largest source of merchandise imports ($10.9 billion in 1994).
Of Australia's top five trading partners, the U.S. is the only country
to consistently run a bilateral trade surplus with Australia. The
surplus reached $7+ billion in 1994.
The composition of Australia's exports has been changing gradually over
the past two decades, to reflect the increasingly value-added direction
of Australian industry. Manufactured exports have grown at an average
rate of around 13 percent per annum over the last five years. Within
manufactures, elaborately transformed manufactures (ETMs) have shown the
best performance -- in the last five years their share of total exports
has increased from around 16 percent to 22 percent. Australia's
emerging ETM exports also have an increasingly diverse base. They
include such items as high-speed ferries, telecommunications equipment,
and motor vehicles.
Compared to recent years, growth in ETM exports slowed slightly in 1994.
Increasing by 9.8 percent, the value of Australia's ETM exports reached
$10.5 billion. Simply transformed manufactures (STMs) have grown at a
slower rate during the last decade, although, in 1994, their performance
strengthened (up by 9.6 percent). Primary products, although they have
experienced very low growth in the past few years, remain the dominant
export sector in value terms. In 1994, they comprised 58 percent of
total merchandise exports.
Assisting the improvement in rural exports in the coming year is the
promise of more favorable weather conditions, following the nation's
severe drought. Grain crops are expected to improve considerably, while
other rural export commodities will benefit from improving global
demand. The Government has predicted that the rural sector again will
play a significant part in Australia's export earnings in the coming
years, supporting a slight decline in non-rural earnings growth. Coal
and iron ore exports will remain the big money earners, with Japanese
buyers paying higher prices after years of difficult price negotiations.
Australia has a net deficit for trade in services, despite having one of
the most prosperous and vibrant tourism sectors in the world. The
services deficit for 1994 totalled $578 million, due mainly to shipment
outflows. Australia has relatively few shipping lines. Therefore, net
costs for freight and insurance regularly exceed $2 billion each year.
Other net debits include "miscellaneous" services, such as advertising,
computing, and education and training.
Net income remains the single most expensive item on Australia's current
account. In 1994, the net income deficit totalled $12.1 billion, by far
the largest component in the overall current account deficit of $15.7
billion. Most of the income deficit comes from debt service payments,
resulting from Australia's high level of foreign debt. Australia's
vulnerability to foreign interest rate increases and currency movements
tends to exacerbate this problem. Net foreign debt at year-end 1994 was
$119.3 billion.
The Current Account Deficit (CAD) remains Australia's foremost economic
constraint. The Government has forecast that, in nominal terms, the CAD
will remain unchanged from FY 1994-95 to FY 1995-96, at A$27 billion --
this is despite a projected improvement in the trade balance. Higher
global interest rates will increase the nation's debt servicing burden,
which accounts for most of the CAD. The Government has announced a new
compulsory retirement scheme to boost national savings, which will
reduce the CAD over the long-term. However, in the short- to medium-
term, Australia's external financial balance will continue to be a
significant policy restraint.
E. INFRASTRUCTURE SITUATION
1. OVERVIEW
See Chapter V.C.1,2 for Information on Opportunities in Major
Infrastructure Development Projects.
Geographically, Australia is similar in size to the U.S. Despite its
small population and vast land mass, the country has well developed,
nation-wide air, road, rail, port and telecommunications infrastructure
networks comparable to those in other industrialized countries. With
its highly urbanized population along the east and southern coasts, yet
with critical goods and services needed throughout the country,
nationwide infrastructure systems support the needs of the people to
live, to conduct business, and to distribute goods throughout densely
populated metropolitan areas, in more isolated country towns, and to
remote areas.
Privatization and corporatization of government-owned facilities and
services is an integral part of the Australian federal and state
governments' economic reform programs. Major project activity is
dominated by infrastructure developments and privatization of facilities
formerly run by federal, state and local governments. Demand for
further infrastructure development is due to population growth, changing
demographic patterns, increased environmental awareness, and a
cumulative obsolescence of existing infrastructure facilities.
In 1992, the Federal Government began a series of initiatives designed
to encourage private sector investment in infrastructure projects.
Roads, railways, ports, airports and utilities are all slated for
corporatization, commercialization, or privatization.
The Federal Government took the lead by first corporatizing, then
privatizing, a number of its facilities and functions.
Planned reforms in the public utility areas (electricity, natural gas,
telecommunications) should yield increased competition and efficiency
improvements in those sectors. Plans are drawn, but not implemented, to
establish a national electricity grid to balance power generation,
distribution and demand among the states.
Greater participation by the private sector has relieved the pressure on
fiscal policy, produced operational efficiencies, stimulated competition
and spurred the growth of capital markets. As traditional government-
owned and -operated institutions strive to restructure themselves in
pursuit of competitive operational effectiveness and efficiency,
opportunities are being created for management and operations
consultants, particularly those with leading-edge U.S.-based expertise,
to provide advice and assistance in the reinvention process.
Private sector involvement also has produced engineering achievements
such as the Sydney Harbor tunnel, prefabricated and sunk in sections;
the Glebe Island Bridge in Sydney, which will be one of the world's
largest cable bridges when completed in 1996; and the excavation of the
Sydney Opera House parking garage to 100 feet below the harbor.
The Government's push towards more efficient and improved infrastructure
has seen a number of significant reforms that will facilitate growth in
those sectors dependent on transport. Australia has no notable
transport infrastructure bottlenecks affecting sales/distribution of
goods. As most of the population lives on the east coast, transport
infrastructure is most concentrated there, although major mining
projects throughout Australia have necessitated a nation-wide road, rail
and port infrastructure network.
An important factor in Australian goods and service distribution is the
distance goods must be transported. When long distances are involved,
transportation costs can be a significant component of the selling
price. Recent reforms in the transport and goods handling industries
are increasing efficiency and improving services while reducing costs.
Competition between modes of transport acts to constrain prices. Even
so, port inefficiencies still exist, and rail remains expensive. The
transportation sector remains a major focus for microeconomic reform.
Government entities in the process of privatization or corporatization
include: Australian National Railways; the remaining 75 percent of the
air carrier Qantas; the Office of Defence Production; the Government
Aircraft Factories; the Federal Airports Corporation; and the Australian
Industry Development Corporation. AUSSAT, the Australian satellite, was
sold to Optus Communications, the Commonwealth Bank was partially
floated (with the full sale slated for the next financial year), and the
naval Dockyard in Melbourne was sold. The Government has also announced
its intention to sell the Australian National Line, major Australian
airports, and to open up some postal services to competition.
2. AIR TRANSPORT
Air transport is used extensively. Australia has 440 airports,
including the major international gateways of Sydney, Melbourne,
Brisbane, Perth and Cairns. International passenger and cargo flights
are frequent and reliable.
Air is used extensively for lighter cargo, small high value items, and
for urgent needs. An extensive network of air cargo operators,
including a number of familiar international companies, offer a full
range of services for all types of cargo, and process all related
documentation relating to importation and clearance of goods, as well as
on-delivery to regional centers. Around 170,000 tonnes of cargo is
flown annually into Australia.
International passenger and cargo flights are frequent and reliable,
with a wide range of international carriers and routes to choose from.
Domestic air fares have fallen in real terms by about 20% since 1990,
and service standards and flight frequency have improved on the 50
busiest domestic routes. Landing charges at Australia's major airports
are among the lowest in the world.
The national airport system has been reassessed by the Federal
Government. In the May, 1994 Federal Budget, the Government announced
its intention to sell all of the nation's major airports to encourage
competition arising from privatization. This should see a wide range of
efficiency improvements in the airport system, which, in turn, will
complement other transport sectors. However, detailed financial
analyses of selling schemes have not been made, and the proposal remains
controversial.
3. ROAD/RAIL TRANSPORT
With its huge landmass and small population - and, therefore, its
limited tax base - the extensiveness of Australia's modern national,
state and local road system is quite remarkable. Road funding
continues to feature prominently in both State and Federal Government
budgets, presumably due to the high profile the need for good roads
holds in the eyes of the voting public. Australia's road transport
industry is relatively efficient, and approaches world best practice.
The majority of inter-state goods transport is by road. Centralized
charging and administration for heavy vehicles, and an increase in
weight limitations for six-axle trucks is estimated to have increased
productivity by 25 percent in recent years.
A 24,000 mile network of railroads competes with road transport. Rail
transport is the preferred mode to Perth, in Western Australia, for the
transportation of freight from Eastern ports, and for the bulk transport
of Australia's mineral exports.
Traditionally, rail transport has lagged behind international best
practice. In the last century, before Federation of the States into the
Commonwealth, each state government established its own different gauge
railway to encourage its own industries. Cargo had to be transferred at
state boundaries. The National Rail Corporation Limited (NR),
established in 1993 between the Federal and State Governments of New
South Wales and Victoria, operates the interstate rail freight business
in Australia, in competition with road transport.
The Australian Federal Government's "One Nation" rail infrastructure
upgrade has at last overcome the problem. The completion of the first
standard gauge rail line from Brisbane to Perth (via Sydney, Melbourne
and Adelaide) in June, 1995, was heralded politically as a new era in
rail freight transport.
The ability to track a coal train from Queensland to South Australia is
a symbolic step in Australia's reform agenda. NR's monopoly over
freight transport may be short-lived. Both private companies and state
rail authorities are interested in competing with NR in this market,
using the new standard gauge track. Long term benefits will include
substantial reduction in travel times, and a reduction in the costs of
running trains.
