Key considerations for your business strategy into China
Considering doing business with China? Australia China Business Week, the most significant Sino-Australian business events of the year, kicked off in Shanghai last month ahead of upcoming events in Melbourne and Sydney. We reveal the insights shared by the Shanghai delegates.
In April, 60 delegates gathered at the first event for Australia China Business Week in Shanghai, ahead of upcoming events in Melbourne and Sydney – the most significant Sino-Australian business events of the year.
The events provide a unique platform for Australian businesses, especially SMEs, who are seeking a path to success in China, as well as Chinese entrepreneurs wishing to engage directly with their counterparts in Australia.
In the first of our two-part series, we share the key insights discussed at the Shanghai event in the lead up to next month’s event in Melbourne.
China: alive and kicking
China is going through a period of significant change as their economy begins the shift away from their traditional investment and exports led model to a more developed economy where services and consumption play a much larger role.
These changes are likely to present a number of significant challenges to China, particularly given the difficult global environment that has prevailed in recent years, but they will also generate just as many opportunities.
Some of the key reasons why it’s not too late to get involved:
- Over the next 10 years 200 million people are expected to move from rural areas to urban centres – this shift will require accompanying infrastructure to support larger urban centres, such as roads, housing, retailing and utilities.
- There is still significant interest in Australian produce: long-term access to food supply for an already bursting population that is also undergoing a change of diet is critical. Food safety is also an issue after several recent food quality health scares – Chinese consumers have a distinct lack of trust for locally produced staples like milk powder.
- Recent announcements reflect the continued improvement in relations between the Australian and Chinese governments. These include enhanced Chinese currency (RMB) conversion to the Australian dollar and mutual commitment to regular formal political discussions between Beijing and Canberra.
What does China’s investment strategy mean for Australia?
The Chinese government’s five-year plan is based on a three-pronged strategy: Going Out (outbound investment), Going West (developing trade and transport hubs in western China) and Going Green. For Australia, China’s Going Out strategy is of critical importance.
Chinese outbound investors fall into two key categories:
1) State owned enterprises: typically seeking strategic, long-term and complex investment.
2) Private investors: often wealthy entrepreneurs, concerned with diversification, secure returns and family succession opportunities.
Opportunities for private investors centre around:
- The expansion of China’s services sector.
- Premium consumers desiring luxury brands.
- Outbound tourism.
- Investment in food security and safety.
Being aware of the changes to the Significant Investment visa and how this may benefit a potential Chinese investor is also important.
Business migrants with $5 million or more to invest in the Australian economy can now apply for the visa, which provides a streamlined pathway to permanent residence for migrant investors who make a complying investment in Australia for a minimum of four years. For more information about the Significant Investment Visa visit immi.gov.au.
Australia China Business Week continues in Australia, with events in Melbourne on June 19 and in Sydney on August 28. Delegates will learn about opportunities for Australian businesses considering trading, importing, exporting, manufacturing/outsourcing and investing in the greater China region.
For more information and to buy tickets visit acbw2013.com.au. Enter the promo code ‘nabclient‘ to receive a discount available to NAB customers only.
Next week, we bring you part two of the Shanghai insights.