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South Australia - Leading the Country in China Engagement

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Australian Business Forum helps Australian SMEs and businesses to understand the Chinese market and refine their China strategy.

http://abf.events/
ABOUT THE PRESENTATION BELOW

Sean Keenihan, President of the Australia China Business Council, South Australia, introduces the state's efforts and successes in promoting Sino-Australian trade. Primarily through strategic engagement with its sister state, Shandong Province, trade delegations and Free Trade Agreements, South Australia has cemented long-term relationships at home and abroad that will steer it well into the Asian Century.

Originally presented at Australia-China BusinessWeek 2015 Adelaide

Published in: Business
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South Australia - Leading the Country in China Engagement

  1. 1. Australia China Business Week Sean Keenihan, President (SA Branch) 10 July 2015
  2. 2. 1 Introduction • We are currently at a high point in SA’s engagement with China • September 2014 – OzAsia festival – Shandong theme • November 2014 – FTA – tariff and non-tariff barrier relief across range of SA advantaged industries • May 2015 - 250 South Australians - broad range of industries and institutions plus all tiers of government – SA’s largest ever outbound trade and investment mission - to Shandong Province
  3. 3. 2 Intro (cont…) • By end of 2015 Chinese consulate and a branch of the Bank of China in Adelaide - plus the commencement of the FTA • In 2016 we celebrate our 30 year sister relationship with one of China’s economic powerhouse provinces that now refers to SA as their window into Australia • SA has set a new benchmark in Australia-China engagement - unique, focussed, structured and supported multifaceted engagement with Shandong Province
  4. 4. 3 Intro (cont …) • China is already SA’s largest goods export and import market – the largest market for our resources and agribusiness commodities • Already largest source country for international education and highest yielding international tourism market as well as highest source of business migrants • Next phase - broadening and deepening of SA’s engagement opening the door to two way trade in good and services, investment, R&D, training and sporting and cultural exchange in the immediate, medium and longer terms.
  5. 5. 4 How did we get here? • Where we find ourselves is no accident – combination of vision and strategy timed to impact at the intersection of significant need-demand-opportunity window • The driver? • SA businesses needed to be globally engaged and ultimately globally competitive – directly or indirectly • SA businesses needed new sources of capital investment, new export markets, competitively sourced business inputs. • Our comparative size and current scale of globalisation demanded a strategic approach
  6. 6. 5 SA’s China Strategy • The SA China Engagement Strategy aims to set out a planned and focussed approach to deepening SA’s bilateral relationship with China. • Partnership b/w SA Govt and ACBC SA • Align resources and effort to high value opportunities and targets • More SA businesses transition to a modern economy through long term, sustainable and mutually beneficial relationships in China.
  7. 7. 6 • Only a decade ago Australia’s trade with China was barely in double digits (now approx 25%) • SA’s trade with China at that time was largely companies sourcing from China, Universities building broad based education and R&D links and bulk commodities export... • ...then companies manufacturing in China, some export of value added goods, increase in services exports... • ...led to the initial wave of Chinese business migration, Chinese investment into SA – largely concentrated in resources sector – some property investment. Put this in context...
  8. 8. 7 Strategy implementation – What have we seen? • Collaboration between industry and government to work on the implementation of the Strategy • Roundtables/forums/missions to identify our competitive strengths and opportunities • Investment in development of identified platforms and relationships • Education of and support for business by Govt and China focussed industry groups
  9. 9. 8 Strategy implementation – What have we seen? • Build up in our two way engagement activity – focussed on identified strengths • Leveraging of Aust - China national level advancements • Collaboration across and within government and industry to tackle challenges and deliver programs • Cultural, sporting, technical, R&D, govt to govt (state and local) and people to people exchange. • Focus on Shandong - our chosen gateway into the China market.
  10. 10. 9 Shandong – thriving coastal province – outward focus
  11. 11. 10 Almost 100M pop spread across 17 prefectures
  12. 12. 11 A growing economy – same size as Indonesia – 3rd largest in China $349.51 $957.15 State GDP (Billion USD) 2006 2014
  13. 13. 12 11 Airports Around the province 6 Coastal Ports and 239 10k-ton Berths 252.8km of Highway & 4994km of Expressway 1425 Freight Depots 5,149km Railway Connects all cities -freight and high-speed 8.5% growth forecast for 2015 – midst of economic transformation
  14. 14. 13 China’s transformation – a reminder • Shandong is a key player in China’s economic and social transformation • China is in the midst of the largest urbanisation in the history of civilisation – the rise of China’s aspirational middle class is the growth story for the world economy in the short to medium term. • China’s transformation is now entering the phase of consumption led growth – China’s new economic drivers aligns with SA’s economic priority sectors and the scale of the opportunity our growth targets
  15. 15. 14 Conditions ripe to ramp up trade and investment activity • Hence concluding the China Australia Free Trade Agreement has been a federal government priority. • The visit of Chinese President Xi in November last year brought Australia to the forefront of Chinese thinking. • The coming into force of the CHAFTA and the commencement of tariff relief will put Australian business on level footing with key competitors for the China market. • China’s new economic model, the rise of its middle class and the levelling of the playing field for Australia business combined with the fall in the AUD$ means conditions are ripe
