China’s economy is changing; the focus on export and investment has shifted to the domestic consumption of an exploding middle class.
In recent decades China has seen some 500 million come out of poverty, something unprecedented in human history.
There are also estimates the middle class will be heading towards a billion within 20 years.
This growth will drive incredible consumer demand and open up new opportunities for Australia across so many areas compatible with our strengths; the things we do as well as any and better than most.
While China is our largest trading partner, with two-way trade reaching $130 billion last year, there is great scope to deepen our relationship well beyond our import of Chinese consumables and the export of our natural resources.
For example, in terms of foreign investment into Australia, China is not in our top 10, although Hong Kong ranks six, nor is China in our top 10 for Australian investment abroad.
Make no mistake, competition for trading and investment relationships with China is fierce from across the globe and we can assume nothing.
In April, I will lead a major, 600-strong business mission to China, as part of Australia Week in China, which will also involve our Prime Minister Tony Abbott, as part of a broader north Asia visit.
Industry-themed events are planned across a range of sectors that are well placed to do business with China in what will be perhaps our largest mission of this kind.
It will send a powerful message that Australia is indeed open for business.
Choices reflect strengths
The sectors we have chosen reflect our commitment to back our nation’s strengths. They encompass agribusiness, mining equipment, technology and services; education, health, tourism, food, beverage and consumer services, including luxury goods and fashion; financial services, built environment, including urban planning and architectural services, and more.
This will be the century of food and water security and Australia, for instance, has a window of opportunity to further leverage our strong reputation in China as a “clean, green” food producer.
By competing at the high-quality end we can help meet demand from the burgeoning Chinese middle class. Australian wine for instance, which of course has a world-class reputation, has enormous potential for export growth in the markets of Asia.
Tourism Australia will also have a strong presence during the mission promoting Australia’s business events and conference capability.
China is our fastest growing and highest spending inbound tourism market, worth $4.7 billion in 2013 and is expected to grow to between $7.4 billion and $9 billion by 2020. Our business events sector is already a considerable part of this, but the market has great future prospects.
Similarly, our international education sector is firmly established, with international students from China contributing almost $4 billion to our economy in 2012-13.
Tourism and education competitive
Tourism and education are examples of where Australia competes very effectively with the likes of the United States and Europe in the Chinese market. The business mission won’t just take in the well-trodden centres of Shanghai, Beijing and Guangzhou but also high growth regional cities such as Chengdu.
Many major Australian companies are doing great things in China and serve as examples to others looking to either do new business or expand existing activities.
The preliminary findings of a government sponsored survey of 2000 Australian companies however found that when asked about the challenges of doing business in China, 62 per cent identified a lack of information on local culture and business practices as major challenges.
Complexities around local regulations, customer payments, licensing, permits and product standards also present challenges. Tariffs, quotas and import duties again, were barriers to maximising our business.
Most popular target
In the same survey, China was the most popular choice for international target markets in the next two years, selected by 20 per cent of companies as their most important future market.
The mission will prove invaluable in providing access to the very best market information, local knowledge, insights and all-important contacts, which can result in strong leads and new opportunities.
It is here that the “badge of government” works effectively on behalf of business to open up doors.
The level of support for Australian business from within China has never been stronger. Austrade has thirteen points of presence across the country and can provide advice, information and real commercial opportunities to assist in tackling the challenges identified by our business community.
The government continues to actively pursue a free trade agreement with China, with the aim of concluding negotiations – which commenced back in 2005 – as soon as we can.
Through this we are seeking to tackle the types of barriers identified by business.
The upcoming mission offers Australian business a golden opportunity to present its wares to China, an economy that offers so much potential… I encourage you to join me.
- Trade Minister's Office: (02) 6277 7420
- DFAT Media Liaison: (02) 6261 1555