With an over 1.3 billion population and a burgeoning middle class, China is offering tremendous potential for business across the world. Among others, its growing appetite for high quality products, along with the conclusion of a Free Trade Agreement last November, presents enormous opportunities for Australian SMEs. However, navigating the complexity of the world’s biggest marketplace can be extremely daunting and expensive.
Discerning the gap in the market, the NSW Business Chamber unveiled an innovative program Export Growth China late last year in a bid to provide export assistance for Australian SMEs.
The program, designed to provide businesses with a low-cost, low-risk export entry point, is a testament to the passion and creativity of NSW Business Chamber’s International Trade team. It is also the only chamber program that actively connects SME products and services with Chinese export opportunities.
“This initiative has been something the NSW Business Chamber has been working on for nearly three years. We led a trade delegation of Australian SMEs to Shanghai in early 2012, and were struck by how well other countries, including New Zealand, marketed themselves and their products,” said NSW Business Chamber General Manager, Paula Martin, who has been travelling between the two countries during the period, to facilitate the landing of the program.
“Our International Trade team has a long track record of helping Australian businesses achieve success in global markets.
The program is available to any business across Australia that is a member of a Local Chamber of Commerce. As part of it, a custom-designed showroom, equipped with large LCD screens, has been established at ShanghaiMart, in the heart of Shanghai’s international trading district, and will be officially launched in August.
“We are currently filling the showroom with Australian products, ready to be sold to Chinese wholesale buyers. Our staff on the ground in China are already proactively marketing Australian products and services to wholesale buyers, and providing real-time feedback on potential sales leads.”
Among others, Ms Martin highlights the great potential of services exports, thanks to the conclusion of the Free Trade Agreement last year.
“Many Australian SMEs are taking advantage of emerging markets in China for food and beverage, textiles and other manufactured goods; but there are also significant opportunities for services exports in financial services, environmental technology, education, tourism and leisure.
“The services industry in China is one of the fastest growing sectors across the board. With the impending FTA, China will be seeking Australian expertise in health care, aged care, financial and insurance sectors, which will reduce barriers for service-oriented businesses to enter the market.
“Australia is recognised for its intellectual capability, innovation and provision of long-term and successful service provision. China is seeking to gain knowledge and skills transfer, to equip their country with longer-term sustainable practices, as they face some of the most serious ageing population challenges in their history,” Ms Martin said.
An Initial Success
Although the showroom at ShanghaiMart will not be officially launched until August, the reactions to the program from both sides so far have been impressive.
“It has generated huge interest from small and medium-sized businesses in Australia, in a range of industries that would not previously have been considered export industries; from environmental consulting and video production through to sport coaching and child care services,” Ms Martin revealed.
Hard work of the team on the ground in China has also paid off. The marketing of Australian products and services to wholesale buyers, both in Shanghai and at trade shows in the cities of Zhengzhou, Tianjin, Hangzhou, Xi’an and Guangzhou, has received an extremely positive response to date.
In particular, there is very strong demand for high quality Australian manufactured goods such as sheepskin products, wool-based textiles, beef, wine and other food and beverages.
A case in point is a recent wine exhibition at the Hangzhou Wine Fair, in which NSW Business Chamber representatives showcased Australian wines. “The event had more than 200 wholesale buyers in attendance, and generated 20 firm sales leads for Australian winemakers Drayton’s Family Wines and Brothers in Arms Vineyard, which will now be followed up by our specialist trade advisors in Shanghai,” Ms Martin added.
Creating Low-cost, Low-risk export entry point for SMEs
For most small businesses, expanding business internationally involves many new challenges and has never been easy. Export Growth China provides businesses with a low-cost, low-risk export entry point by substantially reducing some of the key risks Australian businesses face in reaching the Chinese market, including: raising up-front capital; navigating language barriers and cultural differences; and finding reputable buyers. For just over $5,000, program participants receive:
- A comprehensive Export Readiness Report
- Product or service displayed in the Shanghai
- Showroom for a minimum of 6 months
- Mandarin product promotions
- Proactive buyer matching
- Product feedback reporting
The Export Readiness Report is a complete diagnostic tool developed by the NSW Business Chamber, to identify any areas for improvement and potential roadblocks which may hamper export success in China. As the starting point, experienced consultants would then analyse the information provided in the Report to identify an individual pathway for the success of a particular exporting business.
“If a product or service on display at our showroom in ShanghaiMart does generate interest from Chinese buyers, we will then work with the Australian business to facilitate individual trade agreements, so that they can retail their products throughout China. We will be there every step of the way and keep them updated on the interest in their products from the Chinese buyers,” Ms Martin explained.
“Our international trade experts in Shanghai will be able to provide real time advice – it might be that their labelling or packaging may need to be redesigned for the local market, or the size or ingredients of their products might need to be better tailored for the specific market.”
For an additional cost, NSW Business Chamber can provide further consulting services, including: advice on market entry strategies and planning; marketing and design; contract negotiation business; registration; translation services; and legal, financial and secretarial services.
Knowledge, Relationship and Commitment are Keys to successful Growth in China
When asked about the key elements for Australian businesses to be successful in the Chinese market, Ms Martin pinpointed a sound knowledge of the Chinese regulations, business practices, cultural sensitivities and government strategy, as well as relationship building.
“Relationship development is still a key business success factor in China. In particular, the service industries require more face-to-face contact than the potentially consumable industries. Companies need to demonstrate a serious commitment to the country and their relationships, by way of establishment of resources or training and development or even a local presence. There are many options available to a services industry, including joint ventures, local partnerships or even a fully operational foreign company. This will ensure long term success for Australian companies,” she emphasised.
Other tips include accessing government grants, obtaining accreditation in China and winning industry awards and recognitions.
“Accessing Government grants can help Australian SMEs develop their business both domestically and internationally, and we recommend program participants explore potential grant opportunities as part of their export strategy. By identifying and utilising grants assistance to best effect, businesses can support exporting activities, expansion, commercialisation, innovation and research and development.
“It is recommended that Australian export business obtain accreditations in the China market, as this shows prospective Chinese buyers that they are serious about being successful in their country, and have been proactive in their research and preparation prior to approaching the market.
“Industry awards and recognition are very highly regarded within Chinese culture; therefore participating in programs such as the NSW Business Chamber’s annual Local Chamber of Commerce awards can assist in building credibility with potential buyers,” Ms Martin suggested.
Business owners interested in finding out more information should visit www.exportgrowth.com.au or call 1800 505 529.
Export Growth China team at a trade show in Zhengzhou, China:
Alex Wang, Sara Cheng, Paula Martin, Xiaoya Wei, Victoria Tang