4. SEA TRANSPORT
Australia is serviced by major shipping lines transporting goods world
wide, to and from the major ports of Sydney, Brisbane, Melbourne,
Adelaide and Fremantle. The shipping industry is undergoing
significant changes. Australia has had a well-deserved reputation for
wharf problems characterized by high cost, inefficiency, poor labor and
management practices, and industrial disputes. Some port operations,
such as bulk loading and discharge, have improved, due in part to labor
practice reforms, but problems persist.
General and containerized cargo is handled by one of two stevedoring
companies. Initially, wharf reform resulted in faster container
handling rates at levels, in the more efficient terminals, comparable
with Australia's trading partners. There was approximately 45 percent
improvement in ship turnaround time and substantial reductions in truck
queues and waiting time. Waterfront charges fell by 25 percent between
1990-1992. However, in the last twelve months, there appears to have
been a marked decline in wharf productivity, and reform remains an issue
between government, management, and the unions.
Australia has developed an array of modern, deep water ports to handle
its expanding minerals export trade. Major shipping lines visiting
Australian ports include Australian National Line, Blue Star, Columbus,
Contship Container Lines, Fesco, Five Star, Hapag-Lloyd, Hetherington
Kingsbury, Maersk, Nedlloyd, NYK, Ocean Star, P&O, Patrick Sleigh
Shipping, Swire, Union Bulkships and Wilhelmsen, making around 15,000
calls per annum, and discharging 32 million tonnes of cargo.
5. TELECOMMUNICATIONS
Australia has state-of-the-art international and domestic
telecommunications services, and one of the highest per capita use of
fixed and mobile telephones and facsimile machines in the world. Annual
sales in 1994 reached $12 billion.
There is a single land-based network operated by Telstra and covering
most of coastal and nearby coastal Australia, where the majority of
Australia's 18 million people reside. Much of the mainstream traffic
along this network is by fiber optic cable, with copper cable in
residential areas. Outlying regions are reached by mobile satellite
connection, sometimes using solar power for base stations. This network
currently is upgrading from analog to digital.
Presently, there are three mobile phone operators with more than 1.6
million subscribers using an analog AMPS and digital GSM. Analog AMPS
will be phased out by the year 2000, when digital GSM takes over.
International calls connect to anywhere in the world through Telstra and
Optus switches based in Sydney. Users also can subscribe through local
agencies to use Callback companies, most of which are located in the
United States.
A variety of services are available, mainly from Telstra including ISDN,
Frame Relay, EMail, voice messaging, faxstream, and more.
6. ENERGY
The Australian State Governments are developing billion-dollar
strategies to meet further energy demands that will involve significant
new infrastructure developments over the next decade.
The electricity supply industry in Australia has capacity of 36GW and an
annual income of around $9 billion. The Federal Government and State
Premiers have agreed on the need to reform the nation's electricity
generation, transmission and distribution systems. Reform includes some
privatization, reorganization, and improved central organization, based
on the proposition that competition will accelerate further gains in
productivity and efficiency. Total generating capacity in the
Australian electricity industry is just under 36.5MW dominated by large
coal-fired power stations, since low cost coal is relatively abundant.
Coal is the dominant fuel source, accounting for 72.9% of primary energy
consumption, followed by hydro 20.3%, and natural gas 5.6%, with a
small, but important, fraction of electricity being generated from other
sources. The move to gas-fired power generation is becoming an
important issue in the States of Western Australia, Victoria, South
Australian and Queensland, where an abundance of natural gas fields
occur.
Electricity reform is Australia-wide, but most advanced in Victoria.
Generation and distribution businesses in Victoria have all been
separated into a number of independent entities, and earmarked for sale.
Generation and supply will become increasingly subject to competition.
Five distribution businesses are to be sold before the end of 1995, and
possibly one power station. While other States are undertaking reform
at differing paces, the need to disaggregate generation, transmission,
and distribution functions has been accepted almost universally.
Reform in the Australian gas sector has centered around transmission and
distribution. It is envisaged that a national gas market with
transnational interconnection will result in a competitive supply market
and create efficiencies on a similar scale to those expected to be
achieved through the National Grid for electricity. The Gas & Fuel
Corporation of Victoria has been disaggregated in preparation for a
future sale. Corporatization of Western Australia's gas transmission
and distribution functions has occurred, and changes are expected in New
South Wales with the introduction of a competitive environment for the
supply of natural gas. Queensland's Government has released its ADols
2.5 billion energy strategy which will involve significant
infrastructure for electricity and gas, coupled with energy conservation
measures, and renewable energy.
Pipeline reforms have been instigated to encourage supply competition,
especially in the area of gas. Government sales of gas pipelines in New
South Wales (Moomba-to-Sydney), South Australia (Pipeline Authority of
South Australia), and Western Australia (Bunbury to Perth) are all part
of the new regime to create open access and supply competition.
Attractive investment opportunities will become available as the
industry is rationalized and reformed. There is no shortage of
potential trade buyers for assets in any of the electricity or gas
utility industries. Both domestic and international companies have
expressed interest in acquiring Australian utilities, which are ripe for
considerable efficiency gains, and which will provide large, stable cash
flows.
Strategies implemented will ensure the environmentally responsible
development of the States' energy resources, and offer great potential
for U.S. investors and suppliers of technology. Huge energy savings
from natural gas are set to fuel an Australian minerals and industrial
boom to rival those of 1960 and 1980. Renewable energy continues, as in
most industrialized countries, to have economic constraints, even when
technically feasible. Because of the need to supply power to remote
areas, because of favorable sun, wind and mini/micro hydro regimes, and
because of evolving reforms that would allow generators to sell excess
power to the distributors, there is potential on a case-by-case basis.
Conservation technologies also hold promise.
Plant upgrades will provide opportunity for the installation of new
technology, particularly clean coal and other environmental
technologies. Further, as Australian coal is exported to the major
Asian industrial nations, technology adapted to the characteristics of
Australian coal should see increased opportunity in coal-importing
nations throughout the region.
7. WATER AND SEWERAGE
Australia's water supply and sewerage treatment infrastructure is well
established, and systems are being expanded to meet demand caused by
industrialization and urbanization. Public environmental concerns are
moving federal, state and local governments, and industry from an
emphasis simply on the supply of water toward a greater focus on
resource usage, water quality and pollution control. While some
technologies for water treatment and sewerage systems are well
established, this sector is now subject to significant technological
change as the sewage to be treated becomes chemically more complex due
to pollutants, and as more stringent standards are imposed on effluent
discharges to protect the recipient land or water body.
8. CONSTRUCTION
Engineering and non-residential construction is expected to continue
steady overall growth, with activity forecast at US$15 billion for 1995,
and US$15.5 billion for 1996. Construction companies are looking at
Government-financed infrastructure projects such as new road, rail,
airport, and waterfront links. Industrial, hotel, and retail
construction sectors have strong growth prospects over the next two
years, although some reduction in office building prospects is likely,
once outstanding projects are completed (except in Queensland where the
office vacancy rate is lower).
After a few boom years, a less positive outlook is seen for the
residential construction market, with a decline in new housing starts of
about 13 percent estimated for 1995/96 over 1994/95, and a lowering of
consumer confidence under the weight of higher interest rates. However,
the renovations and additions market (representing approximately 40
percent of the total residential market) is growing strongly and is
expected to continue to do so throughout the next two years.
SYDNEY OLYMPICS: The Sydney 2000 Olympics is projected to create more
than US$1.42 billion of building activity in Australia before the end of
the decade, with construction of sporting venues, accommodation, and
other Olympic facilities. One of the strong features of Sydney's bid
for the 2000 Olympics was the advanced stage of facilities and
infrastructure planning.
Part of the New South Wales Government strategy for a successful Games
is the involvement of domestic and international private sector
organizations as equity participants in the provision of sporting venues
and facilities. The planned Sydney Olympic Games developments form part
of a larger plan for urban renewal in the Sydney area. The completed
redevelopment of Sydney's Darling Harbor, the City West redevelopment,
and the Homebush Bay Olympic site all will contribute to the plan by
providing Olympic facilities whose use will extend into the next
century.
CHAPTER III: POLITICAL ENVIRONMENT
A. NATURE OF THE POLITICAL RELATIONSHIP WITH THE UNITED STATES:
ALLIES WITH COMMON INTERESTS FOR THE FUTURE
The United States and Australia have been close allies for over 50
years, during which Australia has been the southern link in the
structure of Asia-Pacific strategic alliances. The Australian
Government contributes to mutual security and regional stability by
hosting key joint defense facilities and ship visits, participating in a
range of exercises and exchanges with U.S. forces, and fostering
regional security dialogue. In addition, the two governments cooperate
in worldwide non-proliferation, arms control, and peacekeeping efforts.
Like the United States, Australia is a leading advocate of trade and
investment liberalization. Because of common interests and convictions,
the two countries work together on many global issues (e.g., U.N.
reform, promoting democracy and human rights, protecting the
environment, and enhancing the multilateral trading system and the new
World Trade Organization).
In recent years, U.S. export subsidies for wheat and other agricultural
commodities have generated periodic friction. But these concerns are
being attenuated because of agreement during GATT's Uruguay Round on
substantial world-wide reductions in agricultural-export subsidies.
