China Business Forum
Message from the Hon Paul Papalia CSC
Minister for Tourism; Racing and Gaming; Small Business; Defence Issues; Citizenship and Multicultural Interests
I welcome you to the inaugural China Business Forum. Convened by the Perth USAsia Centre, in partnership with the State Government, this Forum will explore opportunities and strategies for Western Australian businesses to engage with the opportunities offered by the Chinese economy.
Western Australia’s business relationship with China is deep and longstanding. Built upon the foundation established by the State’s world-class resource sector, our economic ties have expanded to include the agro-food, tourism, education and service industries.
The Chinese market presently accounts for almost half of the State’s $133 billion of exports, reflecting the importance of the trade relationship to both Western Australia and China. This relationship is now entering a period of transformation. As China’s economy matures and shifts towards consumption-led growth, new opportunities are emerging across a range of service and consumer-oriented sectors. Western Australia’s proximity, relationships and complementarity with China mean it is ideally
poised to participate in these markets.
The Government of Western Australia has identified China as a key partner for the state’s next phase of growth. Opportunity sectors include the tourism, education, agriculture and technology
industries, which will be key drivers of our agenda to create 150,000 jobs, including 30,000 in regional areas, by 2023-24.
These opportunities are particularly important for Western Australia’s small and medium enterprises (SMEs). New trade arrangements – including e-commerce, digital supply chains and cross-border services – have greatly lowered the barriers for SMEs to participate in China’s emerging services markets. But to fully benefit from these opportunities, businesses need a sound understanding of the contemporary Chinese business environment.
The inaugural China Business Forum will help Western Australia businesses to understand the opportunities presented by China and to develop new China trade and investment partnerships. Bringing together local businesses, policymakers and leading China experts, it will explore contemporary business opportunities in China and the strategies required
The China opportunity for Western Australia.
The opening panel discussion sought to frame what new commercial opportunities exist for WA businesses engaging China, in the context of both China’s new growth trajectory and recent developments in the broader Australia-China economic relationship. It is well known in WA and in China that WA is a secure and reliable international supplier of minerals and resource commodities. Over recent decades the quantity and quality of WA exports to China, in iron ore and increasingly in LNG, has been of great benefit to both partners. This has been enabled and accompanied by increasing levels of Chinese foreign direct investment into WA. The panel noted that for the WA Government and the state’s business community, a priority is to diversify the drivers of WA’s economic development. As China’s economic growth is further fuelled by consumption and services, complementary opportunities exist for WA particularly in the education, tourism, advanced technology and agricultural sectors. Across these sectors there are opportunities for both small and large WA businesses to build new lines of economic engagement with China.
The panel raised a number of challenges facing WA in attempting to capture these opportunities. For one, Adam Handley noted that the level of Chinese investment into Australia, of which WA has traditionally been the first port of call for Chinese capital, has dipped in the last few years. Handley stated that there hasn’t always been a clear picture in China of the Australian regulatory framework for investment, and that while the vast majority of applications are approved it is the small number of high-profile rejections that garner attention. Khoon Tan said a challenge facing WA was a gap between the cultural literacy requirements to do effective business in China, and WA’s capabilities in this area. This extended to the need to better understand both China’s legal system and its languages. Insofar as Chinese perceptions of WA are concerned, Director-General Brown said WA needed to work harder to overcome an image of being simply a small mining town. Bonnie Lin argued that in order to do this, WA needed to sell itself better, promote its capabilities better and more clearly articulate what investment opportunities existed.
The panel was in accord that WA needed a new plan to engage China, focused on building essential business and political relationships, driving greater levels of connectivity and knowledge, and targeting an uplift in service-based trade. On connectivity, Professor Flake probed the economic benefits of direct flights, which were unanimously supported as essential to increase two-way student, visitor and business exchanges. Director-General Brown said the WA Government was working hard to secure more direct flights between WA and China. On marketing and branding, a commitment to re-brand WA as a state with value-propositions beyond mining was essential to ensure broad investment and trade opportunities are identified and realised. On this, both government and business panellists stated there was a key role their respective sectors needed to play. In closing, an essential precondition for WA businesses to build long term relationships with China was simply to go there and invest time experiencing China. Both the WA Government and the business chambers said their organisations could provide assistance.
Becoming ready to do business with China.
A common thread throughout the China Business Forum was that individual relationships underpin successful Australia-China business stories. This panel discussion focussed on how SMEs in Western Australia can prepare to enter the Chinese market. The first step is for Western Australian businesses to recognise they are competing on an international scale with other businesses from Europe, North America, and elsewhere in Asia that are trying to capture a part of the Chinese market. Speakers emphasized the need for WA SMEs to distinguish themselves from others by enhancing their “soft” cultural skills, understanding Chinese culture to the extent they can leave an impression on potential business partners and conduct effective negotiations. Careful selection and cultivation of a suitable business partner in China is the best way for an SME to navigate the inevitable on-the-ground challenges of international business.
Speakers discussed some of the realities of doing business in China. The country’s population size, linguistic and cultural diversity means SMEs should make an effort to narrow their focus on a segment of the market. Andrew Wei-Min Lee made the point that three major “supercity clusters”, like the Guandong-Hong Kong-Macau Greater Bay Area, support a significant part of the Chinese economy. Capturing even one area like this is a market size of up to twice the population of Australia. A key characteristic of the Chinese political system is long-term economic planning and Bing Liu from ICBC advised SMEs to stay up-to-date with government economic policy. Being able to complement government economic objectives is an important component of business strategy in China. Jean Dong from the Australia-China Belt & Road Initiative highlighted the opportunities for WA firms alongside the Chinese Government’s plan to advance infrastructure and connectivity in Asia.
WA has a strong foundation from which to advance its business interests in China. Positive perceptions frame Western Australia’s business outputs: high-quality wine, meat, minerals and a safe, clean environment. Speakers warned WA governments and SMEs to be prepared to counter negative narratives that can undermine perception of WA products. This risk can be managed by diversifying the range of WA business interests in China; first within the sector which it has a competitive advantage: resources. Bing Liu suggested natural gas has the potential to become an important export commodity and its growth could benefit all SMEs supporting natural gas development. Outside of resources, promising service exports include financial and legal. WA has agricultural produce that could find a lucrative market in China because the government is seeking trade partners from which it can source quality products that promote health and wellness among its people.