March 24, 2017

Could touring China transform your agribusiness?

This May 13-23, I will be leading NAB’s Agribusiness China Tour 2017. If your business involves cattle, sheep or wool, I encourage you to consider joining me.

Why visit China at all?

It will come as little surprise to hear that China is Australia’s largest agriculture export market overall, as well as its largest market for everything from dairy cattle to wool, hides and skins.

What might be surprising is just how dynamic the Chinese market is.

In 2010 and 2011, China purchased $5 billion of exports from Australia’s agriculture, forestry and fisheries industries. A mere five years later, that figure had doubled to $10 billion.

Yet last year Australia went from owning the largest share of China’s imported beef market to being surpassed by Brazil. It was due to several factors but a major one was that the Chinese, with the stroke of a pen, granted Brazilian beef plants market access.

Post-ChAFTA there are enormous opportunities for Australian agribusiness – but there is also enormous competition for those opportunities. Not to mention a fluid regulatory and commercial environment that needs to be skilfully navigated. Our tour will provide the window to gain in-depth knowledge of the China market, along with better understanding of these challenges.

What’s so special about the NAB tour?

Chinese place a lot of emphasis on face-to-face meetings as a first step in building mutually beneficial business relationships. I’m often surprised by the number of exporters who have never visited China and always encourage them to take advantage of any opportunities to go there that arise. The NAB tour has the advantage of a disciplined focus combined with deep access. It has been designed specifically around the needs of beef, live cattle, sheep and wool producers, with an itinerary structured around an in-depth exploration of the value chain of these commodities.

Which brings me to the issue of access.

As well as being Australia’s largest agribusiness bank, NAB was the first Australian bank that entered the China market. It now has branches in Beijing and Shanghai that service many of Australia’s largest exporters, agricultural and otherwise. The NAB tour includes visits to Alibaba Group, the world’s second-largest e-commerce player, Shandong RuYi, the textile manufacturer that purchased Cubbie Station in 2013, COFCO, China’s largest food processor, manufacturer and commodity trader, and the Agricultural Development Bank of China.

While the trip will involve stops in Shanghai and Beijing, much of it will be spent in the country’s agricultural heartland. Out in regional China, tour members will explore wool processing plants, live cattle processing facilities, meat processing companies, sheep and cattle farms, feedlots, yarn-making factories and hypermarkets. Those on the tour will also meet with in-country representatives from industry groups including the China Animal Agriculture Association, Austcham, MLA and Austrade.

The ROI you can expect

On past tours, some NAB clients have benefited through signing supply agreements or attracting Chinese investment capital. While such outcomes aren’t uncommon, neither can they be guaranteed. What is certain is that those on the tour will:

  • Comprehend the supply chain. Gain a more comprehensive understanding of how the supply chain that their business is part of operates. This often prompts lucrative insights on how to value-add.
  • Better understand what the market wants. Australian agribusinesses often produce first and worry about selling later. This tour provides plentiful opportunities to talk to Chinese processors, wholesalers, retailers and consumers about what they want. You can then develop an appropriate business strategy in response to that needs.
  • Learn from the Chinese. As the likes of Alibaba, Baidu and Lenovo demonstrate, Chinese companies are now setting trends rather than following them. Plus, Chinese businesses are frequently several times larger than their Australian equivalents. So, for example, an Australian cattle farmer with ambitions to increase his herd from 15,000 to 60,000 will have the chance to learn from his Chinese counterparts how to operate at that kind of scale.
  • Strike up useful relationships. Paradoxically, although China is undergoing rapid and enormous change it’s not a place where business relationships progress quickly. On this tour, my staff and I will spend a lot of time making introductions. This will facilitate Australian and Chinese businesspeople exploring how they can work more closely together. By having those meetings, then cultivating relationships and building what the Chinese call guanxi, you can possibly lay the groundwork for investment opportunities or contracts for the future.

See you there?

As many business people have learnt the hard way, China, like agriculture investment, demands a long-term strategy and a degree of cultural sensitivity. Given the encouraging results of past tours and the growing clients’ interests amongst our network for China’s agriculture sector, I look forward to the upcoming tour being a worthwhile and value-add to our clients and our industry. I hope to see many of you on it.

For more information on NAB’s Agribusiness China Tour 2017, talk to your local agribusiness banker.