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Foreign Market Analysis

Foreign Market Analysis
Foreign Market Analysis Introduction Foreign investments have become more common in the world today as most countries have embraced globalization. When investors intend to join an overseas market, it is always advisable that they conduct a market analysis so that they can invest in profitable and less risky markets. By neglecting to do so, they risk losing their money due to market failures, which result from the country's lack of stability in critical sectors. Australian long-standing stable political, social, and economic spheres, as well as tourism, finance, and mining industries make this country the best choice for investment. Australia as a Choice of Investment Political Reasons Every country that challenges foreign investment must have a long-standing political stability, as investors understand that it is the political situation that defines the economic environment. Australia is a free-market democracy with competitive industries, which are open to the rest of the world. The state also privatized almost all of its companies, and thus foreign investors can expect little bureaucracy because the country's authorities have no direct conflict of interest in the market. The legal process in the country has created an independent judicial system, which judges impartially without bias to foreign entities. As Australia is a developed nation, it is expected that the current political stability will continue to endure, as there are less external influences, which can alter its internal operations. Thus, the investors can be sure that for the next few decades, Australia will still be conducive for business. Social Reasons Social indicators from Australia also demonstrate a well-positioned country for foreign investment. First, Australia has an exceptionally well-educated population with a 99 percent literacy rate and 35 percent of people having a post-high school diploma. Such statistics show that any firm entering this industry has a guarantee of a quality labor force for its production activities. The population is also reasonably average-aged, unlike that of other advanced economies, which are struggling with an elderly population that is expensive to maintain. The culture of the citizens is also welcoming, as they do not segregate on external goods and services. Most people show a lot of hospitality towards non-locals, and such culture has been maintained for years. When an investor decides to establish a firm in this country, he/she can be assured that his/her investment will be safe in the hands of Australian people. The same cannot be said about other countries, such as South Africa and Chile, which often display xenophobic behavior. Economic Reasons The primary determinant of a good market is always the economic indicators of a country. In Australia, the state has had a positive growth rate averaging 3.2 percent in the last 26 years, an indication of a vibrant economy. Even during the 2008-2009 financial crisis that mostly affected advanced economies, Australia had a 3 percent growth rate. Such resilience to the external economic tremors is what makes this market so attractive. Additionally, the GDP per capita of the country has continued to rise, which points to the increasing purchasing power of the citizens. It also has an inflation rate of just 1.5 percent, which means that investors face little risk of losing their money due to loss of value. The government debt of Australia is also the lowest among OECD countries, which means that its economic stability will continue to endure in the future. Moreover, Australia is strategically located to benefit from the shifting economic powerhouse in the world. It has sufficient access to the emerging Far East markets, which offers exceptional benefit in the contemporary world. Three Industries for Investment The Financial Industry The financial activities in the modern societies have continued to expand due to the quick flow of money across the world, enabled by globalization. For the last decade, this has been the fastest growing sector in most countries and especially the advanced economies where the service industry is the key driver of the economy. Some of the areas preferred in this industry include banking, real estate, insurance companies, and investment funds. Regardless of the field of investment, studies have shown that investors are likely to make more profit in this industry as compared to others. Investing in the financial services sector is also cheaper as it does not require a lot of initial capital. Most transactions in this industry are done digitally with minimal cost, and thus it is preferred by the investors when they start business overseas. The demand is also overwhelming because people and organizations across the globe are dependent on this sector for their daily money transactions. All forms of trade are now realized with the help of financial services; hence, this market is expected to endure for many more decades. The Mining Industry With the current increase in human population and economic growth in most nations in the world, the demand for consumer items continues to rise. Some of the commodities in highest demand today are electronics, such as phones and computers, which are made using rare minerals. These minerals, which have become more valuable in the 21st century, include Colton, Cassiterite, gold, nickel, and copper among other. The demand is expected to skyrocket soon as the need for electronics is rapidly increasing, while the supply of raw materials remains the same. Additionally, other natural resources, such as oil, gas, iron ore, and coal are also very valuable in the modern society, where most people use electricity and drive cars. They will continue to be in demand because third world countries in Asia and Africa are now emerging markets with a high potential of consuming more commodities. Every investor should thus focus on entering this industry, as it has a great future of success in this technological world. The Tourism Industry As people become more financially empowered, they pursue their childhood dreams of wanting to travel around the world. This phenomenon is common across the globe and that is why there are millions of tourists traveling to different countries annually. With the increase in globalization and political stability, it is expected that more people will visit foreign countries for leisure. It is thus reasonable for any investor across the world to think about investing in this sector. Justification of These Industries for the Australia Market The industries cited above will succeed in Australia due to the current environment, which encourages the growth of these sectors. First, the financial sector in Australia is the biggest in the country based on stock market capitalization and one of the most stable in the world. Its four largest banks are ranked in the top 50 safest banks globally, an indication of how important this industry is to the country. The sector also offers most employment opportunities and highest employee salaries, and thus it is a critical sector even in the political sense. Concerning its significance, it is presumed that the state will maintain reasonable regulations of the market to ensure that it continues to serve Australia for a very long time. Thus, investing in this industry is a right decision for any investor. Australian mining industry provides some of the rarest minerals and natural resources in the world, which are in high demand. They include Colton, gold, oil, gas, copper, and iron ore, some of which have not yet been extracted. With its open economy, Australia will continue to accept foreign investors with intentions of investing in this industry. Australian laws concerning mining activities are also friendly, which is an encouragement to join the industry for long-term success. Finally, the tourism sector is an excellent place for investment as it attracts millions of foreigners each year. Based on the 2016 statistics, 8.1 million tourists visited Australia. The local population is also very adventurous in their domestic tourism accounting for 73 percent of the total tourists in the country. The industry produces 3 percent of the country’s GDP and employs over half a million people. Each year this sector is growing by over five percent, and thus it is a good venture investment for foreigners. Conclusion The above review has provided a market analysis on why Australia is the best country for foreign investment. The state has a long-standing political stability that is democratically driven, welcoming social indicators, and promising economic statistics, which shows an excellent future for investors. Tourism, finance, and the mining industry have also been selected as best areas of investment due to the current changes in individual income across the world and advances in technology. These industries are also market leaders in the Australian economy thus making them perfect for foreign investors. 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Comments (1)

  1. mary

Thank you very much for sharing such a useful information. I will definitely share this with others.
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