SERVICES EXPORTS SET TO BOOM Page 12-13
HOW CHINESE INFLUENCERS CAN BOOST YOUR BRAND Pages // APRIL / 20-21 MAY 2016
AUSTRALIA’S NEXT BIG EXPORT EARNER Pages 30-31 // 1
a smarter way to trade
From the editor
Australia looks to niche services for export growth
Director and National Sales Manager
s the Australian economy transitions from the mining boom to the ideas boom, services are now a key focus for exporters. In this issue we look at the service sectors that are booming – and identify the services with growth potential. According to the Department of Foreign Affairs and Trade (DFAT), services exports expanded by more than 9 percent to nearly $63 billion last year. Strong growth was recorded with our major trading partners – China (up nearly 18 percent to around $9 billion), the US (up over 10 percent to $7 billion) and Britain (up 19 percent to nearly $5 billion. By contrast, there was a fall in the value of goods exports, particularly minerals and fuels. Newly appointed Trade Minister Steven Ciobo says services account for about 70 percent of our economy, yet represent only about 20 per cent of our total exports. So there is tremendous scope for growth. Mr Ciobo says expanding services exports “is a key trade policy focus for the government.” And recent free trade agreements (FTAs) with our three largest Asian trading partners – China, Japan and South Korea – will open further opportunities for service exports. The 1000-strong trade delegation now attending Australia Week in China will put professional services high on the agenda during the 5-day visit. The delegation – the largest ever to leave our shores – will promote a range of services in which Australia excels including financial, business, education, health and aged care. And agriculture will also be high on the discussion list. With Australia’s farm exports forecast to reach nearly $45 billion this financial year, agriculture is set to replace mining-iron ore as Australia’s top export earner. Agriculture is now recognised as one of Australia’s five “super-growth” sectors. Other sectors include tourism, international education, gas/energy and wealth management. These sectors are predicted to add more than $250 billion to the Australian economy over the next 20 years. Who said Australia is no longer the Lucky Country?
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Published by: Think Positive Pty Ltd PO Box 221 Waverley NSW 2024 Australia www.dynamicexport.com.au
Think Positive Pty Ltd cannot be held liable for any person(s), company or business acting upon or using the information provided in this e-magazine in any way. Information and content in Dynamic Export e-Magazine is provided to the best of our knowledge. We advise that you should seek independent professional advice to verify that all information is accurate and correct.
APRIL / MAY 2016
LATEST NEWS 3-5
Australia’s biggest ever trade mission sets sights on China
What’s on 34-35
Local & international events
More tariff cuts under Japan fta
ustralian businesses are continuing to reap the benefits of the JapanAustralia Economic Partnership Agreement (JAEPA) with a third round of tariffs cuts taking effect from April 1. Tariffs on more than 1200 products have fallen, providing a competitive
boost for Australian exporters and building on the success of JAEPA’s first year in operation. Trade Minister Steven Ciobo said 92 per cent of Australian products are
Overdue payments on the rise: Special Coface report
Efic launches new Small Business Export Loan facility
now entering Japan duty-free. This will increase each year until 2034, when 98 per cent of our goods will enter duty free or receive Australia-only preferential access. For the first time, Japan has cut tariffs on high quality Australian Southern Bluefin Tuna, an export worth $116 million to Australia last year. “These tariff cuts give Australian exporters a crucial lead over competitors who continue to face the full tariff,” Mr Ciobo said. Australia’s exports of beef to Japan grew by 14.6 per cent to nearly $2 billion in 2015.
More SMEs looking to expand globally
From April 1, tariffs on Australian beef have again been cut to 27.5 per cent (frozen)
38.5 per cent.
Wine ex Aussie exporters drive services boom in Asia ports booming
FOCUS ON ASIA
China slowdown: How will it affect exporters?
and 30.5 per cent (fresh or chilled). Competitors continue to pay the higher rate of Mr Ciobo said Australian exports of oranges to Japan have hit record levels under JAEPA. Last year’s sales were valued at more than $36 million. And the latest tariff cuts will see Australia’s competitive position further enhanced, with seasonal tariffs falling from 13.1 to 11.6 per cent. Competitors continue to pay a 16 per cent tariff on citrus exports. Other products including nickel, worth an estimated $80 million a year, and food products such
as sauces and mustard worth $29 million a year, will also enjoy significant tariff cuts. Mr Ciobo said the Japanese market has embraced
high-quality Australian product, which can
Why fashion designers should target China
be found in stores, restaurants and hotels throughout Japan.
