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Australia's strong R&D record has received another major boost with one of the world's largest companies moving its entire R&D division to Australia.

The Kellogg's Company is relocating its research and development headquarters from the USA to Sydney, Australia. The move will see Kellogg's treble its investment in product innovation with the development of up to 30 new products per year for the UK, US, Asian and South Pacific markets. Historically all Kellogg's R&D work had been conducted at the group's Michigan headquarters in the USA.

"Most companies in the food industry are contracting or not investing. We're doing the opposite,“ said Kellogg's Australia Managing Director, Michael Bracka. "Kellogg's has recognised that markets are different, consumers are different and business are different. We can take knowledge from around the world and implement it here.“

Kellogg's has recognised the advantages in conducting R&D in Australia, including an abundance of natural resources, and flexible and skilled workforce, which in some industries make the Australian environment 50percent more cost effective than the USA.

Currently new products make up eight percent of Kellogg's sales, up from five percent last year, and it is expected that the Sydney plant will be the driving force behind increasing the share of new products to 20percent of total sales. This will be done on the back of Kellogg's stated aim to triple R&D expenditure from 2001 to 2004.

"We are delighted that Kellogg's Company has brought their R&D to Sydney,“ an Invest Australia spokesman said.

The move reinforces Australia's record in attracting foreign direct investment. In 2002, global foreign direct investment (FDI) inflows to Australia more than tripled to US$13.9 billion. This outstanding performance was all the more remarkable against a 17percent decline in global FDI flows to Organisation for Economic Co-operation and Development (OECD) countries.

Australia not only recorded the fastest growth rate (250percent last year) of FDI inflows among all OECD countries, but also one of the largest in terms of per centage of Gross Domestic Product among all major economies, increasing to around threepercent over the period.

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