John Glover participates in IR Global Guide: International Expansion: Building your Business Overseas

John GloverManaging Director, Pendragon

Foreword by Andrew Chilvers

Despite these uncertain times, expanding overseas can be a key driver for future growth for an ambitious business. International expansion can breathe new life into a company, drive huge value and set it on a path of continued success.

Expanding a business overseas is a strategic opportunity that will help diversify revenue streams, revitalise product development and give high returns on investment. But expanding a business into different jurisdictions takes time – this is a long distance run, not a sudden sprint to the finish line. Furthermore, expanding operations into a new jurisdiction can be fraught with challenges and risks that need to be addressed long before the first boots are on the ground.

For any company turning up in a foreign country, a multitude of tax and legal issues need to be addressed. This can be a labyrinthine experience and not for the faint hearted – but then faint hearted businesspeople seldom set their sights on overseas expansion.

Tax and compliance have to be at the top of any board’s agenda, ensuring the correct steps are taken the moment the company representatives land in-country. It’s pivotal to learn these issues to avoid any costly mistakes from the start.

What are the main government incentives available in your jurisdiction to attract multi- nationals and FDI investment?

Government incentives

The Australian Government provides incentives for companies engaging in research and development (R&D) in Australia. The R&D tax incentive provides eligible companies with a tax offset for expenditure on eligible R&D activities undertaken during the year. R&D activities conducted overseas are eligible under certain circumstances.

The Australian Government and state and territory governments provide support to assist investors in setting up and running a business in Australia. The form of assistance available will vary by location, industry, and the nature of the business activity.

Assistance is available to businesses through grants, finding and training employees, R&D tax incentives, major project facilitation, and for exporting.

There are two main ways in which foreign residents or companies can invest funds in the Australian economy:

• Portfolio investment refers to the purchase of securities (such as stocks or bonds) or equity and debt transactions that do not offer the investor any control over the operation of the enterprise. Common examples include the purchase of property, shares in Australian companies or government bonds by foreign superannuation or pension funds.

• Foreign direct investment (FDI) is when an individual or entity from outside Australia establishes a new business or acquires 10 per cent or more of an Australian enterprise, and so has some control over its operations. Common examples include the establishment of Australian branches of multi-national companies or joint ventures between Australian and foreign companies.

Why invest in Australia?

Australia offers many advantages compared with other countries seeking foreign investment including:

• Pre COVID consistent economic growth

• Highly skilled workforce

• Strategic Asia-Pacific location

• Strong governance and legal systems

• Good infrastructure

• Friendly business climate.

What industries do you feel there are opportunities in for international investors/ businesses in your jurisdiction? What factors do you think contribute to inward investment?

There are opportunities everywhere in Australia. But the best way to look at Australia from an international investors point of view is to look at what industries the Government is stating should be invested in and at the same time are willing to allow foreign investment, to assist with their growth.

The main factors that contribute towards inward investment is the need for the country to have or to improve a particular product, industry or service. If the Government see the need to invest in specific industries, then those industries are usually also open to foreign investment along as it’s within the guidelines set out in Australia’s foreign investment policies. 

Why is it important to hire a local firm to support international expansion? How can you help smooth the process for your clients and overcome common pitfalls?

Having a local company on the ground that can investigate or have the right connections to get the information you need to make the decision on your international expansion is a great asset.

Having someone local can assist you with the following:

• Information on the Australian business and regulatory environment

• Market intelligence and investment opportunities • Identification of suitable investment locations and partners in Australia

• Advice on Australian government programs and approval processes.

The different costs involved in the way you approach your international expansion is considerable; imagine the full-blown cost of setting up from scratch, compared to investing into an existing company, or down to the most economical approach of employing an Australian and utilising back-office services to check the market out before you make a move.

All of these approaches are achievable if you have connections on the ground. That is why using a local firm that is in the know and connected within the jurisdictions removes a lot of the costs and hurdles from doing it yourself.

If you wish to establish a presence in Australia, we can assist you further.

Our services include but are not limited to:

• Business registration

• Visa and Immigration

• Industry reports

• Premises location nationwide

• Australian director

• Insurance

• HR, Payroll and back office support

• Finance and legal advice

• Marketing

• Relocation services

• Product distribution

Contact us today – we’d be happy to discuss your plans for investing in, expanding to or opening a subsidiary in Australia.