B. MAJOR POLITICAL ISSUES AFFECTING THE BUSINESS CLIMATE
A POLITICAL CONSENSUS FOR PROGRESS AND CHANGE
There are no major political issues that detract from the business
climate or the stability of the bilateral trading relationship with the
United States. All of Australia's major political parties seek to
promote growth and encourage investment, including investment from
abroad. Although there are differences in approach, both leading
parties strongly support Australia's internal economic restructuring to
transform the country into a globally competitive trading nation.
Other policy directions that attract equally universal support include
Australia's desire to define itself as a part of the dynamic Asia-
Pacific region, as well as efforts to upgrade its mix of exports in
order to reduce reliance on basic commodities and increase sales of
value-added products. There is also broad political approval for
federal and state government programs to corporatize and privatize
public services so as to reach world quality standards, and for labor
and work force reforms aimed at the world's "best practice".
C. BRIEF SYNOPSIS OF POLITICAL SYSTEM, SCHEDULE FOR ELECTIONS, AND
ORIENTATION OF MAJOR POLITICAL PARTIES
A LONGSTANDING PARLIAMENTARY DEMOCRACY COMBINING ECONOMIC AND SOCIAL
PROGRESS WITH POLITICAL STABILITY
Australia has a federal system of government, and a long history as a
multiparty parliamentary democracy. There is no written Bill of Rights,
but fundamental rights are ensured by law and respected in practice.
The Commonwealth (federal) government and the six state governments
operate under written constitutions that draw on the British tradition
of a Cabinet Government, led by a Prime Minister, which is responsible
to a majority in Parliament's lower house. The Federal Constitution,
however, also contains some elements that resemble American practice
(e.g., a Senate, in which each state has equal representation). The
Head of State is Queen Elizabeth II, the reigning British monarch, but
she exercises her functions through personal representatives who live in
Australia (i.e., Australian citizens who serve as the Governor-General
of Australia, and the Governors of the six states). Australians are
debating whether their country should become a republic, give up ties
with the Queen, revise the constitution, and adopt a new flag.
Members of the Federal House of Representatives are elected for three
years, and national elections were last held in March, 1993. Lower-
house elections, thus, are due no later than mid-1996, but earlier
scheduling is a matter of discretion. (The Prime Minister may recommend
that the House be dissolved at any time, and the Governor-General
traditionally follows such advice.) Current political commentary
focuses on two likely "windows" for national elections: August-October,
1995, and March-May, 1996.
Members of the Senate are elected for six years. June 30, 1996 is the
next date on which Senators' terms expire, and a regular election for
half the members of the Senate is due before that time, but no earlier
than July, 1995.
Under complex conditions specified in the federal Constitution -- in
essence, extended deadlock between the House and Senate -- both houses
may be dissolved simultaneously, so that ensuing national elections
would involve all seats in Parliament. This "double dissolution" is
unusual, and has occurred only six times since the Constitution entered
into effect (1901).
All major parties support the U.S.-Australia alliance and stress the
importance of close relations between Australia and the United States.
Thus, this longstanding and stable pattern is essentially unaffected by
the outcome of national elections.
The ruling Australian Labor Party (ALP) maintains close ties to the
trade union movement and has held office since 1983. During that
period, the government has carried out major restructuring of the
economy (e.g., floating the Australian dollar, cutting tariffs by
substantial amounts, reducing and simplifying regulations that affect
business). Liberalizing trade and enhancing economic integration with
Asia-Pacific countries are major tenets of the ALP and, in particular,
of the incumbent Prime Minister, Paul Keating.
The opposition Liberal-National Coalition is often described to
Americans as the more "conservative" party. It upholds traditional
social values and stresses the importance of a free market,
entrepreneurial approach to economic growth (i.e., it promotes an
updated version of the classical liberalism originated by Adam Smith).
The Liberal Party is the senior partner, holding 79 of the Coalition's
101 seats in the current Parliament. The National Party is identified
closely with the interests of farmers, and its supporters reside mainly
in rural areas.
Two minor parties, the Australian Democrats and the Western Australia
"Greens", are represented only in the Senate but have political and
media effects that are disproportionate to their numbers. They take
highly visible stands on various economic, political, environmental, and
social issues, challenging the major parties to respond in ways that
meet their concerns.
CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES
Market entry strategies for U.S. firms are straightforward. They
include exporting of products and services through the use of
agent/distributorships, license/technology transfers, franchise
arrangements, joint ventures, strategic alliances, and wholly owned
subsidiaries/branches. As Australia restructures economically, there
are significant opportunities to participate in major public-funded
projects and to win major infrastructure and services projects available
through public sector divestment and privatization.
A. RETAILING TRENDS
Contemporary Australian retailing, while still predominantly
characterized by specialty shops and department stores with high
markups, is being transformed rapidly by the introduction of superstores
and warehouse sales outlets. While Australians remain quality conscious
buyers, their consumer appetites are just becoming whetted by discount
buying.
Opportunities are ripe in almost every consumer product sector adaptable
to discount sales - from building supply, to automotive accessories,
toys, books, records and tapes, household goods, and household linen.
Over sixty, large American-style outlets have opened throughout the
country. With record sales far surpassing expectations, retailers are
planning over 100 more superstores to satisfy demand. Because of
similar Australian/U.S. consumer preferences, and high per capita
consumer buying power, many U.S. chains are considering setting up
operations in Australia. To hold their market share, established stores
are being forced to re-examine their pricing policies, and to stage more
frequent, and severe, markdown promotions and sales.
B. DISTRIBUTION AND SALES CHANNELS
Australia's extensive distribution and sales channels are comparable to
those in other industrialized countries. Channels of distribution are
through direct sales, use of distributors or agents, and also through
direct investment. Financing of exports is effected through open
account, commercial bills of exchange (sight and time drafts), letters
of credit, and cash in advance. Foreign exchange is readily available
to the Australian importer through the local banks. There are virtually
no exchange controls or import licensing required for imports of goods
and services. Both direct and indirect foreign investment is encouraged
with only minimal requirements for government review in certain sectors,
e.g., residential housing and media.
C. USE OF AGENTS AND DISTRIBUTORS
U.S. businesses marketing their products in Australia usually establish
relationships with sales agents, distributors, franchisees, and
licensees.
1. Sales Agents
Sales agents or representatives solicit business for the foreign
company, and serve as a conduit for purchase agreements. In most cases,
a sales agent does not have the power to negotiate terms, or to finalize
the sales contract. Instead, the sales representative forwards the
contract to the foreign company, which either accepts or rejects it. It
should be noted, however, that because the sales representative is
considered to be an agent of the foreign corporation, under the general
laws of agency, the foreign corporation may be bound by the acts of its
agent.
Agents assume a number of duties and obligations once a representation
contract with a foreign company is finalized, including adherence to the
principal's instructions, good faith in the interest of the principal,
and maintenance of proper accounts. The agent retains the right to
remuneration, and the right to an indemnity for liabilities or for
losses incurred due to improper termination. However, there is no
precedent for required indemnity payments in Australian law. Parties
may stipulate specific causes for termination in the agreement. Either
party may terminate the agreement upon receipt of reasonable notice of
termination. Although no specific time period exists which defines a
"reasonable notice period", courts may take into consideration the
nature and length of the contract when determining whether reasonable
notice was given.
2. Distributors
A distributor acts as an independent contractor, purchasing products
from the foreign corporation and distributing them to wholesale buyers
or, on occasion, to retailers. Generally, the foreign corporation
cannot restrain the distributor from selling competitors' products.
However, because the distributor is not considered to be an agent of the
foreign corporation, it is not bound by the acts of the distributor. It
is common practice for Australian distributors to ask for exclusive
geographic rights to market a foreign corporation's products. Because
of the size of the market, these rights are often for several states or
even nation-wide.
Parties are free to choose between Australian and foreign (in this case
U.S.) law governing the contract when drafting an agreement. However,
the choice of foreign law does not preclude application of mandatory
provisions of Australian law. Without a stipulation of law, Australian
courts will apply the law of the jurisdiction where the agent or
distributor works (i.e., Australian federal law, and appropriate state
and local law). Therefore, notification of agent appointments should be
submitted in writing to satisfy various state jurisdictional laws,
especially when they last for more than one year or include terms for
commissioning the agent. Either fixed or indefinite-term contracts may
be employed. However, repeated renewal of fixed-term contracts will not
cause the contract to achieve indefinite-term status.
D. FINDING A PARTNER - HOW THE U.S. COMMERCIAL SERVICE (CS)
IN AUSTRALIA CAN HELP
CS Australia provides a range of business facilitation services to help
American companies identify potential partners. All services are
arranged by the U.S. company contacting its local U.S. Department of
Commerce District Office in the United States. Business Facilitation
Services include:
1. Agent Distributor Search (ADS)
CS Australia will locate, screen, and assess Australian agents,
distributors, and representatives for U.S. companies. After an
investigation that determines there is potential interest in a product,
CS Australia will send the U.S. firm contact information on companies
that have reviewed the product literature and expressed interest in
representing the firm in Australia. U.S. companies then contact the
potential representatives directly.
2. Gold Key Service (GKS)
Designed to make a U.S. company representative's visit to Australia more
productive, the GKS provides a combination of many services, such as
market orientation briefings, market research, agent distributor search
and screening, introductions to potential partners, and assistance in
developing a sound market strategy and an effective follow-up plan.
3. Customized Market Analysis (CMA)
Formerly called the Customized Sales Survey (CSS), a CMA provides a
quick and accurate assessment of how an American product will sell in
Australia. Especially valuable for first-time exporters with few
Australian contacts and limited overseas expertise, a CMA provides
current data to make marketing decisions without large travel,
investigative, and other expenses associated with overseas product
research.