  16. 16. 15 Resources and Agri • Resources – despite global economic slowdown, China remains and will continue to be one of world’s largest consumers of minerals and Australia’s key export market. • Opportunities emerging beyond iron ore and coal good for SA - also looking up the value chain for trade and investment in resources. • Agri - ABARES – by 2050 China will account for one third of global agri demand. NFF estimates that agri exports will double to 100bn in value by 2030. • The real story for SA producers and food businesses is the growth in non-commodity food and bev exports – a pointer is the 12 month growth in SA meat exports from SA to China – up 36% • ChAFTA achieved big wins for the competitiveness our agribusiness, food and bev sector
  17. 17. 16 We already seeing m-class driven growth? What is it about our offering? • Growing middle class is also driving rapid growth in Australia’s education and tourism exports to China • Chinese business migration to Australia is also growing strongly. • Why? Federal Government Trade Minister Andrew Robb: “... middle class now seeks higher living standards and affluent experiences – intl travel, premium food and wine, blue sky and golden beaches, western brands, world class education and unique, high end leisure experiences”
  18. 18. 17 Services exports and business migration • Education – forecast 30% increase in intl students enrolments by 2020 – forecast $20bn to Aust economy – Chinese students represent 40% in SA • Tourism – 100m outbound Chinese tourists last year – estimating 200m within the decade – Australia’s largest foreign market - SA’s highest yielding intl market – primed for ‘supercharged’ growth. • Business Migration – the overwhelming majority (two thirds) of business innovation and investment visas are granted to Chinese business people.
  19. 19. 18 Trade in goods and services leads to investment • Movement in goods and people builds the business case for investment as savvy Chinese state and private owned enterprises look to come up the value chain. • Property - $12.5bn invested into Australia last year – doubled on previous year – next biggest investor is the US @ just over $5bn • Overall investment into Australia from China broadly on a par with Chinese investment in the US over the last decade.
  20. 20. 19 The broader services sector discussion – we are only at the beginning • China’s new economic model is based around the rapid expansion of the services sector and a greater role for the private sector. • The ChAFTA provides first-in access to Australian firms to China’s growing services sector • China is already Australia’s top market for education and international tourism export revenues but the broader discussion on services is only really just starting
  21. 21. 20 Health, Ageing and Innovation • Health – China’s health spending forecast to grow to $1 trillion in 2020 – from pharmaceuticals to medical products to consumer health – world’s fastest growing market • Ageing - with China’s population rapidly ageing there is huge, latent demand for services in the senior living industry – from regulation to design to construction and through to management of facilities and programs for senior living. • President Xi in 2014 : innovation is the most imp driving force for economic development in China. • Research – Aust is already China’s 4th biggest and China is Australia’s 3rd biggest research collaboration partner
  22. 22. 21 South Australia’s China Strategy • Given our State’s growth targets, economic priorities and measures, China is a critical market – but competition is intense - SA companies individually don’t have a lot of weight to throw around or strong, longstanding connections to immediately leverage. • This has required government to step in and lead SA’s engagement with China in partnership with industry, institutional and community organisations – and now local government. • SA’s China Engagement Strategy – a framework for multifaceted engagement to ultimately advantage SA SMEs in the China market.
  23. 23. 22 SA approach to opening doors for business has been unique among Australian States in that: • Focussed and consistent – talk of friendship and respect backed up with tangible action and effort – consistent, clear, and differentiated narrative – we each have much what each other needs to transform and ensure prosperity • Multi-dimensional with cultural, sporting and now local government exchange and engagement to complement economic and institutional exchange . • Comprehensive – mirroring the profile of the Australia- China bilateral relationship – 8 separate streams of dialogue in recent Shandong Mission
  24. 24. 23 SA’s unique approach (cont...) • Structured and supported – recognising that by working together and pooling expertise and resources we can have greater impact • Timely – in that we are the first, large, state based business mission into China post CHAFTA signing - front of mind as the tariff and non tariff barriers start to come off in the near future • Scale and Quality - commensurate with the challenge before SA right now and the opportunity presented by our unique relationship with Shandong
  25. 25. 24 Where to now for my business? • So beyond the CHAFTA and the A$, significant cultural, technical and people to people exchange has laid a substantive and unique foundation of two way understanding, respect, friendship and trust. • How do I make the most of this opportunity?
  26. 26. 25 ACBC SA membership brings: • the latest trends in China engagement, • case studies, • thought leadership and expert opinions, • support programs, • business education; and • networking events.
  27. 27. 26 ACBC SA committed to: • continuing to work in partnership with SA Govt, Local Gov and other chambers and industry groups • providing targeted support and opportunitiy for our members to better engage with China – investment, export, import • representing industry to position SA businesses to advantage in their China engagement • If being ahead of the pack in China engagement interest you – join ACBC
  28. 28. 27 Where to from here? • The time is ripe – it’s all before us – low $A, ChAFTA environment, China growth model, Shandong relationship high point and established platforms • We’ve seen how collaboration, cooperation and quality engagement brings results – and that is SA’s strategy. • While we are at a high point right now in terms of the State’s engagement with China, if we continue to collaborate, cooperate and drive excellence in the standard of how we engage the best times are very much ahead of us.

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