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Tim Harcourt
Chief Economist
Australian Trade Commission
Sydney
www.austrade.gov.au/economistscorner
5 August 2008
| Fast Facts |
- China is Australia’s number one trading partner (worth over $58 billion) exports, the number two source of imports (after USA at just over $30 b) number two export destination (after Japan, at just under $28 b). (DFAT/ABS/World Trade Atlas)
- More than 4,250 Australian businesses now export goods to China, making China our 6th most important exporter destination (after NZ, USA, Singapore, UK & Hong Kong). (Austrade research)
- More than 3,000 Australian businesses have a physical presence onshore in China. (Austrade research)
- Approximately a third of SMEs (30%) who are not currently export to China are likely to start exporting to China within the next 5 years (Telstra SME survey)
- According to the Australian Bureau of Statistics, 90 per cent of Australian exporters are either small or medium sized enterprises (SMEs).
- Of Australia’s exporting small and medium sized enterprises (SMEs), 15 per cent now export to China.
- China is now the fourth most popular destinations for Australians SMEs to export to, behind New Zealand, USA and UK (Austrade)
- More Australian SMEs now export to China than the whole of continental Europe.
- According to the DHL Export Barometer, the majority of exporters believe that in the next 12 months China will be their number one market for growth. This is expected to continue for the following five to ten years (Austrade/DHL research)
- Services exports are also becoming important between China and Australia particularly in financial services, professional services (such as architecture law and engineering), education and tourism. (Austrade)
- In 1991 China was ranked 17 in terms of the number of passengers that travelled between Australia and China, with just under 1% of the share of total passengers. By 2007 China was ranked 4 in terms of the number of passengers that travelled between Australia and China, with just over 6% of the share of total passengers (Source: Qantas)
- Austrade now has 15 offices in the ‘Greater China’ market (Source: Austrade)
| You learn a lot from your children. And they tend to tell the truth so you know where you stand. For example, whenever Prime Minister Kevin Rudd appears on television, my four year old Chinese-born daughter Yun Shi says: “That’s Kevin, he can speak Chinese. But you can’t Baba. But that’s ok; I will be your teacher.”
But it looks like Yun Shi Harcourt is the not the only one impressed by the Prime Minister’s language skills in Mandarin. According to a new survey by Telstra, 42 per cent of all small and medium sized enterprises (SMEs) interviewed who are currently or intend to export believe that Australian Prime Minister Kevin Rudd’s ability to speak fluent Mandarin creates a more positive environment for Australian companies doing business in China
The Telstra survey also said that whilst many were largely unaffected by the 2008 Beijing Olympics, 16 per cent did however feel the Olympics would have a positive effect. With all the sub-prime talk around the survey also showed that SMEs thought that having a presence in China would cushion them in the event of a global downturn. Just over a quarter of companies who export to China now, thought the Chinese market to be pretty good insurance if things got rough elsewhere in the global economy.
This Telstra survey result on language is consistent with other surveys that show that business culture and language matters when Australian SMEs are engaged in exporting or investment off-shore. According to the DHL Export Barometer, 21 per cent of exporters said language was a major barrier to exporting, whilst 30 per cent mentioned different business principles and 29 per cent mentioned the regulatory environment as well as transport and logistics as impediments to further trade. That’s why assistance with language, business culture, principles and regulation is seen as a major reason why exporters seek government help off shore. Market access is one thing, but there are plenty of ‘behind the border’ barriers that Australian exporters need help with.
But despite the language barrier, the Chinese market is expanding at a rapid rate for Australian exporters. According to Austrade research over 4,250 companies now export goods to China and over 3,000 have a physical presence in the Middle Kingdom. Accordingly, Austrade now has 15 offices in Greater China to service the increased demand for Australian businesses looking to export to and invest in the Chinese market. And the Beijing Olympics is a good opportunity to get started – particularly given that our PM’s Chinese skills will be on display. In fact, Business Club Australia (BCA), a business networking club set up by Austrade to leverage the trade opportunities emanating from the Olympics, will be holding an extensive programme of activities at the Beijing Olympics in 2008. BCA, which was first set up at the Sydney Olympics in 2000, will provide opportunity for Australian businesses to meet their Chinese counterparts and give them access to the highest ranks of Chinese officialdom during the Olympic Games. The success of BCA at Sydney 2000, as well as at the Rugby World Cup in 2003 and 2007 and the Commonwealth Games in 2006, has yielded and estimated $1.7 billion in trade and investment deals showing that business and sport do mix.
So as Yun Shi pointed out, whilst we all can’t speak Mandarin as well as Kevin Rudd can (myself included), when it comes to the language of business, there are plenty of Australian businesses, large and small, doing very well in the Chinese market. The Beijing Olympics will provide an opportunity for more Australian businesses to get involved and we are likely to see more Australian trade action in China even as the Olympics are passed on from Beijing in 2008 to London in 2012. |
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