For UK companies looking to expand overseas, Australia ticks a lot of boxes - a common language, cultural connectivity that goes back centuries and a Free Trade Agreement in place since 2021.
The proposition is an enticing one. But it can be deceptive, as it comes with considerable challenges. Understanding them before you start thinking about Australia as part of your expansion program is the key to success.
Going the distance
Australia is an immense federation of six states and two territories, with differing laws and regulations which need to be factored in when thinking about growing your business Down Under.
Most of the 27 million people in the country live on the coast, but the distances are huge and, if you ever need to send any physical product, it may be in the air, on the road or at sea for days before it arrives at its destination.
Source: English Wikipedia user SonNy_cZ
While Australia is physically vast, your potential market is about one third the size of the UK. The upside of this is that the business community is relatively small and connected, especially within sectors and regions. It’s a good idea to work on the assumption that, while your target clients or customers may not know you, they may well know each other and share information and contacts with you.
The downside is that if something goes wrong with a customer, word of that may get around, too.
Digital divide
Despite Australia boasting major cities with robust infrastructure, including high-speed internet and technology hubs, many regional and remote areas of the country still face challenges related to connectivity and access to resources.
This ‘digital divide’ can limit opportunities for some tech companies. But it also presents opportunities to those providing novel infrastructure: satellite-based networking systems, sustainable power generation and energy storage solutions, and next-gen logistics, to name but a few high-demand areas.
Watch the clocks
If you are going to do business in Australia, you will face challenging time zone differences, so it's essential to streamline your communication and not rely on virtual chats at an uncomfortable hour for one or potentially all of you.
This can also impact the speed of business unless you get it right, and can lead to delayed project timelines, especially where immediate feedback and collaboration are required.
To ensure you can communicate effectively with Australia, you should develop strategies to manage the time zone differences. Consider delegating to Australian partners or setting agreed co-working hours. Investing in robust digital communication and project tools which promote proactive communication practices will also help alleviate these challenges.
Culture - same, same, but different
Australia and the UK have long enjoyed employment and health reciprocity for their citizens, which has resulted in considerable movement between the countries and a familiarity between the two cultures. Yet, there are differences which, for scaleups wanting to do business in Australia, are more significant than they might at first seem.
In 2020, a Series B UK fintech firm working in the field of earned wage access bought an Aussie company offering the same innovation. Two years later, the business had a successful Series C fundraise in the UK and was rapidly expanding in the US. Yet, it had to sell its Australian operation because of one significant local difference: most Aussies get paid twice a month, whereas most Brits and Americans get paid monthly. Australians just didn’t need the benefit. Same, same, but very different.
As in the UK, there are also distinct regional differences within Australia – between urban and country areas, as well as across state and territory borders. Tech companies won’t be challenged by state laws in their provision of core services, but regional laws do vary significantly on the application and collection of audio recordings, visual imagery and personal data. If you are collecting person-specific information, you’ll need state-specific legal advice.
Familiar laws but local rules
While the UK-Australia FTA has helped reduce some tariffs and trade barriers, it does not eliminate all regulatory hurdles. Australia has its own set of product standards, health and safety regulations and compliance requirements that can differ significantly from those in the UK.
Navigating the country’s regulatory environment can be daunting for many foreign tech companies - and even domestic ones - especially those operating in highly regulated sectors like medtech.
Compliance with data protection laws, IP rights and industry-specific regulations add multiple layers of complexity and cost.
So, UK companies must ensure their products are fully compliant with Australian standards before entering the market, and this often requires adapting your core proposition, which can be time-consuming and expensive.
Working with local experts, such as the Therapeutic Goods Administration (TGA) if you're in the medtech sector, or the Australian Securities Investment Commission (ASIC) if you're a fintech firm, can help you navigate the complexities of the Australian regulatory environment.
Don’t underestimate the locals
Australia is an attractive market with well-established domestic and international players across many sectors. This means that UK tech businesses may face stiff competition from both Australian companies and other foreign players. As an example, with 800+ fintech startups and many other tech businesses competing for market share, it is becoming increasingly difficult for innovative tech businesses to differentiate themselves.
However, Australia is also a ‘sandbox for innovation’ - a perfect testing ground for companies to finetune their global expansion strategies.
Australian companies often have the advantage of better market knowledge, established networks and stronger relationships with customers and other stakeholders. In addition, Australian customers may prefer to work with local companies, especially when it comes to products and solutions that emphasise sustainability, ethical sourcing or local production.
So, standing out in a crowded Australian marketplace will not only require innovation and differentiation, but also effectively communicating your value proposition to local investors, customers and partners.
Conducting thorough market research to identify unmet needs within the Aussie market is important to provide you with a competitive edge. Partnering with experienced Australian distributors or forming strategic alliances will also help you gain traction in a crowded market.
Sending a small team to Australia to start the legwork can strategically position a UK tech company to serve its key accounts more effectively and strengthen business ties within the region. For example, a London-based visualisation software company established an office in Sydney in 2023, starting with a small team before committing larger resources once the business began gaining commercial momentum.
Cost of doing business
The cost of doing business in Australia is also generally higher than in the UK, particularly in major cities like Sydney and Melbourne. Rent, wages and utilities are relatively expensive, which can impact your profitability, as is the cost of living.
You may find alternative capital cities like Brisbane, Adelaide or even regional centres such as the Gold Coast offer lower living costs, while still providing excellent business opportunities, infrastructure and lifestyle.
British firm AutogenAI, for example, recently established its Australian headquarters in the country’s ‘tourism capital’, City of Gold Coast, Queensland, to capitalise on the regional innovation hubs nearby at Bond University and reduced running costs compared with Sydney and Melbourne.
Tech companies have also flocked to the nearby Northern Rivers region in New South Wales, famed for its Byron Bay beaches, which provides them with not only lower rents and operating costs but a huge recruitment drawcard.
Success Down Under
So, while there are undoubtedly a number of potential potholes to navigate when doing business in or with Australia, none of the hurdles is insurmountable if you plan your approach carefully and get the right advice.
And capitalising on the common ground between the two countries to create enduring business relationships will certainly increase your chances of success Down Under.
UK tech firms can get free and subsidised support for expanding in Australia from our partner, Foley, via the UK-APAC Tech Growth Programme. For more information and to apply to be considered, see here.