Chafta takes fear out of doing business with China

ChAFTA takes fear out of doing business with China
All the talk of job losses in Australia to Chinese workers is a huge distraction from what ChAFTA is really about. In fact, the jobs’ scare campaign seems to be missing the point.

While freer Chinese investment into Australia is undoubtedly a good thing and the next step in Australia’s foreign investment story that began decades ago, the true benefits of ChAFTA are the new jobs it will help create for Australian businesses in Australia and those operating on the ground in China. Accessing a huge market, bigger than anything seen before, gives Australian companies the chance to take their business to another level.

For some years Australians have been disadvantaged in China as nations such as Chile and New Zealand gained the advantage with their own trade agreements. We now have a platform for jumping ahead of our rivals in this huge and exciting market.

The impact of the emergence of China on the resources sector is an object lesson for all Australian companies in all industries. The job growth in mining was a direct result of China’s demand for our product.

1442454993305

Montague Cold Storage is moving to take advantage of ChAFTA as the agriculture boom takes off.
For Australians doing business in China, ChAFTA is seen as a major breakthrough and was greeted with much enthusiasm. With the finalisation of the agreement in late 2014, and its signing in Canberra earlier this year, tangible benefits have already begun to flow, even before it’s in force.

CEO and founder of Freedom Road Travel David Keir for example quickly saw the appetite for dealing with Australian business in the halls of government in China change when the agreement was signed. Keir saw ChAFTA’s potential, and thanks to its signing, Freedom Road Travel is now the first100 per cent Australian-owned, Chinese locally licensed travel agent.

While other tourism industry operators have been registered in Hong Kong for some time, Freedom Road Travel represents the first in the new wave of Australian tourism industry operators ready to engage with the growing mainland Chinese middle class.

Developments like these say nothing of what ChAFTA can do once in force

Australian businesses are increasingly recognising the importance of Australia’s trading relationship with China. Organisations like the Toowoomba and Surat Basin Enterprise (TSBE) have established a presence in China this year, recognising that the future growth of a region relies on Asia, and in particular China. After taking steps to engage on the ground in China, their region and individual businesses within are benefiting.

Despite the focus on China’s wild sharemarket, and Beijing’s attempts to shift China’s economy to a “new normal”, Australian businesses are getting on with the job on the ground in China. In recent times we have seen strong China growth for Australian businesses like Blackmores, Treasury Wine Estates, and Elders – three businesses capitalising on the Chinese demand for safe, superior and uniquely Australian products.

But it’s not just Australian companies operating in China that stand to benefit from the increase in confidence stemming from ChAFTA.

SFHT.com has recently established an online pavilion showcasing Australian products to millions of Chinese consumers. The site is set to develop a platform for Australian “mum and dad” producers to sell direct to China, acting as a bulk buyer and taking all the stress and risk when it comes to logistics and supply chain management.

This is of course just one example of a Chinese business intent on introducing Australian suppliers to their millions of Chinese consumers. Australian businesses now have countless gateways to China through the long and growing list of Chinese e-commerce giants.

Shanghai, China’s “capital” capital is still the premier location for Australian businesses coming to China.

As a friendly platform for Australian businesses heading north to China, AustCham Shanghai, the largest community of Australian businesses in China and part of AustCham Greater China (with chambers in Beijing, South China, West China, and Hong Kong) has doubled in size over the past five years. This growth has only quickened since ChAFTA negotiations were finalised and the agreement was signed.

DELAY HARMFUL

For too long, trade with China has been seen as too difficult for many Australian businesses. With ChAFTA that no longer needs to be the case. From on the ground in China, ChAFTA takes much of the fear out of doing business with the largest market in the world.

The uptick in business confidence on the ground in China since ChAFTA was signed has been phenomenal and the potential is truly exciting.

The examination of the agreement by the Australian Parliament is a necessary and important process, however this should not delay tariffs being cut, new avenues for business being opened up, and new benefits flowing to the millions of Australians that will stand to gain.

To delay would hurt Australian businesses already operating in China, the countless Australian businesses that can expand north. This is the most exciting market in the world and there are countless jobs for Australia if it grasps the opportunity and advantage that the ChAFTA has handed us.

This article originally appeared as “ChAFTA takes fear out of doing business with China” written by Peter Arkell for the Australian Financial Review on September 17th 2015.

Peter Arkell is the chairman of AustCham Shanghai and managing director of Carrington Day.

Source: Australian Business Forum – http://abf.events/chafta-takes-fear-out-of-doing-business-with-china/