This month Mr Ciobo launched a new
FTA Portal to help Australia’s SMEs take full advantage of Australia’s free trade
Call for national branding on all food exports
agreements with China, Japan and South Korea. The new FTA Portal provides free and
accurate information on tariffs under the FTAs
Port Melbourne to be sold off
so small and medium businesses can easily work out how price competitive they will be.
Agriculture: our next top export earner
The Portal also has Australian and international trade data and an
innovative step-by-step system to help businesses assess whether
their product is likely to meet the requirements of the agreements. ••• The FTA Portal is available at: https://ftaportal.dfat.gov.au/
APRIL / MAY 2016
Australia’s largest ever trade mission sets sights on China More than 1000 Australian business leaders, mostly SMEs, left Australia this week to explore new business opportunities in China.
he delegation will attend Australia Week in China (AWIC) from April 11 to 15.
fast-developing innovation ecosystems for the first time. It includes a series of events promoting Australia as a
AWIC 2016 will deliver more than 150
premium investment, education and tourism destination,
events across 10 cities including Beijing,
including the Chinese launch of Tourism Australia’s
Guangzhou, Hong Kong, Shenzhen, Xiamen,
coastal and aquatic campaign.
Shenyang and Hangzhou and Shanghai.
The first Australia Week in China promotion resulted in
Activity is scheduled across eight business streams:
significant trade and investment outcomes for Australia.
agribusiness, financial services, health and aged care,
About $1 billion in export sales were generated and more
innovation, education, urban sustainability and water
than $3 billion in investment followed the event.
management, premium food and beverage and tourism. The delegation, which is the largest trade mission
“We anticipate that the breadth and scale of AWIC 2016 will generate similar outcomes and be the catalyst for
ever to leave Australia, hopes to make the most of
significant export sales and investments into Australia,
opportunities created with the signing of the China-
further driving jobs and growth,” Mr Ciobo said.
Australia Free Trade Agreement (ChAFTA) signed in December last year.
Tourism Minister and Minister Assisting the Minister for Trade Senator Richard Colbeck said China is now our
Trade Minister Steven Ciobo, who is leading the
largest source of international students and our highest-
delegation, said a highlight of AWIC is the first ever
spending tourism market, with both sectors experiencing
The program brings together Australia’s and China’s
“The Australian Government recognises tourism and international education as key economic super-growth sectors for the next decade,” Senator Colbeck said. Senator Colbeck is leading the tourism and education streams of Australia Week in China (AWIC) 2016.
Steven Ciobo … ‘significant export sales’
The program includes meetings, site visits and events focused on promoting Australia to Chinese businesses, students, tourists and consumers. AWIC will also help tourism and education providers explore new opportunities arising from the ChinaAustralia Free Trade Agreement. “It will also allow them to see first-hand how China’s transition to a consumer-driven economy is affecting demand for services like tourism and education, which are currently our top two services export earners,” Senator Colbeck said. •••
APRIL / MAY 2016
Is your business ready for the world stage? The Export Council of Australia’s (ECA) has announced a series of upcoming workshops this month to help you grow your business overseas. The workshops are designed to help you build your capacity and capability to become a confident participant in the world of international business. Whether you’re just starting out on your international journey or you’re a seasoned professional you can follow the ECA’s pathway to international success. The program includes:
Are you ready to go global? This half-day workshop will cover the basic fundamentals required to access and prepare your business for entering global markets. The workshop has been created to help you to develop a successful international strategy and tools to identify global opportunities to ensure you are ready for international business success. VIC Date: Tuesday, April 12 Venue: Melbourne CBD Times: 9am – 2pm Register: Click here to register QLD Date: Tuesday, April 19 Venue: Brisbane CBD Times: 9am – 2pm Register: Click here to register WA Date: Wednesday, April 27 Venue: Perth CBD Times: 9am – 2pm Register: Click here to register Getting the documentation right Preparation of export documentation can be confusing, time consuming, costly and, unfortunately, prone to human error, but correct export documentation is vital for any exporter to transact business in an efficient and cost effective way. The ECA has developed a one-day workshop for companies looking to not only understand export
documentation requirements but who are also looking for assistance in training up their team to process documentation correctly and efficiently. VIC Date: Thursday, April 14 Venue: Melbourne CBD Times: 9am – 5pm Register: Click here to register WA Date: Monday, April 18 Venue: Perth CBD Times: 9am – 5pm Register: Click here to register NSW Date: Monday, April 27 Venue: Sydney CBD Times: 9am – 5pm Register: Click here to register QLD Date: Tuesday, April 28 Venue: Brisbane CBD Times: 9am – 5pm Register: Click here to register Marketing for international growth Doing business in international markets requires know-how and companies need to understand how to easily navigate the “how to finance for global growth”. This half-day workshop provides an overview of what you need to know when it comes to managing and preparing for global growth and also provides you with key contact information for experts in the field.
