BIG RED WINES. BIG SURF. BIG, frothy beers. Big smiles on the friendly people. Australia conjures up a range of images, all positive, because this country inevitably scores high in any survey of Americans' dream vacations. But the news flash is that, right now, Australia is also beginning to score high as a place where Americans want to do business. Australia couldn't be located much farther from the mainland United States. For decades, it was roundly ignored even by businesses on the hunt for global opportunities, mainly because it seemed too remote and too small—but all that has changed. "Now is a great time for Australia," says Ben Thornley, an official with Invest Australia, the government arm charged with enticing foreign companies to set up shop Down Under. "Our economy is strong, and we provide a foothold into the Asia-Pacific market." Add up the pluses, says Thornley, and more U.S.-headquartered businesses are arriving at the conclusion that Australia is worth a closer look.

Fuel for the growth of Australia-U.S. commerce has been a free trade agreement (effective January 1, 2005) that, with the signatures of both heads of state, made 99 percent of U.S.-manufactured goods exported to Australia duty-free. Two-way trade between the nations is valued at $29 billion, and Australia is one nation where the U.S. runs a trading surplus (about $9 billion annually). "The free trade agreement fully opened up the Australian market to U.S. business," says William Primosch, senior director of international business policy with the National Association of Manufacturers, a Washington, D.C.–based trade group that lobbied hard on behalf of the treaty. "Australia had been a country that was overlooked, but its economy is going full guns, and now U.S. businesses are taking notice." The upshot: Literally tens of thousands of U.S. companies, big and small, have taken steps to do business in Australia—or, at the very least, have started to brainstorm their to-do lists for successful trade on the other side of the globe.

In some cases, too, Australian businesses are the ones courting U.S. partners. A case in point is Atlanta, Ga.-based Afterburner, a training company that puts on workshops rooted in lessons learned from combat fighter pilots. "We weren't looking for a partner in Australia. They contacted us," says Jim Murphy, Afterburner's CEO and a one-time F-15 pilot in the U.S. Air Force. In the States, all of Afterburner's seminar leaders are former American military pilots; but in Australia, they are Royal Australian Air Force veterans. What may surprise you is that, according to Murphy, most of Afterburner's pilot-based teachings—which revolve around executing in a rapidly changing environment—export well, particularly to Australia. "Our Australia distributor is our leading global business unit," says Murphy, who adds that Afterburner also operates in Canada and the U.K.

However, easy entrée is the exception. Most American companies seeking top-line revenue growth that head to Australia, as well as the ones who already have planted flags Down Under, have learned a few hard lessons along the way. The mantra imparted by all: Go, because the opportunities are real, but understand that "this is a different market. It is not simply a smaller version of the United States," says Gerry Tucker, director of sales in the recently opened Sydney, Australia, office of Proofpoint, a developer of enterprise messaging security tools. Local nuances are ignored at a company's peril.

The other reality about Australia is its size: It's a huge country, about as big as the continental U.S., but with a population roughly equivalent to New York State's. "There are a number of business centers with quite a distance between them," says Tucker. From Sydney to Perth, for instance, is about 2,500 miles. Incoming American executives often start out with a plan to blitz the leading Australian business centers, including Brisbane, Canberra, Adelaide, Hobart and Melbourne. Once the reality of the distances involved sets in, most executives either double the amount of time they plan to devote to barnstorming, or they trim half the cities off their agenda.

Going with local talent

Compared to the hurdles in, say, India or Brazil, Australia offers minimal barriers to success. The proof lies in the many U.S. companies that are flourishing. Climax Portable Machine Tools, a Newberg, Ore.-based provider of onsite machining solutions, is a good example of surprising companies that are aggressively pursuing sales in Australia. Climax provides the necessary tools to fix objects that require repair, but are too large to bring into a machine shop, such as bridges (the company supplied key tools for the seismic upgrade of the Golden Gate Bridge in San Francisco), ships and heavy mining apparatus. The company started looking for export opportunities about six years ago, when Phil Bauder joined the executive staff as vice president of international sales, and Australia quickly surfaced as a prime market. It already had an established customer base for the kinds of solutions Climax provides, but there was no domestic market leader, just a hodge-podge of mom-and-pop operations.

That proved an irresistible lure to Climax, which turned to the U.S. Export Assistance Center in Portland, Ore., for help with tapping into Australia. Climax paid a nominal fee ($600) and, as part of its Gold Key program, the U.S. government helped the company identify potential Australian distributors. Previously, Climax had dealt with the same Australian contact identified by U.S. trade officials as their top choice—and things had not gone well. But the government official persisted, Bauder agreed to interview the candidate, and they clicked in person. Bauder gave him an exclusive to pursue the Australian market for his company, and the choice quickly emerged as solid. "He's become a top producer for us," says Bauder, who continues to visit Australia a few times a year. A market with as much potential as Australia is worth the travel time, he says.

