Expanding a Business in Austria
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Austria Entering the Market
Why is it such a good idea for UK businesses to consider exporting to or expanding to Austria? Nestled in the heart of Europe and surrounded by eight different countries making up its boarder, it is often thought of by international investors as a central distribution point for the rest of Europe. Austria's population is growing towards eight million people and with this there is an increasing workforce. It has a fantastic infrastructure and compared to other EU member states, it has invested financially more in its telecommunications infrastructure. With industrial productivity of output per man-hour increasing by 50% in recent years, it is continuing its high level and is up there with the best. Austria is ranked 9th among 57 industrial countries for its economic stability and enjoys a vibrant relationship between business managers and its labour work force. There is the right business environment to expand, license or incorporate a business in Austria.
What's the Attraction for UK Business?
With a positive attitude and relationship with the UK, many Austrians speak English, making it a great country for UK businesses. Its close enough to the UK to make it easy to travel to on business trips or even move to when your business takes off. Austria has been ranked in the World Competitiveness Yearbook for its quality of life, which of course cant be a bad thing if you are setting up a business in Austria.
Market entry and start up considerations
Austria is a successful market in the EU. Its geographical location makes it a good centre for investment in the local market and in the developing markets of Central and Eastern Europe. The country has a population of just over 8 million and one of the highest per capita incomes in the EU, yet enjoys the lowest numbers of days lost due to strikes and has Europe's highest productivity growth rates. Its historic relevance to the area has made Austria a natural conduit for investment in Central Europe, where it is the largest investor on a per capita basis, and is likely to head inward investment league tables in Croatia, Slovenia, Slovakia, Romania and Bulgaria. This relationship has allowed for the development of over 15,000 joint venture between Austrian and Central and Eastern European firms.
There are several ways of entering the Austrian market. One option is to export directly to the Austrian market. Dependent on industry sector, it might be advisable to find a local partner (especially for products/services requiring customer service) but it is not automatic necessary.
Another possibility would be to appoint a local distributer which will provide a direct access to the Austrian market including all market knowledge.
In Austria personal relationships are very important. This requires an investment primarily of time and personal presence. Likewise, product training for the agent's workforce is essential, as are regular updates on developments, modifications, competitor activity etc. Therefore regular visits to the market, especially during the early phase, are an important part of a successful interaction with the agent/distributor.
When setting up a local branch one should bear in mind that even though Austria is part of the European Union, there are differences in setting up business to the UK.
One option to enter the Austria market is to purchase an existing Austrian company. Finally companies can also form a joint venture with an Austrian company or work under an Austrian licence agreement.< /p> Most British companies who decide to establish in Austria, including those in the service sector, do so either by founding a 100 per cent subsidiary or by taking over an Austrian firm. Setting up a business in Austria is physically very easy. There is plenty of office and industrial space available, both for short and long term let and serviced office facilities are available.
There are however certain legal restrictions which need to be overcome where the intention is to found a company on a permanent basis. Apart from the requirement to register the company that also involves the need to pay surety to the government, there is also the need to satisfy Austria's strict "Gewerberecht". These laws lay out the professional requirements needed by business in order to operate on the Austrian market. In certain areas, for example telecommunications, engineering and building, it is often easier to ensure that the head of the business is an Austrian national with the appropriate qualifications rather than attempt to have UK or other non Austrian qualifications approved, which can be a lengthy process.
No matter which option is most suitable for entering the Austrian market, companies should bear in mind that even though Austria is a western European country and a member in the European Union, there are differences in law as well as differences in culture and business etiquette. When entering the Austrian market, getting as much information as possible in advance is essential.
The main industrial sectors that have been identified as potential sectors for UK companies expanding a business in Austria are:
- Clothing and footwear its not just the French and the Italians who want to look good anymore. The rest of Europe is catching up on the style front and now they cant wait to look fantastic and feel good about new trends. As the demand for Germany and Italian goods decline, UK businesses can step in.
- Telecommunications who would have known two decades ago wed all be carrying a mobile phone. Thank goodness we dont have to carry the battery around with us like an extra brief case! Telecommunication is a huge business and shows no signs of slowing down. Mobile phone penetration is 83% and all five operators offer a 3G service.
- Food and drink with world wide travel becoming available for more and more people, our taste buds have been exploding while experiencing foreign foods. There is potential for specialist foods, ethnic flavours and convenience foods. There is also shown growth in the frozen food market and private label products.
- Gardening equipment and pet care products its becoming more popular with Austrians to turn their gardens into their own havens while enjoying their leisure time with their pets, and who can blame them. Sounds like a very blissful way to spend leisure time and money.
With the main cities of Austria spread throughout the country and connected by an excellent infrastructure there are several locations that can be considered when setting up a business in Austria, such as:
Challenges Foreign Companies Face
Starting up a business in Austria is a scary challenge for anyone. Austria has many benefits to it, but like every country also has its pitfalls. Before expanding a business in Austria, it is important to fully research your area of expertise and decide if it is potential market area that is growing.
Organisations that can assist with Entering the Market
Need to register a company or setting up a company?
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.
ABA – Invest in Austria, the national investment promotion agency, is the first contact point for foreign companies interested in establishing business operations in Austria
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 145+ countries around the world.
Do you need advice from an expert in your field, on the ground? Need help finding the best route to market for your product or service?