APRIL / MAY 2016
NSW Date: Wednesday, April 20 Venue: Sydney CBD Times: 9am – 2pm Register: Click here to register International payments and understanding documentary credits This workshop will help all importers or exporters to obtain essential information on how to use letters of credit as a safe payment method for handling overseas transactions. WA Date: Friday April, 18 Venue: Perth CBD Times: 9am – 5pm Register: Click here to register Pricing your product or service for international success Getting your international pricing strategy right is crucial to the success of your business. It is difficult to go back and renegotiate your price once this has been set and also you ultimately cannot risk potentially not getting paid. NSW Date: Wednesday, April 13 Venue: Sydney CBD Times: 9am – 5pm Register: Click here to register VIC Date: Thursday, April 21 Venue: Melbourne CBD Times: 9am – 5pm Register: Click here to register
Worrying trend: Overdue
payments on the rise in China Corporate payments continued to deteriorate in China last year, with eight out of 10 corporates experiencing overdue payments, a new survey has revealed.
he survey on corporate credit risk management, to which 1,000
Chinese companies responded, was conducted on behalf of Coface, a leading global credit insurance group. And Coface is forecasting GDP growth in China to slow to 6.5% this year â€“ about 0.4% lower than the previous year. Businesses in China are facing increasing challenges, such as high leverage with steep costs of financing (despite monetary easing), low profitability (driven by large overcapacities in certain sectors) and volatility on the foreign exchange and stock markets. Coface, a global leader in credit insurance and risk management, does not expect non-payments And a higher percentage
will improve in China in the
a more prudent approach to
overdue payments in 2015
granting credit facilities to
(compared to 79.8% in 2014).
of respondents (about 10
Over 58 percent of these
percent) said that average
Last year, the average
firms also reported an
overdue periods have been
by China-based firms
with 80.6% of respondent
increase in the amount of
longer than 150 days.
decreased again, reflecting
credit terms offered
And risks have increased,
APRIL / MAY 2016
Of companies surveyed,
‘Exporters to China should fasten their seatbelts and stay alert’
compared with the previous
the process of rebalancing
and low global demand.
The authorities are
• Household electronics
• Industrial electronics
needed to rebalance growth
in favour of consumption
At the same time, automotive and transport
and services. Ms Wong says Australian
has stabilised, while the
exporters should be aware
long payments is putting
risk in the paper-wood and
of the increased risk of
increasing pressure on
pharmaceutical sectors has
overdue payments when
trading with China.
Jackit Wong, a Coface
Coface warns that Chinese
“This could be a very
economist for the Asia-
firms that are suffering
difficult year for Australian
Pacific region, says the
from overcapacity and low
exporters that rely so much
results of the survey were
profits now have a higher
on China,” she says.
not surprising given the
probability of default.
slowdown in the Chinese economy.
And even though credit
Ms Wong believes Australian exporters should
growth is slowing, private
not abandon China as a
debt is continuing to grow
trading partner, but they
now facing an increasing
faster than GDP. China
should investigate ways to
risk of overdue payments
has not yet entered a
manage the risk.
and bad debts when trading
deleveraging process and
with China, she says.
the risks are increasing.
Australian exporters are
Outstanding debt held by
Should they be
the private non-financial
concerned? “Of course,” Ms Wong says.
sector reached 201% of GDP
“The best solution would be to find the right partner and hedge against the risk.” Factoring, she says is a logical option. This is where a business
“An increasing number of
in June 2015, compared to
exporters will be harmed.”
114% in June 2008 and 176%
sells its accounts
in June 2013.
receivable, or invoices, to
She advises exporters to China to “fasten their
China’s 6.9% GDP growth
seatbelts and stay alert.”
in 2015 was the lowest in
Ms Wong says goods
25 years, while Coface’s
a third party commercial financial company. This means a business can
exporters are facing a
forecast of 6.5% in 2016
receive cash more quickly
higher risk of overdue
would be another record.