4. Participation in Catalog Exhibitions
CS Australia takes booth space in selected Trade Shows and runs separate
catalog exhibitions in association with a variety of trade promotion
events, conferences, symposia etc. U.S. firms are invited to
participate either directly, or by providing catalogs for display.
5. Introduction to Australia
CS Australia has developed a new market entry program called
"Introduction to Australia", which offers U.S. firms an effective, yet
very inexpensive, way to test the Australian market. Through this
program, CS Australia contacts American firms in a specific industry
sector, and invites the companies to participate by completing an
application form and forwarding copies of product literature. A special
mailing then is sent to hundreds of local agents, distributors,
wholesalers, and end-users in that particular industry. Interested
respondents are sent product literature. The U.S. participants are
advised of the names of the local companies that requested their
catalogs so they can follow-up directly.
6. Participation in Trade Missions
CS Australia organizes and supports trade missions sponsored by the
Department of Commerce and by State Governments.
7. Trade Events
CS Australia organizes U.S. booths and support for companies
participating in Trade Shows and Exhibitions in Australia. (See
Appendix E for full Trade Event Schedule.)
8. Trade Opportunities Program (TOP)
This program provides U.S. suppliers with credible, complete, and timely
trade leads gathered by CS Australia. The trade leads may be requests
for representation, manufactured goods, services, investment, joint
ventures, licensing, or foreign government procurement bids.
Opportunities are publicized by the Department of Commerce through the
NTDB and other avenues.
9. Market Research and Reporting
FCS Australia reports continually on industry sector developments, major
projects, program and policy developments. These reports are available
through the Department of Commerce and the NTDB (see Appendix D for a
list of available documents).
10. Commercial News USA
This monthly publication provides summary information on new U.S.
products being offered to the export market. CS Australia distributes
the publication free of charge to over 1,600 potential agents and
distributors throughout Australia. Interested companies contact the
U.S. firm directly.
E. FRANCHISING
Franchising is changing the face of the Australian retail industry.
Increasing at a rate of 15 percent a year since 1991, and representing
11 percent of the country's gross domestic product, this rapidly
growing, dynamic field had a turnover of nearly US$32 billion in FY
1993-94 with a workforce of 280,000. This gives Australia the highest
rate of franchised business per capita in the world, with an estimated
26,000 franchise outlets, accounting for nearly 25 percent of all
retailing. Furthermore, franchises have a very high survival rate.
Opportunities exist now for new investment.
It should be noted that although franchising is booming under the
present voluntary Code of Practice (introduced in 1993), the Federal
Government is considering a tougher regulatory policy following the
release in May, 1995, of the Gardini Report that examined the operation
of the Code. The Code does not yet apply to foreign franchisors selling
a master franchise in Australia. Further information is available from
the Franchisors' Association of Australia and New Zealand Ltd. (See
Appendix E.3.)
F. DIRECT MARKETING
Australia's direct marketing industry (mail order catalogs, direct mail,
direct response advertising, and telephone marketing) is estimated at
US$3.5 billion. Although the industry still can be considered at the
early stage of take-off when compared to the U.S., there is increased
consumer understanding and acceptance of contemporary direct marketing
(in contrast to the old-style catalog supply sales). The reduction of
import duties on many goods, and the introduction of new postal and
telephone infrastructure services to support the industry, are
contributing to good growth for direct marketing in Australia. The
realization of pay television also will carry with it advanced direct
marketing techniques.
Despite the untapped potential of an affluent consumer market with a
taste for American goods, few of the big U.S. mail order companies have
yet entered this market in a systematic way. A local company, Myer
Direct (a subsidiary of the Myer-Grace Bros. department store chain) is
presently the only mail order service that is comparable with those in
the U.S. Myer Direct's turnover of about US$ 870 million has grown from
nothing six years ago, and now reaches 2.5 percent of the group's total
sales. New market entries include a leading Australian fashion
retailer, a cosmetics company, and a high-quality lifestyle magazine.
There are some specific mail order catalogues, for example, scholastic
books, collectibles, thermal underwear, health and outdoor lifestyle
products. There are also a variety of cheap to medium-priced and
independently sourced products (anything from electric toothbrushes to
home fitness centers, pocket spellers, personal breath analyzers, and
more) sold through mail flyers and on television. These moves are
indicators of the future.
G. JOINT VENTURES AND LICENSING
1. JOINT VENTURES
Joint ventures are a common feature of Australia's commercial and legal
environment. While there are some differences in the treatment of joint
ventures between Australia and the U.S., they are similar enough for
U.S. investors to understand easily. They include:
a) Unincorporated Joint Ventures may, in colloquial terms, be described
as "contractual joint ventures" that do not create a separate corporate
entity, and which lack equity capital, i.e., no shares are allotted for
the consideration of a payment of money or money in kind. Such joint
ventures look much like partnerships - because partnerships are also
forms of contractual association that do not create a separate corporate
entity or equity capital.
b) Incorporated Joint Ventures are companies. The shareholders in the
company are the joint venture participants. Unlike in an unincorporated
joint venture or partnership, the shareholders have no rights in
relation to the company's assets, and they can participate in the
profits (distributed as dividends), but not in losses.
c) Unit Trusts are devices that enable the separation of legal and
beneficial interests in assets and the income derived therefrom. In a
joint venture situation, the participants wish to insure that their
entitlements are fixed rather than discretionary. A unit trust is a
configuration where the entitlement of beneficiaries is expressed in
units relative to the total number of fixed units.
d) Limited Partnerships are creations of statute. They remain a
partnership at general law and, therefore, do not give rise to the
existence of a separate legal entity. A limited partnership structure
requires at least one general partner to have unlimited liability and
limited partners who have liability limited to the extent of their
investment in the partnership. They are used rarely in Australia.
e) Hybrid Forms are forms of joint venture comprising elements of each
of the preceding. They can also be created to suit the needs of the
particular participants. For example, one participant in an
unincorporated joint venture could be the trustee of a unit trust, while
one shareholder in an incorporated joint venture could also be the
trustee of a unit trust.
2. LICENSING
On the whole, there are few legal and administrative requirements
governing the field of licensing in Australia. Exclusive licenses of
patents, copyrights and other statutory rights require compliance with
minor formalities. The Trade Mark Act in Australia provides for the
registration of licensees or "users" as they are called in the
legislation.
A license agreement involving an Australian licensee should contain the
usual terms one would find in a license in the United States. These
include: type of license being granted (i.e., sole, exclusive or non-
exclusive); territory being covered; license fee or royalty; licensee's
duties and obligations; period of grant and field of use of the
technology involved; maintenance of quality control; ownership of rights
in improvements and innovations made by the licensee; warranties and
indemnities; technical assistance and confidentiality; sub-licensing and
assignments, and termination.
Prior to entering into a licensing agreement, both firms should
ascertain that the product or service name to be licensed is not already
registered to another company in Australia. This relatively simple, but
essential, check closes a door to potential legal problems about brand
names, names of services, etc., and protects the product or service from
litigation under the Trade Practices Act.
H. STEPS TO ESTABLISHING AN OFFICE
Business rules are set by the Federal Government and administered by the
Australian Securities Commission (ASC). The requirements for starting a
business are identical in each state, and the same rules apply for local
and overseas companies.
Because Australian business practices are similar to those in the United
States, it is easy for foreign investors, either in partnership with
local companies or on their own account, to set up a business in
Australia. A foreign company has a wide range of business structures
from which to choose. The most common forms of business organizations
are: representative offices; branches of parent companies;
subsidiaries; sole traders; partnerships; trusts; companies; and joint
ventures. Overseas investors may set up an operation as any of these,
irrespective of the business structure they have elsewhere.
Most significant businesses operating in Australia are incorporated as
private or public companies. Under the Corporations Law the entity is
registered automatically as an Australian company enabling it to conduct
business throughout Australia without further registration in individual
states or territories. Local companies may be fully controlled by
foreign owners.
All registered companies must conform to Australian company law
administered by the ASC, including: accounting; financial statements;
annual returns; auditing and general meeting requirements; and the
necessity to maintain a registered office open to the public.
While the procedure to establish an office is fairly straightforward, as
in the U.S. it often is done best with expert legal and financial advice
readily available from Australian and multinational service providers.
Fees for company registration are in the order of US$350.
Application forms are available from ASC Business Centers which operate
in each state and territory. (See Appendix E.4)
I. SELLING FACTORS/TECHNIQUES
While Americans find it easy to do business in Australia because of the
similarities in cultural and business practices, to understand the
market better, there are some precautions to be observed, and some key
selling factors to be considered. Australians are very quality
conscious. The principles that apply to all sales methods are: product
quality, company integrity, and good ongoing service. With a history of
geographic isolation, and reliance on imported manufactured goods,
Australians are very sensitive to product reliability and assurances of
back-up product service, where necessary.
1. Market Research
Before entering the market, U.S. firms should evaluate their proposed
selling technique thoroughly to ensure that it is responsive to market
demand in Australia for their product, technology, or service. An
effective way to evaluate the situation is to do some basic market
research, followed by a personal visit. There is no substitute for a
first-hand look. Refer to the Section D, above, on the U.S. Commercial
Service's Australian market entry assistance programs.
