AUSTRALIA

Country Manager  Brian O’Doherty 15 Wellington St Croydon NSW 2132 Australia Tel: +61 (2) 97063387 Mobile: +61 (413) 592154 E-mail: bodoherty@theyorkgroup.com

Mr. O’Doherty is a senior executive with significant experience in building and growing young and startup companies to maturity, with specific experience in the development and management of Electronic Commerce companies.

He has 15 experience in Sales, Marketing and General Management in the Australian IT industry, working across the Manufacturing, Distribution, Utilities, Banking and Government sectors. His background includes a position as Regional Director of Sterling Commerce Australia, from 1996 – 2000, assisting Sterling to commence operations within Australia. He has been a board member of Australia’s national Electronic Commerce body, Tradegate Electronic Commerce Australia.

Regional Spending on Information and Communications Technology
(Data provided by WITSA - www.witsa.org/digitalplanet )

Technology Sectors	Spending ($millions)
Hardware	5,183
Software	3,074
Services	5,938
Communications	20,281
TOTAL ICT Spend	34,477
Vertical Markets
Agriculture	76
Manufacturing	3,066
Utilities	488
Construction	321
Wholesale & Retail	4,792
Transportation & Communication	3,761
Finance & Bus. Services	6,748
Other Services	830
Government	5,180
Consumer	8,986
Software Piracy	31%

Top Vertical Markets

Leading companies
Banking & Finance	National Bank, ANZ Bank, Westpac, Commonwealth Bank
Insurance	Axa, ING, Insurance Australia Group, Zurich
Telecom & Utilities	Telstra, Singapore Telecom, Energy Australia
Governmentÿ	Federal, State, Local government
Retailÿ	Woolworths, Coles Myer
Mining	Rio Tinto, BHP Billiton

Country Specific Services

Within Australia, The York Group can offer complementary services that assist companies or their resellers create demand for their solutions: Lead Generation and Sales Outsourcing services. These services are being used today by multi-national software companies setting up in Australia, established multi-national companies, local Australian startups and professional services companies with considerable success.

Market Overview*

Australia has proven an appealing and profitable market for American companies for many years. It offers very few barriers to entry, a familiar legal and corporate framework, and a sophisticated – yet straightforward -- business culture. While it is important to understand and appreciate Australia’s cultural differences, the long and successful history of American firms in Australia suggests that other U.S. companies will also find this market to be rewarding and attractive. This is clearly demonstrated by the US$9 billion trade surplus that the U.S. enjoys with total exports to Australia reaching US$28 billion in 2004.

In addition to ease of entry, current economic conditions in Australia are attractive. Australia’s economy kept galloping forward in 2004, and the trail ahead looks clear of any obstacle to a fourteenth consecutive year of positive growth. While the pace may slacken slightly, the Australian economy continues to show amazing stamina. Domestic and global economic factors are working in harmony for Australia, providing new opportunities while buffering it from threats. From the American point of view, the implementation of the Free Trade Agreement between the U.S. and Australia (AUSFTA) is the watershed event of 2005.

The internal underpinnings of the Australian economy remain sturdy and strong:

· Positive key economic indicators: high and rising income per capita, low unemployment (4.7 percent), low inflation, high capacity utilization, and GDP growth at 3-3.5 percent annually.

· Active capital spending by businesses across major sectors such as mining, energy, IT, and food processing.

· A vibrant and transparent economy with very few barriers to entry and a familiar legal system.

· A highly developed, competitive, English-speaking market with well-established Australian, American and third-country firms. U.S. market share varies by industry, but many American corporations have had a subsidiary or production facility in Australia for decades. Global competitors from Japan, the nations of the European Union, New Zealand and the rest of Asia are also present and active. The U.S. has healthy market share in leading areas such as medical devices, pharmaceuticals, software and ICT equipment, aircraft, defense technologies and environmental technologies.

· The 2004 re-election of the coalition government and Prime Minister John Howard kept in power a government strongly aligned with the United States across facets such as trade, security, defense, and humanitarian aid. Australia is carving out a new role in Asia, completing a Free Trade Agreement with Thailand and exploring another with China.


External factors also support continued growth:

· Relatively high world commodity prices for Australia’s resources – energy, mineral and agricultural -- driven by voracious demand from Asian countries such as China.

· Renewed economic growth in Australia’s major trading partner increases demand for its exports, including agricultural commodities.

· The strong Australian dollar has shaved growth from the export-sensitive parts of Australia’s economy while giving more purchasing power to the import-driven parts. The weakness of the U.S. dollar relative to the Australian dollar provides an opportunity for U.S. exporters to improve their competitive position in this market.

Market Entry Strategy*

· Successful market entry strategies for Australia have three common elements: understanding the market, selecting the optimal partner, and providing ongoing support to that partner in the market.

· A common language and familiar business framework may lead Americans to overlook Australia’s cultural and market differences. It is vital to first gain an understanding of the Australian context for a product or service, its competitors, standards, regulations, sales channels and applications.

· Success in the Australian market requires establishing a local sales presence. For many American exporters this means appointing an agent or distributor. The bounds of that appointment are negotiated, and may include only certain states of Australia, the entire country, or New Zealand as well. An increasing number of businesses and investors see Australia as a secure platform from which to serve third markets in Asia.

· The distance from many of their trading partners causes Australian firms to stress the importance of local support and service. American companies should visit Australia both to meet prospective partners and demonstrate ongoing support, as this is the common practice of their competitors.

· Most of the criteria American firms use to select agents or distributors can be transferred to Australia, with expectations adjusted to the scale of the market. Performing due diligence is just as important as in the United States, and numerous resources are available to assist in that work.


* INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2005. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.