than it would by waiting 30
payments than service
Momentum is on a downward trend, due to
to 60 days for a customer payment. •••
The survey identified nearly 18 percent have
construction, metals and
had to deal with ultra-long
IT-telecoms as the highest
overdue amounts (of more
than 180 days) exceeding
The risk of overdue
5 percent of their annual
payments also increase in
turnover. The rise of ultra-
the following sectors in 2015
The Coface Group offers companies around the globe solutions to protect them against the risk of financial default of their clients, both on the domestic market and for export. Coface has been conducting the corporate credit management survey in China since 2003. The 2015 survey is the 13th edition. www.coface.com.au
APRIL / MAY 2016
Three steps to save time and money on overseas payments Business owners all know there are some challenges of doing business overseas, especially with currency fluctuations between the time a deal is agreed and when payment is completed.
f you don’t have a hedging strategy you are often exposed to uncertainty and as Benjamin Franklin once said: “By failing to prepare, you are preparing to fail.” Whether you’re looking at a one-off transfer overseas
or importing/exporting hundreds of containers a year, using the right combination of payment and cash management strategies means you can improve cash flow and protect profits. 1. Save money on transfers. Most people and businesses will use their bank to make a money transfer as they’re probably unaware of alternatives that can make the process easier and save them a lot of money. You have
your margins. Next time you have an upcoming future expense ask
to be aware of real transaction costs on international
OFX about hedging and they can walk you through your
money transfers, as they are not always that transparent.
Forward Exchange Contracts or other products that may
When transferring funds internationally you have two fee
suit your needs.
structures – direct and indirect. Direct: Most banks charge a high upfront fee to process the transfer and receiving fees are charged by the bank you
3. Now create a strategy It’s important to look at your business needs and build a plan around it.
send to, if it’s sent internationally. Indirect: These are (hidden) costs in the exchange rate
First you should find out at what rate makes your
itself and known as the margin. Banks often have the
international trade worthwhile or unprofitable. This will give
largest margins and can be as high as 5 percent.
you a trading range that tells you when it’s a good time to
In comparison OFX (formerly OzForex) have minimal or no
lock in a rate or not. You will also need to work out what
direct fees and offer far better margins than banks, allowing
your cross-border payment needs are, both incoming and
you to save hundreds if not thousands when settling your
outgoing, and set your actions accordingly. This allows you to decide as and when you use a spot rate
(for imminent payments, due now) or hedge forward using 2. Hedging: Whilst this may sound complicated, hedging is actually quite easy to do and can provide some certainty
Forward Contracts (for future payments) when the rates are worthwhile. Now relax knowing your business has been de-risked and
in your costs. By taking out a Forward Exchange Contract (FEC) you can
focus on running your company. •••
fix the exchange rate at a fixed time in the future with just a 5 percent of the total amount you need. This will remove the exchange rate risk, give you piece of mind, and protect
For more information contact Jonathan Sermon from OFX directly (quote the code 2775) on +61 2 8667 9106 or jonathan.sermon@ OFX.com or or simply REGISTER HERE to get started.
APRIL / MAY 2016
Efic unveils its new
Small Business Export Loan
ith a lower Australian dollar and a host of new trade agreements in place, many small businesses are considering expanding operations internationally to boost growth. However, despite an apparently favourable export environment, many small to medium enterprises (SMEs) are still finding access to finance a key barrier. It’s this factor that ultimately prevents them from implementing export initiatives. In February this year, Efic’s SME Exporter Index* found that, of the more than 500 small businesses surveyed, more than half expected greater difficulty in sourcing financing solutions for their export endeavours in the year ahead. The survey also found that the smaller the business, the greater the difficulty accessing credit, with one in four SMEs reporting they’ve had new credit applications refused. Andrew Watson, Executive Director of Export Finance at Efic, says “Our new Small Business Export Loan has been developed specifically to meet the needs of small businesses with a turnover of less than $5 million per annum.”
*Efic’s SME Exporter Index, February 2016
Getting financing secured quickly is often essential for export contracts so a key feature of the product is that it is approved in as little as 7 business days. Applications can only be made online through EficDirect, Efic’s online application portal. “Small businesses are often time-poor, and the online application process allows them to complete an application at a time that suits them,” says Andrew Watson. Another key feature of the Small Business Export Loan is that it is unsecured, with the small business’s ability to repay the loan, rather than taking security, one of the aspects considered in the loan approval process. In addition to this, applying businesses will (amongst other things) need to show that they are unable to secure funding through their bank, and that the export product meets Australian content criteria. “At Efic, our objective is to help small businesses achieve export success“ says Andrew Watson. “We are confident that our new Small Business Export Loan will address some of the ‘access to finance’ issues that SMEs encounter today, and ultimately enable them to take on the world.”