2. Common Sales Arrangements
The use of agents and distributors is the most common way for U.S.
companies to sell products in Australia, as discussed in more detail in
Section B., above. Because of market size, it is common practice for
Australian distributors to ask for exclusive geographic and/or product
rights.
Franchising, licensing, joint ventures, and direct marketing, as
discussed in Sections E.-G., above, are all good alternative market
entry techniques. These methods entail more investment and commitment
than simply appointing an agent or distributor, but they may be more
appropriate in the long run.
J. ADVERTISING AND TRADE PROMOTION THROUGH MAJOR NEWSPAPERS
AND BUSINESS JOURNALS
U.S. companies can promote their products in the major newspapers of
each Australian state and/or national and state trade and industry
magazines. The Commercial Service in Australia publicizes Trade
Missions and Seminars by advertising in the financial sections of the
major newspapers, in industry magazines, and in newsletters of
associations. It also compiles industry-specific mailing lists, sourced
from a variety of business directories, both print and electronic, to
send material by post or faxstream, using automated mailing list
products and search techniques.
(Contact information for leading newspapers, periodicals and business
directories is found in Appendix E.11)
K. PRODUCT PRICING
Australia is a free enterprise economy, and basic market factors of
supply and demand apply in product pricing. When adopting pricing
methods, exporters should be aware of inherent local market
characteristics. In order to complete successfully in this small, but
generally highly competitive market, U.S. exporters to Australia must be
prepared to offer flexible prices, with, perhaps, lower than usual
profit margins, and for smaller minimum quantities. Some factors to
consider are:
1. SELLING COSTS AND PRICE COMPETITIVENESS
There are important elements for U.S. firms to bear in mind when pricing
products for export to Australia. To structure prices competitively,
suppliers should consider all the cost elements imported products have
to bear. The key factors are freight rates, handling charges, import
tariffs, marketing costs such as advertising and trade promotion, sales
tax, plus agent or distributor commissions of up to 30 percent.
Imports from competing European nations and some Asian nations including
Japan, face the same tariff rates as those from the United States.
Tariff rates on imports from nations designated as developing countries
are five percent less. Sea freight shipping costs from the U.S. to
Australia are high when compared with those from Asia, and even from
Europe. Sales tax is applied to most imported and locally made products
at the wholesale level. This can make a difference to the end price of
imported products, where sales tax is applied at a nominal wholesale
value. If this nominal wholesale value is more than the mark-up
generally applied by local manufacturers, imported products may be
outpriced.
2. VOLUME BUYING/SELLING AND DISCOUNT PRICING
Australian wholesalers and retailers traditionally have sought the
highest markup the market would bear, rather than thinking of volume
buying or selling. This pattern is changing as open markets and the
influx of franchisers and other high-volume businesses have alerted the
increasingly cost-conscious consumer to competitive discount sales and
services. Suppliers need to be able to deliver quality products and/or
services at attractive prices. To compete successfully, exporters
should consider granting maximum wholesale discounts, preferably based
on marginal export pricing. However, what is seen as volume buying to
the Australian buyer, may only be a small order to the U.S. exporter.
3. INDUSTRIAL PRICING
Australians respect the concept of "value for money". Factors of price,
quality, reliability and support in the way of service, are prime
considerations when selling industrial products or capital equipment.
While price is certainly a major factor, a purchaser may decide to pay
more for a piece of equipment known to be of better quality and more
reliable than a competing product. However, U.S. exporters still must
be prepared to negotiate on price, or other aspects of the purchase.
In general, Australians are conservative when purchasing capital
equipment to upgrade their manufacturing processes. They take time to
make purchasing decisions, weighing them carefully against their
perceived pay off - to increase bottom line profits. If the bottom line
does not appear to offer much gain, they may simply defer their
purchase. Constrictive labor agreements sometimes deter a manufacturer
from investing in equipment that would result in operational
efficiencies because resultant labor savings could not be translated
into bottom line profit. While labor reform is changing this situation
in many plants, union restrictions can still be a real constraint.
4. PRICE CONTROLS
There is little formal price control. The Federal Government has
established a Prices Surveillance Authority (PSA) to examine the pricing
systems of companies and authorities that have a major impact on the
economy, and which have few market competitors.
Certain industries are required to notify the PSA of any proposed price
increases. These include oil and petrol, steel mill products, beer,
cigarettes, glass containers, harbor towage, such as tug boats, and
steel welded pipes.
The PSA makes pricing recommendations, and endeavors to mobilize
community pressure by publicizing pricing cases. There have been cases
where companies surveyed have adjusted their prices downward as a result
of the PSA's recommendations. Recent PSA studies have included
biscuits, tea, instand coffee, banks and credit cards, cement, breakfast
cereals, steel mill products and book prices.
The PSA has little effect on the overall conduct of business, which
generally responds well to market forces. It is moving generally toward
monitoring prices in the public (government) sector, and is doing less
in the corporate sector, due to increasing private sector competition.
State governments also can set price controls, but do so rarely.
L. SALES SERVICE AND CUSTOMER SUPPORT
Generally, doing business in Australia is simple for U.S. exporters,
when compared with other foreign markets. Culture, language and
business practices are remarkably common. However, subtle cultural
differences do exist that can either invigorate or undermine a business
relationship. In their dealings, both Americans and Australians are
wise to take the time and effort to confirm that their perceptions and
expectations about roles and expectations are consistent with those of
their counterparts.
Depending on the product or service to be exported, Australian
agents/distributors expect support from their U.S. suppliers. Examples
of this support include product warranty for a specified time, training,
advertising, and promotion.
Timely delivery of goods, including spare parts, is expected and is
rarely a problem, as major U.S. freight forwarders have offices in
Australia. Air freight is used commonly for smaller items. Shipping
schedules are reliable. Where necessary, U.S. firms should ensure that
their representatives can service the imported equipment or that there
are service arrangements in place.
M. SELLING TO THE GOVERNMENT AND LOCAL INDUSTRY DEVELOPMENT
ENCOURAGEMENT
While Australia's government procurement regime generally is considered
to be well documented and fair, with few restrictions to foreign
bidders, there are a number of qualitative decision factors relating to
local industrial development. It is very important for U.S. bidders on
major public sector projects to understand, and to take these factors
into account, in their bid structuring. This applies particularly to
their consideration of whether to team with Australian industry
partners, or to go it alone. A more detailed discussion of some of
these factors is in Chapter VII, Investment Climate, Section F:
Performance Requirements and Incentives in Support of Local Industry
Development.
Australia has not yet signed the GATT Government Procurement Code, which
means that it is not bound by conditions prohibiting specification of
locally-made product in tenders. However, with the conclusion of the
Uruguay Round, the GOA is reviewing the Code.
Although the Federal Government has abandoned the Civil Offset Program,
it actively encourages local industry participation. A 1994 policy
statement, strengthened its efforts to use government procurement policy
to encourage local industry development. However, it stops short of
directing its agencies to give preference to local suppliers. Bidders
and purchasing agencies are required to submit separate industry impact
statements.
Federal information technology projects involving systems integration
purchases over $0.7 million are sourced from members of a Restricted
Systems Integration Panel (RSIP) comprised of 20-25 private companies
selected by the Government. Although panel membership is not closed,
access for domestic or foreign firms is dependent on government-
determined eligibility. The U.S. Government and the Australian
Information Industry Association strongly oppose the RSIP, regarding it
as having the potential to hinder open competition.
Foreign information technology companies with annual sales to the
Australian Government of between $7 and $30 million "are encouraged" to
enter into fixed-term arrangements. Those with sales greater than $30
million are encouraged to participate in the Partnership for Development
Program, requiring them to meet local research and development,
investment, export, and local content targets. Since 1992, this scheme
has been extended progressively to telecommunications companies.
Some Australian purchasing preferences still exist in State Government
procurements. These mostly are holdovers from the times when offsets
were a significant feature of both Federal and State Government
procurement. The States now are following the Federal lead in
dismantling offsets as their perceived benefits have been discredited.
However, as in Federal procurement, the States actively encourage local
industry develop activities as components of major procurements.
N. PROTECTING YOUR PRODUCT FROM INTELLECTUAL PROPERTY RIGHTS (IPR)
INFRINGEMENT
Copyrights, patents, trademarks, industrial designs and integrated
circuits are protected under Australian law; and, Australia is a member
of the major global intellectual property protection organizations and
conventions. American patent holders planning extensive sales or
manufacturing in Australia should not assume that a U.S. patent provides
comparable protection in Australia, and should seek legal advice as to
the advisability of registering their patent under Australian law.
For a full discussion of Intellectual Property Rights. (See Chapter
VII, Investment Climate, H.)
Copyrights are protected under the Copyright Act of 1968 for the life of
the author, plus 50 years. Parallel importation of overseas sound
recordings is not allowed and regarded as an infringement of copyright
except in the case of an individual importing product for his own use.
Conversely, limited parallel importation is permitted for books in cases
where the original editions are not made available in Australia in a
timely fashion. In the case of computer software, both industry and the
Copyright Law Review Committee (CLRC) agree that parallel imports of
legal copies of computer software should be permitted. However, a
decision will not be made until 1996 on the issue, because of the need
to determine the best means of preventing imports of pirated software
into Australia. (See Chapter V. A. 1.)
Patents are available for inventions in all fields of technology under
the Patent Act of 1990. Trade secrets are protected by registration
under the Designs Act for one year, with extensions. Trade names and
marks may be protected for seven years and renewed at will by
registration under the Trademark Act of 1955. Once used, trade names
and marks may also, without registration, be protected by common law.
