South Australia uniquely ready for new relationship with China

By / 19th of June, 2015

INTENSE business and government preparation and negotiations with China over the previous three years have positioned South Australia in front of their interstate counterparts to reap the benefits of the newly-signed China-Australia free trade agreement.

The FTA comes less than a month after South Australia’s largest trade delegation travelled to economic powerhouse Shandong province in China, targeting new relationships and business opportunities.

A sister state of South Australia since 1986, Shandong Province has the third largest GDP of all provinces in China, is one of the country’s top manufacturers and produces almost half of all wine in China. It has a population of around 100 million.

Sean Keenihan, the vice president of the Australia China Business Council said the FTA would see greater trade volumes for South Australia and strategic investment to scale up the state’s production to meet growth in Shandong as well as greater China.

Keenihan was instrumental with setting up the South Australian policy of concentrating on building relationships with one province in China.

“The South Australia engagement strategy for China was the first in Australia to look to the future and concentrate not only on what South Australians would best engage with China around for significant, mutual benefit but how and where that would best be done,’’ Keenihan said.

“In the course of the last three years, South Australia has worked strategically to deepen and broaden its engagement with Shandong as it emerged as one of China’s economic powerhouses. ‘’

The second South Australia-Shandong Cooperation and Development Forum, headed by Premier Jay Weatherill, visited Shandong’s capital city of Ji’nan and Adelaide’s sister city Qingdao in May.

Among the 250 delegates taking part was South Australia’s largest local council area, the City of Onkaparinga, which will soon issue a formal expression of interest for investors to partner in the multi-million dollar Noarlunga Regional Centre (NRC) revitilisation project.

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An artist's impression of the Noarlunga Centre redevelopment.

Chinese investment company Beijing Development Area Company (BDA) is already investigating the project with its vice chairman Mr Tang Xu saying the company has  “strong interest’’ in the NRC.

“The investment potential of this project is compelling,’’ he said.

“The City of Onkaparinga is one of South Australia’s fastest growing regions and offers an excellent lifestyle opportunity supported by a strong focus on business growth and jobs.’’

City of Onkaparinga CEO Mark Dowd said the council had worked very hard to build their own links with China hosting several delegations, visiting China and signing a sister city agreement with Changli County in 2014.

Tim Harcourt, the J.W. Nevile Fellow in Economics at the Australian School of Business at the University of New South Wales and the International Engagement Advisor to Premier Jay Weatherill said intense groundwork by the South Australian Government over the past three years has ensured the state was primed to maximise the benefits of the FTA quickly.

“South Australia is sure to be involved by contributing to the ‘Great Mall of China’ as one of the booms I think we will experience will be for architectural firms,’’ said Harcourt, also known as the Airport Economist.

“There is a lot of prestige associated with having an international architect design your building and a number of South Australian companies are well advanced in their dealings with China.”

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Wine tastings are one way that South Australia has been raising awareness of its industries in China.

He said in the next 12 months South Australia could expect an increased presence of Chinese students and tourists.

“South Australia has taken the approach of focusing on a particular region in China, as opposed to trying to impact the entire country, and has been working very hard to achieve this,’’ he said.

“Film and art exhibitions, wine tastings, fashion shows and visiting educational institutions have all gone a long way to raising the awareness of the South Australia brand.

“China has a unique way of doing business and understanding how they do this has been a key element in positioning South Australia to maximise the benefits associated with the FTA,’’ he said.

Chief Executive Officer of Food SA Catherine Barnett said the free trade agreement provided a “gift’’ for food industries in South Australia.

“It is now up to businesses to seize this opportunity to grow by being smart with their marketing, branding and positioning,’’ she said.

“This should provide a sense of urgency for local agriculture to act as there are other countries also looking for these types of opportunities.

“It provides a rare opportunity to increase market share and attract investment, ideally in partnership, with China.

“South Australia producers are predominantly small to medium enterprises and often family owned which means they are very nimble in the market place to seize opportunities, as opposed to large conglomerates.

“There is a lot of intellectual property in SA around agriculture and horticulture which really stands us in good stead.’’

Senior Trade Commissioner to Beijing for Austrade, Michael Clifton said beef, sheep, dairy and seafood industries should be very optimistic about achieving terrific outcomes as a result of the FTA.

“We are seeing already businesses jockeying for buying position with South Australian business following the announcement of Seppeltsfield signing a deal to export 1.5 million litres of premium wine to China every year and the Stehr Group signing its first deal to export 40 tonnes of tuna to China worth around $1 million.

“This is happening before all the benefits of the Free Trade Agreement come in to play because businesses want to secure their buying positions and relationships with South Australia companies.’’

South Australia’s beef and sheep farmers will also gain from the phased abolition of tariffs ranging from 12 to 25 per cent.

Darren Thomas, owner of South Australia’s largest meat exporter Thomas Foods International, said the tariff reduction would allow the meat industry to be more competitive, especially against the New Zealand market.

“We certainly have had a heightened focus on a China with the Free Trade Agreement in mind. We are working closely with our clients to ensure they are aware of the benefit of the FTA.

“One of the biggest benefits will be through direct investment to accelerate the opportunities for companies through either formal sales partnerships or equity investment. It will also perhaps allow Chinese companies to invest in their own right to capture opportunities.’’

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Thomas Foods is South Australia's largest meat exporter.

Thomas is also the chairman of Brand South Australia, the entity tasked with building awareness of the opportunities within the state.

“There’s in no doubt that through the new brand of Brand South Australia we have been able to increase the awareness and geographic location of South Australia in a consistent and coordinated approach,’’ he said.

Next week delegates who attended the Shandong Forum will come together again with Premier Jay Weatherill who will outline the next steps in trade and investment outcomes.