APRIL / MAY 2016
More SMEs look to overseas markets for expansion The number of Australian SMEs looking to expand their business overseas has grown by nearly 40 percent in the past 18 months, according to a major business survey.
cottish Pacific’s latest SME Growth Index found that 9.4 percent of SMEs surveyed were seeking overseas expansion in March this year, compared to 5.6 percent in September 2014.
And those looking at expansion both at home and
overseas, in the same timeframe, grew from 11.6 percent to 15.3 percent. “The proportion of growth SMEs seeking overseas geographic expansion, and a combination of domestic and overseas geographic expansion, is on the rise,” said Scottish Pacific CEO Mr Peter Langham said. The SME Growth Index also found that an alarming two thirds of Australia’s SME owners use personal finances to support their business. One in five of business owners survey admitted to regularly dipping into their own pockets to fund their business. And nearly 50 percent said they resort to using personal finances occasionally. This included using credit cards with high interest charges. Only 10 percent of SME owners had never settled
Peter Langham … ‘significant concerns’
business expenses using non-business sources. The Scottish Pacific SME Growth Index is a twice yearly look at the growth prospects and concerns of more than 1200 Australian small and medium sized business
because there were better funding options available to help SMEs grow. “How SMEs are funded has a significant bearing on
owners and CEOs. It was initiated by Scottish Pacific, the
operations, from how well they can manage cash flow to
largest specialist provider of working capital solutions for
the pace at which they can expand. It’s crucial to get it
SMEs in Australia and New Zealand.
right and not think too short term,” Mr Langham said.
Scottish Pacific CEO Mr Peter Langham said the findings on personal credit card use posed significant concerns,
“Personal finance may appeal from a convenience, speed and accessibility perspective – the downside is
APRIL / MAY 2016
that higher than necessary funding costs cut directly into margin, and personal financing can impact on lifestyle
great ideas but may not own any real estate.” Despite the rise of online and automated funding
and leave owners open to family conflict which can
solutions being offered for SMEs, he said it was worth
destabilise the business.
noting the high importance SME owners still place on
“I’d strongly encourage SMEs, whether product or service orientated businesses, to seek smarter funding options. Look beyond the banks as this is an active, innovative space trying to offer a better alternative.” Mr Langham said another significant finding was that
being able to talk directly to the lending decision maker. The funder should be an expert who can provide guidance and support, not just dollars. Since September 2014, the Scottish Pacific SME Growth Index has twice a year tracked the optimism for growth
SMEs were more than willing to pay higher rates to
of a range of small business across many industries in
obtain finance if it meant they didn’t have to provide real
Australia. “Of note is that the number of optimistic enterprises
estate security. “This reflects a growing awareness amongst SME
is relatively unchanged since we started the Index –
owners that putting the house on the line is no longer a
dipping 1.5 percent in March 2016 from the finding of 58.9
given and suggests openness to alternative, innovative
percent a year ago – yet the average revenue growth
funding solutions such as trade and debtor finance.
forecast in that time has contracted sharply from 6.7 to
“This is key for up and coming entrepreneurs who have
5.2 percent,” Mr Langham said. •••
APRIL / MAY 2016
Services exports set to boom The need for professional expertise is now stronger than ever in maturing economies to Australia’s north – especially China and India.
nd Australian exporters are perfectly placed to service the growing demand. Department of Foreign Affairs and Trade statistics show services exports accounted for about 20 per cent of Australian exports
services exporters,” says Mr Hunter. “Business owners tell us that they don’t care too much about the country itself – they care about the market and prices, and regulation and red tape.” But Australian SMEs should not be deterred by
in 2014-15, even though services make up 80 per cent of
regulatory barriers, HSBC Australia head of global trade
our domestic economy.
and receivables Rohit Garg told The Australian.
Services exports increased 9.4 per cent in the year to
“It is not an excuse for doing nothing. “This is a time for services firms with existing
June 2015. This was fuelled by demand for education-related
relationships in Asia, especially in China, to be hanging in
travel services (14.5 per cent), personal travel services
there and building on those connections,” Mr Garg says.
excluding education (6.4 per cent), financial services
“It’s a good time for Australian services firms to consider
(25.4 per cent) and telecommunications, computer and
exporting. The opportunity is enormous.” The Australia-China Free Trade Agreement is one of the
information services (35.8 per cent). The government has attributed the growth to the transitioning of the Chinese economy from an industrialconstruction focus towards middle-class consumerism. Other contributing factors include the devaluing of
most comprehensive FTAs when it comes to services. However, its allowance of wholly owned Australian operations in China is limited by industry (software, building and cleaning services, real estate,
the Australian dollar and the recently signed free-trade
manufacturing services, environmental services and
agreements with our three biggest Asian trading partners
interpretation) or limited by territory, such as the
– Japan, Korea and China.