The Australian Patent, Trademarks and Designs Office of the Australian
Industrial Property Organization handles inquiries regarding laws,
regulations and procedures applicable to patents, trademarks, other
industrial property rights protection, and copyrights. (See Appendix
E.4., for contact information)
O. NEED FOR A LOCAL ATTORNEY
As in the United States, in Australia it is common practice - and good
business sense - to retain the services of a reputable attorney familiar
with local business conditions, local law, and regulations. Legal
expertise is needed to execute legal documentation, interpret laws and
regulations, and ameliorate disputes. Most businesses also use the
services of a professional accounting firm.
Many well-known local and international law and accounting firms
practice in Australia, some with offices throughout Asia and the United
States. The Commercial Service in Australia and the American Chamber of
Commerce maintain lists of law and accounting firms, as do legal and
accounting associations.
CHAPTER V: LEADING SECTORS FOR U.S. PRODUCTS AND INVESTMENTS
("BEST PROSPECTS")
Best Export Prospect Sectors at a Glance:
1. COMPUTER SOFTWARE (CSF)
2. COMPUTERS & PERIPHERALS (CPT)
3. MEDICAL EQUIPMENT (MED)
4. AUTOMOTIVE PARTS & ACCESSORIES (APS)
5. EDUCATION & TRAINING SERVICES (EDS)
6. TELECOMMUNICATIONS EQUIPMENT (TEL)
7. TELECOMMUNICATIONS SERVICES (TES)
8. HEALTH CARE SERVICES (HCS)
9. DEFENSE EQUIPMENT (DFN)
10. SAFETY & SECURITY EQUIPMENT (SEC)
11. AIRCRAFT & PARTS (AIR; APG; AVS)
12. LABORATORY & SCIENTIFIC EQUIPMENT (LAB)
13. BIOTECHNOLOGY (BTC)
14. FOOD PROCESSING/PACKAGING EQUIPMENT (FPP)
15. CONSTRUCTION EQUIPMENT (ENGINEERING AND NON-
RESIDENTIAL (CON)
A. EXPORTS
All statistics are calculated using the following conversion rates:
1994 USD1 = AUD 1.35
1995 USD1 = AUD 1.37
1996 USD1 = AUD 1.30
RANK: 1 - COMPUTER SOFTWARE (CSF)
a) Growth Potential for U.S. Exports
The Computer Software market accounts for over 20 percent of the
Information Technology (IT) industry. It is one of the fastest growing
sectors of IT, with an estimated growth rate of around 13.5 percent over
the next twelve months. The software category comprises three parts:
Solutions, 45 percent of total market size; Tools, 28 percent; and
Systems, 27 percent.
While hardware performance improvements have been of considerable
importance in overall IT industry growth in Australia, software has been
the real key to the increased capability of computer systems generally.
As the range of software applications and tools continues to grow, the
opportunities for U.S. software developers/exporters will increase in
Australia.
b) Competitiveness of U.S. Exports
U.S. imports dominate the overall packaged software market, as well as
the major growth areas, including: client/server application solutions;
client/server database management systems and application development
tools; client/server oriented systems management software; middleware
software for connectivity and inter-operability in client/server
environments; UNIX-based tools, solutions and, to lesser extent, systems
management software.
c) Major Local and Third Country Competitors
The software market is regarded as the most diverse and fragmented of
any IT market segment, with hundreds of multinationals and domestic
vendors vying for market share. Very few players are leaders in more
than one of the systems/utilities, application tools, and application
solutions sub-sectors.
Local companies, historically, have excelled in the development of
applications software. The concentration of domestic developers and
multinational suppliers of packaged software has meant that the market
has been consistently strong. As business moves to computerize more
complex applications, this growth is expected to be sustained.
Total imports vary according to the software category. Imports
represent 56 percent of Solutions; 97 percent of Tools; and, 98 percent
of Systems.
d) Regulatory/Demand Issues Impacting Market
Import Tariffs: There is no duty imposed on imported computer software.
However, the carrying medium (diskette, CD) is subject to 22 percent
sales tax.
Intellectual Property: Computer software has copyright protection. The
parallel importing of software (imports other than by the licensed
distributor) is not permitted, and is treated as an infringement of
copyright. The issue has been reviewed recently by the Copyright Law
Review Committee (CLRC) and the Prices Surveillance Authority (PSA),
both of which concluded that parallel imports of legal copies of
computer software should be permitted. However, the two organizations
had different views about the best means of curtailing imports of
pirated software. A decision will be made in 1996.
e) Most Promising Sub-Sectors
Opportunities for new players are almost totally within the domain of
application solutions, as tools and systems software is already
dominated by foreign developers. In the solutions marketplace, existing
(legacy) application solutions are being migrated (converted, replaced)
and integrated with new types of "information access" applications on
the desktop.
Best prospects by major end-users include:
- BANKING (customer information systems and service
applications);
- INSURANCE (especially investment and superannuation);
- MANUFACTURING (fully integrated solutions);
- WHOLESALE (logistics, warehousing, routing, inventory
management, forecasting);
- RETAIL (integrated management systems);
- ACCOUNTING (planning, analysis, EIS systems);
- SERVICES (workflow-style, multimedia, and integrated
technology and advanced solutions).
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL MARKET SIZE 1,277 1,421 1,620
B. TOTAL LOCAL PRODUCTION 294 327 373
C. TOTAL EXPORTS 166 185 211
D. TOTAL IMPORTS 1,149 1,279 1,458
E. IMPORTS FROM THE U.S. 1,124 1,250 1,426
The above figures are unofficial estimates.
RANK: 2 - COMPUTERS & PERIPHERALS (CPT)
a) Growth Potential for U.S. Exports
The Australian computer hardware market represents 40 percent of the
Information Technology (IT) industry. Australia ranks as second top per
capita user of personal computers (PCs) and laptops in the world (after
the U.S.), with the ratio of one pc/single-user computer for every 6.3
Australians. There are an estimated 2.75 million business computers and
30 supercomputers in Australia. PCs account for over 70 percent of
computer hardware sales in Australia, and experience around 10 percent
average annual growth rate. The extremely high penetration of PCs in
business, government, and the home consumer segment is a result of the
users' desire to connect PCs in networks, and to link existing networks
to other networks. As in the U.S., much of the growth is driven by the
notebook category, and the move to single-user systems linked through
data communications.
Single-user systems (PCs, single-user workstations, associated
peripherals), which account for over 71 percent of the hardware market,
has a high growth rate because of the growing demand for computer power
at an individual user level; the increase in networking; and the high
acceptance of single-user platforms.
Data communications hardware (network interface cards, hubs, bridges,
routers, modems, multiplexers, packet switching equipment), which
accounts for over 13 percent of the hardware market is growing at a high
rate due to the growing demand for networking of PCs and mid-range
server systems.
The multi-user systems market (mainframe, mid-range systems, associated
peripherals), which represents 15 percent of the total hardware market,
is declining due to the decreased costs of multi-user systems equipment,
and the shift to lower-value, networked architectures.
b) Competitiveness of U.S. Exports
American products are well regarded and received in Australia. They
dominate the local market, despite competition from Japan (particularly
Fujitsu and Toshiba). The major U.S. hardware suppliers are represented
in Australia already, and some are involved in local manufacturing.
Attractive attributes of Australia for computer hardware firms include
Australia's strategic regional location in the Asian time zones; an
advanced IT skills base; and the availability of a highly skilled,
English-speaking and multicultural IT workforce.
c) Major Local and Third Country Competitors
The domestic industry consists mainly of small companies, aiming for
niche markets. There is a reasonable amount of assembly work undertaken
in Australia, using imported components.
Multinationals from Europe and Asia also are represented. According to
IDC, the Australian market is a microcosm of the U.S. market.
Therefore, Australia is often used as a testing ground for some products
from European and Japanese vendors, providing Australia with early
access to the latest technology.
The leading multinational vendors include the multi-user suppliers such
as IBM, Digital Equipment Corp, Fujitsu, and HP; and leading PC vendors
such as Apple Computer, Compaq Computer Corp, and Toshiba.
d) Regulatory/Demand Issues Impacting Market:
Import Tariffs: Imports classified as computer hardware are duty free.
Telecommunications components are not. Therefore, as computer and
telecommunications technologies increasingly converge, the tariff
anomaly is becoming an issue, and is currently the subject of a federal
inquiry.
The Bounty Scheme: A bounty, paid at the rate of 8 percent of factory
cost, is available to domestic producers of eligible hardware. The
scheme has been in effect since 1984 (at a rate of 25 percent of factory
cost), is scheduled to expire in December, 1995, but may be extended
until June, 1996. In accordance with government policy to remove
protection, the rate of bounty has been reduced in tandem with general
reductions in assistance to Australian industry. However, there is a
steady increase in the number of firms (including many multinationals)
claiming the bounty, including many firms undertaking low value-added
assembly work. Multinationals that have established their regional
headquarters and manufacturing or assembly work in Australia are
benefiting from this scheme. See Chapter VII, F.2. on bounties.
e) Most Promising Sub-Sectors:
Strong growth in sales of single-user systems between 1993 and 1998,
driven by increasing demand for notebook computers in the business
market, and by increasing demand in the home consumer market is
forecast.
Technology trends in Australia include: interactive multimedia; printers
with scanning capabilities; client/server computing (desktop systems,
networking hardware); mobile computing (PCs).
