Non-traditional export avenues in China
The signing of the China Australia Free Trade Agreement (ChAFTA) has given rise to opportunities for Australian service providers in the coming years. Along with the ongoing trade standoff between United States of America and China, there has never been a better time for the Australian businesses.
The free trade agreement agreed upon in 2015, is already beginning to broaden and deepen the trade relationship. New service sector opportunities are opening, with Australian financial and legal firms now able to do business in China for the first time and Australian agricultural produce exporters will also reap competitive benefits from many tariff reductions. Tariffs will be removed on 85 per cent of Australian goods imported into China when the agreement is implemented, rising to 95 per cent once it is fully enforced.
There is no indication of the resources sector showing a dip in performance but opportunities outside the traditional export areas are booming. Australian businesses should particularly consider some of the following sectors:
China is Australia’s largest source of international students with the services export market worth $4.7 billion in 2014-15. As levels of disposable income continue to increase in China, Chinese parents are increasingly choosing to send their children abroad for secondary education in preparation for foreign university. In 2015, there were 10,308 Chinese students enrolled in Australian schools in contrast to only 4,721 Australian students went to China to study in 2014.
China is Australia’s largest tourist market when measured by tourism expenditure. More than 927,000 Chinese visited Australia in the 2014-2015 financial year and were the largest source of tourism expenditures into the Australian economy.
China’s ageing population and underdeveloped aged-care sector represent a potentially big opportunity for Australian businesses. The government identified improving the aged care industry as a key priority. It plans to provide 35 to 40 aged care beds per thousand elderly people. With the help of ChAFTA, Australian private health sector is free to expand its provision of services in East Asia.
Financial Services and Investment
A key prospect for Australian business is the provision of financial services to China’s burgeoning middle-class population. As Chinese incomes rise, more people will need banking, insurance, investment products, financial planning and various other consultancy services. Australian financial services providers have both experience and expertise, and are well placed to become significant players in China’s financial services sector.
ChAFTA will benefit Australian law firms by permitting them to be the first foreign entrants able to establish commercial associations with Chinese law firms in China specifically in the Shanghai Free Trade Zone (SFTZ).
Agriculture and Processed Food
The Australian Department of Agriculture predicts China will account for 43 per cent of global growth in demand for agricultural products to 2050. The primary increase in demand is predicted to be for foods such as beef, lamb, dairy, fruit and vegetables. Australian products have an enviable reputation for being clean, safe and high-quality which positions Australian exporters strongly to take advantage of China’s growing demand for quality produce and its need for food security. There are also big opportunities for agribusinesses supplying inputs such as animal feeds and genetics, as well as productivity enhancing services including education and technology.