Shanghai Free Trade Zone (telecommunications,
It has opened opportunities for services firms, small and medium enterprises (SMEs) in particular, Export Finance and Insurance Corporation (Efic) chief executive Andrew Hunter told The Australian newspaper last month. Between 2012 and 2015, services exports grew 33 per
legal) and Beijing, Tianjin, Shanghai, Jiangsu, Fujian, Guangdong and Hainan for Australian medical services. “Whereas Australia’s gross domestic product is 80 per cent services, China’s services economy is still developing and contributes just 50 per cent of its GDP,” Mr Garg says.
cent, he said. “Regulation and red tape is the biggest trade barrier for
“The growth of the Chinese services sector is the next
APRIL / MAY 2016
big story in that country,” he says. “Twothirds of their economic growth now comes from the services sector, and services is something that Australia does very well.” Mr Garg says the commodity boom in Australia-China trade is not “over” in the true sense because the next phase of the commodities trade is the services that accompany the hard goods. “Australia doesn’t just have the
The written word can be crucial to export success
nnovation alone is not always enough to secure commercial success in a competitive globalised world economy. Another important factor of success is quality of finish,
which is often overlooked or undervalued.
opportunity to export dairy, meat and
According to BizTechWrite, it receives enquiries from
grains. China’s demand for these products
inventors and start-up companies that consider export
is growing, so they want expertise in
planning, product documentation and written language
logistics and cold chain logistics. It
translation as an afterthought.
isn’t just about buying milk, it’s about,
In worst case scenarios, some companies attempting to
‘How do I transport milk from A to B, at the right
export to Asia will spend over $AUD 25,000 on hotel costs
temperature, every day?’”
without having a local language document or having a
Managing supply chains for agriculture, food
poorly written technical data sheets in disjointed English.
and mining products is an expertise developed
Some even use Internet translation software, which is
in Australia over many years and it isn’t only the
more likely to attract ridicule than paying customers.
Chinese who need the expertise, he says.
For example, one Australian exporter did not translate
“India is now looming as a really big opportunity
a payment terms contract with an international customer
for Australia. Like China, they have many mouths to
ultimately missing important information that meant they
feed and they see the value in developing their own
had to wait over 120 days beyond the expected date for
agriculture and supply chains rather than relying on
payment. This led to an immense strain on cash flow.
Concise, well written, translated and illustrated product
Large countries such as India and China
documents and commercial contracts are crucial steps
understand that they need to attract expertise in
for ensuring business are treated with respect in different
key industries from countries such as Australia, he
says. However, the deep and complex regulatory
BizTechWrite offers technical documentation, technical
arrangements in both of those countries cannot be
drawing, language translation, contract translation and
export planning and their customers include some of the
“Services exporting is always more complex than
biggest Australian value-add exporters and start-ups. •••
goods, because it isn’t one transaction,” he says.
“You’re living and operating in that country.” The China-Australia Free Trade Agreement addresses services and makes material concessions to attract Australian companies to operate in China, he says. “Now we have the India FTA. There are no guarantees, but we know Andrew Robb has been visiting there a lot, and we know that the Indian government needs partnerships with expert firms, especially in the agricultural sector.” •••
APRIL / MAY 2016
Australian exporters set to drive services boom in Asia Long the poor cousin of goods exports, services continued their rise in 2015 on the back of lower trade barriers in Asia. Anthony Fensom
or the Turnbull government, the latest data
to around $9 billion, the United States up over 10 percent
makes happy reading in its push to transition
to $7 billion and Britain rising by 19 percent to nearly $5
the economy from the former mining boom to
billion. According to DFAT, services exports to China have risen
the so-called “ideas boom.” According to the Department of Foreign
Affairs and Trade (DFAT), services exports expanded by more than 9 percent to nearly $63 billion in fiscal 2015,
by 9.2 percent a year since fiscal 2010, with a 6.8 percent annual gain for US exports and 4.2 percent for Britain. Among the services sectors, education stood out, with
contrasting with a fall in the value of goods exports,
international student expenditure growing by 14.5 per
particularly minerals and fuels.
cent to a record of more than $18 billion. For calendar
Strong growth was recorded in the nation’s top three services exports markets, with China up nearly 18 percent
2015, the sector is estimated to have racked up more than $19 billion in exports, with education currently the top
APRIL / MAY 2016
services export and the third largest overall behind coal
secure a WTO-plus Trade in Services Agreement, which
and top-ranked iron ore.
involve 50 economies.”