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL MARKET SIZE 3,882 4,658 5,590
B. TOTAL LOCAL PRODUCTION 1,153 1,379 1,660
C. TOTAL EXPORTS 765 918 1,101
D. TOTAL IMPORTS 3,494 4,192 5,031
E. IMPORTS FROM THE U.S. 1,500 1,845 2,264
The above figures are unofficial estimates.
RANK: 3 - MEDICAL EQUIPMENT (MED)
a) Growth Potential for U.S. Exports
U.S. products enjoy a major share of the Australian market for imports
of medical equipment (56%). Growth, however, is likely to remain
relatively static in the short term due to budgetary constraints imposed
by government on public hospitals. The major end-users of medical
equipment are public hospitals (56%), followed by private hospitals
(21%), other professional outlets (10%), retail (6%), other (7%). In
1992, there were 705 public hospitals, 320 private hospitals and 79 day
hospitals in Australia. This represents 1,104 hospitals with a total of
78,811 beds, or 4.5 beds per 1000 population.
b) Competitiveness of U.S. Exports
American medical equipment is traditionally well-received in Australia
due to its perceived high quality and usually competitive pricing. U.S.
equipment dominates imports, followed by Europe with 33% (mainly from
Germany), and Japan (8%).
c) Major Local and Third Country Competitors
A number of U.S. firms have Australian subsidiaries including Baxter
Healthcare, Becton Dickinson, Johnson & Johnson Medical Pty. Ltd.,
Abbott Laboratories, Bard and William Cook. The Pacific Dunlop group is
the major Australian producer of medical equipment. The Telectronics
(pacemakers) and Ansell (consumables) divisions both now manufacture
off-shore. The Nucleus division products include ECG monitors, and
defibrillators. Most other Australian manufacturers are smaller firms
producing medical furniture, wheelchairs, orthopaedic and rehabilitation
equipment, pacemakers and consumables.
d) Regulatory/Demand Issues Impacting Market
Currently, medical equipment from all sources may require approval from
the Australian Therapeutic Goods Administration before it can be
marketed in Australia. Europe and Australia are well advanced towards
signing a Mutual Recognition Agreement (MRA) on conformity assessment in
a number of industry sectors, including medical devices and
pharmaceuticals. This means, in effect, that goods originating in the
European Union will be able to be assessed for conformity to Australian
requirements in Europe, thereby eliminating the need for additional and,
in part, duplicative evaluation by Australian authorities. The new
medical devices agreement may become effective from early 1996 and, when
finalized, may provide a market entry advantage for European companies.
The U.S. and Australia do not yet have a similar agreement.
e) Most Promising Sub-Sectors
Capital equipment, diagnostics products, sophisticated consumable items
such as cardiac catheters.
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL MARKET SIZE 795 787 847
B. TOTAL LOCAL PRODUCTION 333 345 371
C. TOTAL EXPORTS 185 208 223
D. TOTAL IMPORTS 647 650 699
E. IMPORTS FROM THE U.S. 320 335 375
The above figures are unofficial estimates.
RANK: 4 - AUTOMOTIVE PARTS & ACCESSORIES (APS)
a) Growth Potential for U.S. Exports
Prospects for U.S. Automotive Parts and Accessories in Australia
continue to improve with U.S. exports presently holding 26% of the total
import market, second only to Japan.
b) Competitiveness of U.S. Exports
Australia has one of the highest vehicle ownership rates in the world,
with 10.5 million vehicles registered in 1994 in a country with a
population of about 18 million. Australians also keep their cars for a
long time - the median vehicle age is 9.4 years - guaranteeing a healthy
market for replacement parts and accessories.
The automotive parts and accessories market is extremely active and
competitive. Importers and distributors are always searching for new
products to add to existing product ranges. U.S. exporters must be
prepared to make sales of relatively small numbers (compared with the
U.S.), and at competitive prices. U.S. companies, such as Monroe,
Federal Mogul, Eaton, Cummins, and Echlin, have offices and elaborate
distribution systems in Australia. However, there is still room for
more players. U.S. exporters are encouraged to look to this lucrative
market.
The yen's high present rate is forcing some companies to consider
servicing replacement parts elsewhere, including the U.S. This is not
so with original equipment manufacturer (OEM) exports to Australia,
which are not expected to change much in the foreseeable future.
c) Major Local and Third Country Competitors
Japan is the major competitor to U.S. exports, followed by Taiwan and
Korea. Often, however, parts from these countries do not compete
directly with parts from the U.S., as many are vehicle-specific.
d) Regulatory/Demand Issues Impacting Market
In most cases today, replacement parts must adhere to the ISO 9002
quality standard. Manufacturers of OEM parts must be accredited with a
quality standard known as QS9000, which originated in the United States,
and which incorporates the ISO 9000, and other requirements. The four
Australian car manufacturers, General Motors, Ford, Mitsubishi and
Toyota, recently agreed to this common standard, which replaces the
international quality ratings of their own companies. As QS9000 has
been announced only recently, a transition period applies whereby OEM's
have until December, 1997 to come into compliance and must, until they
receive QS9000 accreditation, have been accredited with individual
quality rating by the particular car maker. QS9000 also is being
adopted by Ford and Holden commercial vehicles, but not by other
commercial vehicle (mainly heavy duty trucks) assemblers yet in
Australia.
Import tariffs remain at about 15%. Some U.S. products may be less
saleable on the Australian market due to Australia's Design Rules
(ADR's), that most affect external fixtures such as headlights,
indicator lights and mirrors. Increasingly, replacement parts must
adhere to the ISO 9002 quality standard.
e) Most Promising Sub-Sectors
U.S. products that are competitive include performance springs, shock
absorbers, carburetors, brake components, gear boxes and gear box
components, and a wide variety of parts and accessories.
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL MARKET SIZE 3,853 4,317 4,750
B. TOTAL LOCAL PRODUCTION 2,115 2,368 2,700
C. TOTAL EXPORTS 668 804 950
D. TOTAL IMPORTS 2,406 2,753 3,000
E. IMPORTS FROM THE U.S. 626 721 810
The above figures are unofficial estimates.
RANK: 5 - EDUCATION & TRAINING SERVICES (EDS)
a) Growth Potential for U.S. Exports
The vocational education and training market is extremely diverse. The
increasing demand for training - in particular, information technology,
literacy and numeracy, professional and personal development - coupled
with Australia's open market policy, and America's well known expertise
in the field, translates into real opportunities for the US exporter of
training services and expertise.
The following major developments have enhanced opportunities in an open
training market:
- increased allocation of funds to competitive tendering
(More than A$12 million was made available for open tender in 1994,
increasing to A$21 million in 1995.);
- policies to encourage participation from private enterprises in
tendering for training courses ;
- an increase in registered private providers to around 1,000;
- access for private providers to publicly recognized credentials;
- access to publicly-developed courses and materials for private and
industry providers in some States and Territories;
- increased industry investment in structured training;
- encouragement of joint government/industry projects;
In 1995, enterprises (or group training companies on behalf of
enterprises) will be able to choose, in consultation with employees, the
most appropriate publicly-funded, off-the-job training for apprentices
and trainees.
b) Competitiveness of U.S. Exports
American expertise in the training field is recognized in Australia and
well received, provided the training material/presentation is adapted to
Australian style English and culture, including Australian
language/spelling and weights/measures. Australia looks to U.S.
expertise, in industrial training, computer training, motivational and
personal development skills, and on-off site seminars, as well as for
textbooks and manuals. Americans are seen as leading in more
theoretical training, and as prolific writers, developing instruments
and models for the training industry. With the exception of one-time
seminars and training in sales, it is most common for U.S. training
programs to be conducted by local trainers, not expatriates.
c) Major Local and Third Country Competitors
Within the private training sector of the market, there are over 4,500
companies and individuals registered with the Australian Institute of
Training and Development (the largest Australian association for private
trainers and training companies). There are other, smaller training
associations as well.
The training market is led by Australian training providers, with very
few third country training establishments. With the exception of a
couple of Swiss and French hotel management schools, and foreign
language trainers, such as the Goethe Institute, l'Alliance Francaise,
Dante Alighieri Society and several Japanese language/culture schools,
there are no readily identifiable registered third country training
companies offering industry, business or computer training.
d) Regulatory/Demand Issues Impacting Market
The Australian government's process of structural micro-economic reform
includes education and training in industry to address technological and
structural change. The goal is to develop a multi-skilled and efficient
workforce. Once seen as a social policy issue, vocational education now
is regarded as an economic necessity. The Australian Federal Government
has contributed to the expansion of the training industry through
legislation and budget allocations.
The growing need of all employees, both old and new, to be conversant
with constantly evolving technology ensures that the need for efficient
training programs will be an ongoing one. Approximately 75 percent of
the existing workforce is expected still to be in the employment pool at
the turn of the century. However, only 30 percent of the skills and
knowledge they possess will be applicable in the year 2000.
e) Most Promising Sub-Sectors
Industrial/Factory Training (including communication skills/literacy;
collaborative quality management; preparation for multi-skilling and new
technologies, particularly in the computerized workplace; and total
quality management);
Business/Office Training (including report writing for the services
sector; speech and language consultancy; customized videos, and training
programs; computer skills, especially word processing and spreadsheet;
marketing/sales skills; and management training); and,
Information Technology Training (including networking skills; desktop
applications; UNIX skills; and training in Microsoft's window NT).
