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It’s important for international businesses pursuing global trade to carefully consider cultural and business etiquette expectations when establishing a foreign office in Australia

Global Trade: Opening an Australian OfficeARTICLE

By Debra Donston-Miller

The United States has a long history of healthy relations and international trade with Australia, a nation that has recorded more than 25 years of sustained economic growth and is the world’s 12th largest economy. It also has the sixth-highest per capita income.1 All of this combines to make Australia a good potential opportunity for U.S. companies looking to expand global trade.

According to the U.S. State Department, bilateral investment between the U.S. and Australia totals more than $1 trillion. U.S. firms have conducted international business in Australia for more than 100 years, and the U.S. is Australia’s largest foreign investor – with $650 billion in accumulated investment, almost 30 percent of Australia’s total stock. Leading sectors for U.S. investment are mining, finance and insurance. About 30 percent, or $440 billion, of Australia’s overseas global investment is in the U.S.2

Free Trade Agreement Buoys Global Trade

The Australia-United States Free Trade (AUSFTA) agreement has buoyed global trade between the two countries. According to Asia Matters for America, a project of the East-West Center, in Washington, D.C., half of U.S. states have increased exports by more than 50 percent since the 2005 signing of the agreement.3 “The AUSFTA eliminated 99 percent of duties on U.S.-manufactured exports and 100 percent of duties on agricultural exports to Australia,” according to Australia Matters for America. “Since the implementation of the AUSFTA, Australia increased exports of goods to the U.S. by 26 percent and the U.S. increased exports of goods to Australia by 68 percent.”4

Establishing a Business in Australia

Companies typically establish a business in Australia by creating an Australian subsidiary company or by registering as a foreign company (opening a branch office).5

An Australian subsidiary is a separate legal entity with limited liability, and it has its own identity for tax and legal purposes, according to EY. An Australian subsidiary must have at least one director in Australia, but it can be wholly owned by a foreign shareholder.6 Companies must register with the Australian Securities and Investments Commission (ASIC), which is responsible for the ongoing regulation of foreign companies.7

Registering a Branch Office for Global Trade

Registering as a branch office can make sense when the activities in Australia are limited in duration or scope (although a branch office does not limit the operational activities in Australia) or when a branch structure is in line with company strategy, according to EY.8 The process for registering a branch office is more complex and time-consuming than for a subsidiary company, taking up to 28 days.9 Companies must submit an application to ASIC, providing general information about the company and how it will be run, as well as supporting documents.10 Registered foreign companies must submit financial statements at least once every calendar year. The time between financial statements can't be more than 15 months.11

The business tax environment in Australia is relatively complex and constantly evolving. Companies and branch offices that derive assessable income or have carry-forward tax losses must submit an annual income tax return with the Australian Taxation Office (ATO).12

Cultural Awareness and International Trade

In addition to understanding the legal and regulatory requirements of opening an office in Australia, it’s important for companies pursuing global trade to carefully consider cultural and business etiquette expectations. One in four workers in Australia comes from another country, resulting in a workforce comprising people of many different religions and cultures.13

English is the predominant language in Australia, but more than 100 different languages are spoken in the country.14 It’s important to be aware that there are some differences between American English and Australian English in vocabulary, accent, pronunciation, grammar and spelling.15

Those outside of Australia tend to consider Australians as understanding, friendly, outgoing and relaxed. Indeed, business meetings or interviews in Australia are often informal, including handshakes, laughter and pats on the back. The use of first names is common. Australians maintain eye contact in the workplace, regardless of a colleague’s age or position.16

Hard work and positive attitudes are valued in the Australian workplace, where employees are typically treated with respect and decisions are often made after consultation with employees at multiple levels and in different roles. This can slow the pace of decision-making.17

The Takeaway

U.S. companies seeking to expand global trade may find potential opportunities in Australia. Understanding and meeting expectations on all international business and cultural fronts will help to ensure a profitable and positive relationship for both U.S. businesses and their Australian colleagues.

The Author

Debra Donston-Miller

Debra Donston-Miller is a veteran journalist, specializing in IT, business, career and education content. Formerly editor of eWEEK magazine and content director of eWEEK Labs, Donston-Miller currently develops content and content strategy for multiple organizations.

Sources

1. “U.S Relations with Australia,” U.S. Department of State; https://www.state.gov/r/pa/ei/bgn/2698.htm
2. Ibid
3. “Australia Matters for America: U.S.-Australia Imports and Exports,” East-West Center; http://www.asiamattersforamerica.org/australia/data/trade/importexport
4. Ibid
5. Doing Business in Australia: Essential Tax, Compliance and Reporting Considerations, EY; http://www.ey.com/Publication/vwLUAssets/Doing_Business_in_Australia_and_Australian_tax_landscape/$FILE/EY-doing-business-guide-australia.pdf
6. Ibid
7. “Invest in Australia: Guide to Investing,” Australian Trade and Investment Commission; https://www.austrade.gov.au/International/Invest/Guide-to-investing/Setting-up-a-business
8. Ibid
9. Doing Business in Australia: Essential Tax, Compliance and Reporting Considerations, EY; http://www.ey.com/Publication/vwLUAssets/Doing_Business_in_Australia_and_Australian_tax_landscape/$FILE/EY-doing-business-guide-australia.pdf
10. “Foreign Companies,” Australian Trade and Investment Commission; http://asic.gov.au/for-business/registering-a-company/steps-to-register-a-company/foreign-companies/
11. Ibid
12. Ibid
13. “Australian Workplace Culture,” Career Workforce Development Center; www.skills.sa.gov.au/dmx?Command=Core_Download&EntryId=1201
14. Ibid
15. “Guide to Australia: Etiquette, Culture, Customs & Business; Kwintessential; http://www.kwintessential.co.uk/resources/guides/guide-to-australia-etiquette-customs-culture-business/
16. Australian Workplace Culture,” Career Workforce Development Center; www.skills.sa.gov.au/dmx?Command=Core_Download&EntryId=1201
17. “Guide to Australia: Etiquette, Culture, Customs & Business; Kwintessential; http://www.kwintessential.co.uk/resources/guides/guide-to-australia-etiquette-customs-culture-business/

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