Considerations when entering the Australian market

KEY LEGAL, REGULATORY AND COMMERCIAL CONSIDERATIONS FOR FOREIGN BUISNESSES ENTERING THE AUSTRALIAN MARKET

In Australia, foreign businesses must carefully assess how their operations align with local laws, product approval requirements, and definitions of “carrying on business.”

While distributor models may suit some, others will require local registration or a subsidiary—making expert legal advice essential to building a compliant and commercially sound presence from day one.

 

VIDEO SCRIPT

I want to talk today about a few considerations you need to take into account when trying to work out the right set up for your Australian operation.

The Australian market is a stable and low-risk market, rich with potential for overseas suppliers. It is also a gateway to Asian markets, which makes it even more attractive.  With the right setup for your Australian operation, you can confidently take advantage of the wealth of opportunities the Australian market has to offer your business.

Choosing the right setup for your operation in Australia means working through a few factors about the best ways to protect your interests here and in other markets. You’ll also need to be compliant with Australian laws and regulations, which can be significantly different from the rules in other places.

There are several cost-effective ways to ensure your Australian setup is robust, commercial and set for plain sailing. It is an appropriate analogy for the fjord here.

Which of these ways is best for your business depends on:

• your plans for the Australian market over the next few years
• how those plans fit within the broader context of your global business

When we know your plans, we can give you advice specific to your circumstances. In the meantime, in the next few videos I’m going to discuss:

1. the main considerations you should work through with someone familiar with Australian law and business conditions; and
2. the options you must weigh up to see which of them best fits your business plans for Australia

This should not be taken as legal advice as I don’t know your specific circumstances.

What you will export to Australia is the first consideration because some products and services require approvals, sponsorship, introduction and registration. The Australian market is highly regulated. Many products require registration or approval by government agencies before they can be imported for sale in Australia.

The types of product that need approval include:

• Medicines and medical equipment (therapeutic goods)

• Skin care, personal care, makeup and other cosmetics (depending on their Ingredients)

• Sunscreens

• Mining equipment

• Electrical products

• Agricultural and veterinary products

• Industrial chemicals

The best structure for your operation in Australia depends on whether:

1. you need registrations or approvals for your products to sell them in Australia
2. there are rules that require those registrations or approvals to be held by an Australian entity

The second consideration is:  will you be trading in Australia or working through a distributor without a presence in Australia? Australian legislation has a complex definition of “carrying on business” in Australia. If you are a foreign company and your Australian activities count as carrying on business in Australia, you’ll probably need to do one of the following:

• Register in Australia as a foreign company to establish a branch office; or

• Set up an Australian subsidiary

This applies, for example, if you open a place of business in Australia. Other legal structures are available in some circumstances, but they are less common.

If you do not plan to have a direct presence in Australia and intend a distributor to represent your products, you’ll need a distribution agreement that:

• protects your interests
• covers all eventualities
• is enforceable in Australia

You might have a global distribution agreement that you would like to use in Australia to keep things consistent worldwide, which is understandable. Also, we’ve seen examples of businesses that have relied on distribution agreements downloaded from the internet, sometimes translated with Google Translate.

Both situations can create problems:

1. It’s unlikely that a downloaded generic agreement will cover everything that needs to be covered to protect you in Australia (especially the limitation of liability clauses and warranties)
2. The translation of an agreement by software might not be good enough to be upheld by an Australian court
3. Even a master agreement that is well-drafted for another jurisdiction might:

• contain provisions that are unenforceable in Australia
• omit provisions that you would want in Australia
• not anticipate the provisions of the Australian Consumer Law, which are broader than the consumer laws of many jurisdictions and which in particular deal with limiting liability and warranties.

When you set up your Australian operation on a firm foundation, you can make a confident entrance to an exciting market.

At Argyll Law, we have decades of experience in helping companies outside Australia set up their businesses on exactly that foundation.  And the relationship continues into providing ongoing advice and support on the ground in Australia.