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

1. Australia China Business Week
Sean Keenihan, President (SA Branch)
10 July 2015

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. 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. 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. 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. 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. 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. 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. 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. 9
Shandong – thriving coastal
province – outward focus

11. 10
Almost 100M pop spread
across 17 prefectures

12. 11
A growing economy – same size as
Indonesia – 3rd largest in China
$349.51
$957.15
State GDP (Billion USD)
2006
2014

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.