Why didn't Climax simply set up shop on its own in Australia, without doing business with a distributor? All companies entering Australia must face the same decision. Bauder explains that when Climax closely examined potential business in Australia, "We saw markets that were fragmented and very spread out. It did not look easy to manage remotely. We decided we needed a representative who knew the key customers, who understood the market and who knows how Australians do business. We haven't regretted our decision."

At the cutting edge

A very different route to Australia was pursued by Avaya, a Basking Ridge, N.J.–based Voice over Internet Protocol (VoIP) developer spun off from Lucent Technologies. Avaya dates its start in Australia to 2000, when the company opened its first wholly owned office Down Under. Business has been strong ever since—revenues grew 22 percent from 2004 to 2005, notes Carlton Taya, Avaya's managing director for the South Pacific region. "Our business in Australia has thrived because Australia is a nation of sophisticated IT users who eagerly embrace new technology," Taya says. He adds that Australia is so cutting-edge that the country is frequently used by Avaya as "a test bed for new applications." The deal is sweetened by "the opportunity [that] exists to build stronger business ties into Asia, as Australia has well-developed regional ties and is in a strategic geographical position," says Taya.

Are there potential pitfalls for U.S. companies setting up shop in Australia? Taya comments on one possible trouble spot: "The Australian workplace is not as hierarchical as U.S.-based companies," and "workers tend to have a more relaxed attitude to work/life balance compared to their U.S. counterparts." Put more plainly: Just because the boss demands workers jump on a project right at normal quitting time doesn't mean they will. Where American workers will reflexively defer to authority, Australians might need more persuasion and cajoling.

Buying Australian

American companies are also on the hunt for Australian businesses to partner with or buy, with the intent of putting them on a global stage. Examples include the early 2006 tie-up of record company EMI America with Australia's Petrol Records, founded by Chris Murphy, one-time manager of INXS. The key to Petrol Records' appeal is that Murphy specializes in producing compilation albums organized around a theme, such as Roadtrip, a recently released album offering up a mix of songs by Neil Young, Joni Mitchell, Lou Reed and others. In Petrol's production, the songs are reinterpreted by younger artists. Whatever Murphy's alchemy, it works: The company has logged 141 #1 iTunes hits, making it a leader in mining the digital music market.

Where does EMI America come in? "Our goal is to expand the Petrol brand into the U.S. and Europe," says Ronn Werre, president of EMI Music Marketing. "Chris Murphy has developed a unique approach to compilations that we believe we can market to a broad audience." Adds Werre, "We have encountered no cultural barriers at all doing business with an Australian company. Australians love the United States."

Most executives agree that, in a world where anti-American sentiments seem to be on the rise, Australia is one place where Americans will still find the red carpet rolled out. But don't let it go to your head. Proofpoint's Tucker says that "In general U.S. companies are well-perceived. They are seen as leaders. However, they can also be seen as arrogant, due to a lack of appreciation of specific local market requirements. To do well, adapt to local conditions."

ROBERT MCGARVEY is a freelance writer based in New York.

Why Australia?

The Australian economy is roaring. With a population of 20 million (Canada's population is 33 million; the state of California's is 34 million), Australia has an economy on the move. The Australian government says it had the third-fastest-growing economy in the period covering 1998 to 2004 (trailing only Ireland and Luxembourg), and it is a nation with virtually no public debt (0.6 percent of the GDP, vs. 47.5 percent for the U.S., 61.4 percent for Germany and 81.2 percent for Japan).

It is also a good place to do business. By the reckoning of the World Bank, Australia is the fastest place on the planet to start a new business (it takes two days to satisfy regulatory procedures, compared to 71 days in India and a stultifying 203 days in Haiti). In a ranking of cultures and their openness to foreign ideas, Australia placed third (following Hong Kong and Iceland).

Right now, the Australian economy is bubbling with intense activity in mining (uranium deposits are especially rich) and biotechnology, says Ben Thornley, an official with Invest Australia, but the strength of the broad economy has triggered heavy demand for everything from telecommunications gear to cookware (Australia is in the midst of a flowering of Australian regional cuisine).

Even better, Australia is a significantly transparent nation, especially when compared to the other big economies in its region. "Foreign companies see opportunity in Australia. That is what is drawing them to the country," says Thornley.

—R.M.