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL SALES 3,800 4,200 4,700
B. SALES BY LOCAL FIRMS* 3,610 3,990 4,420
C. SALES BY LOCAL FIRMS* n/a n/a n/a
D. SALES BY FOREIGN-
OWNED FIRMS* 190 210 280
E. SALES BY US-OWNED FIRMS* 100 110 190
* NB: the above figures are based on sales by the training provider
(usually a local firm/trainer), rather than by the country of origin of
the training program/courseware.
The above figures are unofficial estimates.
RANK: 6 - TELECOMMUNICATIONS EQUIPMENT (TEL)
a) Growth Potential for U.S. Exports
U.S. exports of telecommunications equipment to Australia have the
potential to grow at about 20% annually. Telecommunications products
must be broken into two sectors, namely network equipment, and Customer
Premises Equipment (CPE) such as telephone handsets.
Australia has three telecommunications carriers, the government-owned
corporation of Telstra, and privately-owned Optus and Vodaphone.
Telstra is presently the only nation-wide carrier for local calls, while
Telecom MobileNet, which is part of Telstra, Optus and Vodaphone all
compete for mobile phone services. The Australian telecommunications
market as a whole was valued at $12 billion in 1994, with Telstra
accounting for $9.5 billion sales revenue. Almost every Australian
household has a telephone, and there are an estimated 1.6 million mobile
phone users in a population of 18 million.
b) Competitiveness of U.S. Exports
During the past year, the highly competitive Australian
telecommunications equipment market has shifted somewhat for products
from the U.S., with opportunities for advanced network equipment gaining
ground and those for CPE, such as handsets and mobile phones, losing
some. This relates directly to the declining import of analog mobile
phones from the U.S. as the European GSM digital standard begins to take
over, and more phones come from Europe.
U.S. products, including advanced network equipment such as ATM
switches, call processing and managing equipment, modems and routers,
are highly competitive in Australia. A number of U.S. companies
including Scientific Atlanta, ADC Communications, Digital Equipment and
North American company Nortel, have contracts to supply network
equipment to telecommunications and Pay (Cable) TV operators.
c) Major Local and Third Country Competitors
Major network equipment competitors include Ericsson of Sweden, and
Alcatel of France. There are also many quality local suppliers, most of
which are subsidiaries of international companies including Ericsson and
Alcatel. Motorola is a major player, with products coming from the U.S.
and Europe.
d) Regulatory/Demand Issues Impacting Market
Industry Development Arrangements (IDA's) apply to CPE, requiring some
local content of the CPE itself, a related telecommunications product,
or requiring R & D on the part of the IDA participant. CPE suppliers
are less limited than previously by joining federal government programs
such as Fixed Term Arrangements (FTA's) or Partnerships For Development
(PFD's), which more generally require the participant to provide a local
content that is agreed to jointly.
CPE and products that connect to the customer side of the network must
be approved by the telecommunications regulator, Austel. Austel-
approved testing houses are located in Australia, Europe and the U.S.
Telecommunications competition is expected to increase after June 30,
1997, when the present industry program ends, and doors are expected to
open for additional carriers and private operators. The market for U.S.
products is expected to expand further as Cable TV operators lay their
foundations, which for some, include the intention to operate local
telephone calls along their Cable TV lines. This would be possible only
after July 1, 1997.
e) Most Promising Sub-Sectors
Digital Network Equipment, routers, mobile phones.
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL MARKET SIZE 1,678 2,043 2,349
B. TOTAL LOCAL PRODUCTION 1,022 1,213 1,395
C. TOTAL EXPORTS 270 378 435
D. TOTAL IMPORTS 926 1,208 1,389
E. IMPORTS FROM THE U.S. 276 337 400
The above figures are unofficial estimates.
RANK: 7 - TELECOMMUNICATIONS SERVICES (TES)
a) Growth Potential for U.S. Exports
U.S. exports of Telecommunications Services are expected to grow by 15-
20% annually. After June 30, 1997, easing of restrictive Federal
government conditions imposed on the telecommunications services
industry will encourage growth further in a more free market
environment. These conditions relate to the general areas of class
licenses and international switching. Details are still under
consideration by the government.
b) Competitiveness of U.S. Exports
U.S. exports are extremely competitive, presently holding approximately
50% of total sales. Major players include AT&T, U.S. Sprint, MCI, and a
host of international Callback suppliers.
c) Major Local and Third Country Competitors
The rest of the market share is held by prominent local companies such
as AAP Telecommunications and Anixcorp, and by international firms
including Singcomm, BT Australia, Telecom New Zealand, and more recently
Telecom Italia.
d) Regulatory/Demand Issues Impacting Market
Presently there are two types of service providers - simple re-sellers
of excess network capacity - and, value-added service providers who
provide voice and data services including EMail, Frame Relay, Voice
Mail, Callback, enhanced fax services, and more. Simple re-sellers may
set up business at any time after arranging for the lease of excess
network capacity, usually from Telstra, Australia's dominant
telecommunications operator. Value-added service providers must apply
to the telecommunications regulator, Austel, for an International
Service Provider's Class License prior to establishing a service. This
is a relatively simple procedure.
The telecommunications service industry presently is limited in that all
international services must use an existing carrier's international
switch. This is expected to change, allowing more open international
access after June 30, 1997. Telstra and Optus are the only two carriers
that now have international switches.
e) Most Promising Sub-Sectors
There are numerous simple re-sellers, and as of February 1, 1995, there
were 46 holders of International Service Providers Class Licenses. The
growth of Callback services has mushroomed during the past 12 months,
with at least 15 representatives of mostly U.S.-based callback companies
active in Australia. This market is expected to peak during the next 12
months. Other growth areas include Frame Relay, Electronic messaging,
and EMail.
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL SALES 1,201 1,364 1,569
B. TOTAL SALES BY LOCAL FIRMS 488 531 611
C. TOTAL EXPORTS BY LOCAL FIRMS 300 341 392
D. TOTAL SALES BY FOREIGN-OWNED FIRMS 1,013 1,174 1,350
E. SALES BY U.S.-OWNED FIRMS 638 682 784
The above statistics are unofficial estimates.
RANK: 8 - HEALTH CARE SERVICES (HCS)
a) Growth Potential for U.S. Exports
In 1993, health expenditure by Australian governments and individuals
was A$35 billion, an average of A$1,944 per person. This represented
8.6% of gross domestic product, an increase of 0.8 percentage points
from recent years. Preliminary figures for 1994 health expenditure are
38 billion which is 8.8 percent of GDP. For the period 1975 to 1993
there was an average annual increase of 2 percent spent per year on
health. This was due partly to the ageing of the population, and partly
because of greater use of health services by people of all ages. Health
expenditure has grown at a relatively steady rate, and is much less
dependent on the business cycle than are other sectors of the economy.
b) Competitiveness of U.S. Exports
Statistics on Health Care Services are limited. However, U.S. products
and services are accepted readily in this market. There are 320 private
hospitals in Australia. There is only one foreign-owned hospital group,
Australian Medical Enterprises, whose parent company is Tenet, a
recently formed company in the U.S., following the amalgamation of NME
and AMI hospital groups. Australian Medical Enterprises operates nine
hospitals in Australia with 636 beds. Earlier this year, the Victorian
State Government signed a contract worth A$160 million with the U.S.
subsidiary, Integraph Australia, to provide Melbourne's emergency
services with a centralized communication system.
c) Major Local and Third Country Competitors
The majority of health care services are provided by state governments,
with religious and other charitable institutions fulfilling a
substantial subsidiary role. This is changing as all state governments
are in the process of privatizing parts of their health care sectors.
The companies involved in this process largely are locally-based.
d) Regulatory/Demand Issues Impacting Market
Both Federal and State Governments have policies that require Public
Hospitals to operate within a limited budget. All governments are
privatizing hospital services where they can, e.g. food, cleaning and
waste disposal services. Approval from the various State Departments of
Health is required for health care services.
e) Most Promising Sub-Sectors
Because of the state governments' privatization policies, at present,
the market is in a state of flux. U.S. firms should seek niche markets,
such as computer software with medical applications - hospital
management systems, patient tracking systems, software packages for
general practitioners, and remote area diagnostic systems.
DATA TABLE (Millions USD)
1994 1995 1996
A. TOTAL SALES 8,273 8,204 9,453
B. TOTAL SALES BY LOCAL FIRMS 8,162 8,095 9,337
C. TOTAL EXPORTS BY LOCAL FIRMS 189 190 206
D. SALES BY FOREIGN-OWNED FIRMS 300 299 322
E. SALES BY U.S.-OWNED FIRMS 264 263 282
The above figures are unofficial estimates.
RANK: 9 - DEFENSE EQUIPMENT (DFN)
a. Growth Potential for U.S. Exports
The most recent Australian Defense White Paper, "Defending Australia"
(November 1994), contains three main defense priorities for the
Australian Government: To increase public recognition of the tasks
performed by the defense forces; to emphasize investment in high
technology capabilities; and to continue to pursue a more effective
partnership between defense and Australian (and New Zealand) industry.
A closer dialogue is developing between defense and industry in
Australia. Those firms willing to take part in the consultative process
early in the life of projects will be best placed in the bidding
process. The White Paper forecasts that defense spending will be
sustained at 2% of GDP over the next few years to meet the objectives of
the White Paper, and beyond that, modest real increases will be needed.
b. Competitiveness of U.S. Exports
The U.S. has advanced technology in most areas, and enjoys a strong
position in