Market environments

Australia and New Zealand are mature economies with

British heritage. Their economies have grown at a slower
pace than those of the Asian countries, with growth rates at
about 2 to 4 percent, typical of other developed nations.
Both Australia and New Zealand targeted Asia and in
particular ASEAN region as the future source of growth and
are in the process of shifting away from their European
past. In 1994, trade between Australia and ASEAN
countries reached 8 billion USD, growing at 20 percent
annually. Following in Australias footsteps after its
emergence in the 1980s from a socialist government with
high tariffs and import controls, New Zealand is also
targeting Asian countries. Its largest trading partner is
Japan.
Australia, a vast country more than twice the size of India,
has only 19.5 million inhabitants. The per capita income
was 19,500 USD in 2003. Its economic base is in raw
materials, in particular minerals, and in agriculture. Its ratio
of exports to GDP has been relatively low because of
protectionist government policies initiated after WW II; but
after the election of a new Labour government on the late
1970s, Australia has gradually opened up. A free-floating
exchange rate was introduced in the early 1980s as the
financial sector was deregulated and FDI increased. The
change has also moved Australia away from the concept of
a self-sufficient economy and toward a more opened
market place, which in turn has allowed Australias export
products better access to foreign markets. Exports have
also been helped by a weakening Australian dollar.
Both Australia and New Zealand in recent years have
developed a large and expanding wine industry with a
strong export performance. Given the soil and climate

conditions, the best wines are the whites, and Australian

wineries have garnered accolades around the world for
high quality white wines at good prices.

New Zealand with its 4 million people is basically agrarian.

The per capita income was 12,900 USD in 2003. The
domestic economy can be subdivided into five industries,
all with substantial international involvement: forest
products including paper, dairy products, meat products,
fruits and wool. Traditionally, the country has exported
agricultural
and
forest
products
and
imported
manufactured goods, still the dominant pattern. But
economic growth and FDI by global firms have combined to
make New Zealand a player in the telecommunications,
information technology, and office equipment industries.
Because of its small size and relative isolation from world
markets, multinational companies such as IBM, Microsoft,
Ericsson, Honeywell, Canon, and Philips approach New
Zealand as a low-cost and low-risk test market for new
products.
As a result of the growing trade exchanges, the centuriesold fear of larger-scale immigration from the Asian
countries seems to have waned; and in New Zealand in
particular, with its Maori native culture, there is growing
public acceptance of the contributions made to the
economy by professionals and other immigrants from Asian
cultures.
Australia and New Zealand have traditional ties to the
British Commonwealth, which gave the countries preferred
trading status with the United Kingdom. When the UK
joined the European Common Market in 1973, however, the

favoured trading status was lost, which led to severe

economic strains and ultimately new open-market policies
in both countries. They have since reoriented their
economies, and have long sought a free trade agreement
with ASEAN. Both countries are members of APEC (Asia-

Pacific Economic Cooperation) and also participate in ARF

(ASEAN Regional Forum).