Exports of business services rose by nearly 11 per cent
However, Australian businesses have been urged to take
to around $17 billion, with financial services increasing by
advantage of the competitive gains from the FTAs, or risk
25 percent to $3.5 billion and telecommunications and
losing an edge to rival exporters.
information services posting a 36 percent gain to $2.7 billion.
According to HSBC, only 19 per cent of Australian exporters are using FTAs, compared to 26 per cent of
The tourism sector also benefitted, with short-term
Asian competitors. Another study, AIBS 2015, showed that
international visitors to Australia rising by nearly 7 per
around 20 per cent of Australian exporters consider FTAs
cent to 7.1 million, and expenditure on personal travel
useful to their business, but nearly half were uncertain
other than education growing by 6 percent to almost $15
about whether such deals are applicable.
billion. The largest sources of visitors were New Zealand
With China engaged in 22 current or planned FTAs,
with 1.26 million tourists, China with 927,700 and Britain
Japan in 24, South Korea with 23 and India in 28,
Australia’s underutilisation of FTAs could put exporters at
Commenting on the latest data, Trade Minister Steven Ciobo said expanding services exports “is a key trade policy focus for the government.” “As the economy transitions from the mining boom to the ideas boom, services will be a central element of Australia’s transition to a broader-based growth model, one that delivers more diversified sources of growth, higher levels of productivity and job creation,” he said. “There is tremendous scope for growth in our services exports, given services account for around 70 percent of our economy yet represent only about 20 per cent of our total exports.”
a commercial disadvantage.
‘Among the services sectors, education stood out’
Typical reasons given for such lack of use include a lack of understanding of FTAs and their benefits, a lack of awareness of the Rules of Origin
requirements, compliance issues and a belief that accessing the benefits is “too costly and burdensome.” In a bid to ensure Australian exporters benefit, DFAT and Austrade have rolled out a series of information
While Australia’s relative geographic isolation “makes
seminars across the nation on the latest North Asian FTAs,
it harder to deliver services compared to countries
including a promotional campaign and grants for industry
that border other nations,” DFAT argued that traditional
measures underestimate the contribution of Australia’s services industries to total exports.
For details of the latest seminars, visit: http://www. austrade.gov.au/Australian/Export/Trade-Agreements/
According to DFAT, services’ contribution to exports on a value-added basis exceeds 40 percent. The figure
seminars With the mining boom now a distant memory, Australia’s
may be even greater when considering that two-thirds of
services exports are crucial in ensuring the nation
Australian services provided to the world are delivered
continues its record-breaking run of economic growth.
by Australian foreign affiliates abroad instead of via direct
For services exporters, it could be the start of what the
export, the department said.
government has proclaimed in its innovation agenda as
The Trade Minister said recent free trade agreements
“the most exciting time in Australia’s history.” •••
(FTAs) with North Asian trading partners had opened up further opportunities for services exporters, with a further lowering of trade barriers eyed. “Following the entry into force of the China, Japan and Korea FTAs, Australia is pursuing early ratification of the Trans-Pacific Partnership Agreement,” Mr Ciobo said.
Anthony Fensom is an experienced business writer and communication consultant with more than a decade’s experience in the financial and media industries of Australia and Asia.
“We are also actively participating in negotiations to
APRIL / MAY 2016
FOCUS ON ASIA
Australia keen to expand trade with Philippines Australia is expecting two-way trade with the Philippines to further expand this year, after sustained growth over the last five years.
ustralian Ambassador to the Philippines Amanda Gorely says trade between the two
countries the Philippines sends exports. Australia is looking toward sustained trade growth
countries has been steadily increasing in recent
and investment links with the Philippines and views the
years and the trend is set to continue.
economic reforms implemented by President Aquino as
“Trade between Australia and the Philippines is at $4.2
billion and increasing fast at the rate of 10 percent over the last five years,” Ms Gorely told BusinessMirror in a recent interview. Beef, lamb, wine, wheat, consulting services, services and engineering are Australia’s main exports to the Philippines. Also, there are 200 Australian companies now operating in the Philippines. They employ more than 30,000 Filipinos
‘Trade is at $4.2bn and increasing fast’
positive steps towards greater cooperation and building investor confidence. The Philippines is also a signatory in the ASEANAustralia-New Zealand Free Trade Area, which opens and
creates new opportunities for its 600 million population and combined economic output of $.265 trillion.
in the business-process outsourcing, finance, oil and gas, This agreement will:
manufacturing and infrastructure sectors. On the Philippine side, main exports to Australia include
• Progressively reduce tariffs
heating and cooling equipment, electrical machinery and
• Facilitate movement of goods through flexible rules
parts, mechanical machinery, pumps, coconut and rubber
• Simplify custom procedures
And Philippine companies like International Container
• Liberalise trade barriers
Terminal Services Inc., Monde Nissin and San Miguel
• Facilitate movement of individuals engaged in trade
Corp., have a strong presence in Australia.
The Philippines ranks Australia among its top 20 import sources, while Australia is also in the top 20 among
• Install an investor-state dispute settlement mechanism. •••
APRIL / MAY 2016
focus on asia
China’s economic slowdown: are you at risk? Tim Michael
Michael Sarpi … ‘not every exporter is the same’
hina’s economy continues to underperform
companies and individuals to secure competitive
and its stockmarket remains volatile.
foreign exchange rates.
But Chinese consumers are still spending strongly – and that spells good news for
Australian exporters, says financial expert Michael Sarpi. Mr Sarpi, the Chief Operating Officer for Compass
Boutique Forex solutions providers like Compass offer a more personalised service than major banks – with highly competitive rates due to lower overheads. And with the Australian dollar trading about .75c
Global Markets, a company specialising in foreign
against its US counterpart, it’s a good climate for most
exchange payments, hedging and advisory services, says
domestic sales in China remain strong.
So where is the dollar heading in 2016?
“So that is good for the majority of Australian exporters,
Mr Sarpi, a former senior executive with the
with the exception perhaps of commodities such as iron
Commonwealth Bank, predicts the downward trend
ore,” Mr Sarpi says.
will continue over the next 12 months.
“It is more industry and infrastructure where China has
“The US currency will remain the dominant currency
slowed in recent times.”
in that period,” he says.
And Mr Sarpi says consumer spending in China is unlikely to slow in the short term. “I think they will continue to spend,” he says confidently. “We are talking about wealth that has been developed over the past 10-20 years or so – and the Chinese middle class continues to grow. “So there will still be a strong need for consumer
‘Chinese consumers will continue to spend’
“The market was expecting further rate immediately in the US that didn’t eventuate. “But I still believe there will be at least two rate hikes this year
products. It could be the next growth area coming out of
… and by the end of the year the dollar will slip back
below .70c as the US dollar strengthens.” •••
Mr Sarpi says the new China-Australia Free Trade Agreement (ChAFTA) is also helping to boost trade between the two nations. “China is not an easy market to get in to,” he says. Financial companies such as Compass Global Markets can assist exporters to crack the challenging, yet lucrative Chinese market. “We have a dedicated Asia Desk that can connect exporters with key trading partners in China, Malaysia, Singapore and Indonesia.” Mr Sarpi says when exporting to Asia it is vital for
For more information visit: www.compassmarkets.com
APRIL / MAY 2016
FOCUS ON ASIA
Dressed for success: Why Aussie fashion designers should target China Hannah Bretherton
Last month the editor in chief of Vogue China got me thinking.
had never before put “fashion” and
that time there were no Chinese
one million Chinese visitors to
“China” in the same column.
Australia agree with her, associating
When I talk with friends about shopping destinations in Asia
the list will run from Hong Kong to Singapore to Tokyo or Kuala Lumpur
Currently valued at $85 billion it’s
Australia with “good food, wine, local
only now that the Chinese fashion
cuisine and produce” according to
industry can take centre stage.
survey data by Tourism Australia.
When asked about the Australian
With Chinese tourists ranking these
before anyone even contemplates
fashion industry Cheung said it wasn’t
commodities as the second most
really on the collective radar of her
important factor when choosing
Angelica Cheung admits China
readers. But she was quick to point
any holiday destination, it dawned
was late to the party – the Chinese
out how impressed she was during
on me that Cheung’s comments
subsidiary of the world’s most
her visit by Australia’s dining scene.
weren’t necessarily that off-topic.
iconic fashion magazine was only
Observing a knowledgeable yet
When thinking about the huge
laid-back feel in hospitality service,
market potential in China, Australian
as well as the finest, unrecognizable
businesses need to go back to basics
not fashionably, late meant Cheung
ingredients in fusion cuisine, Cheung
and highlight a uniquely Aussie
and her team made it just in time to
admired what she thought of as a
competitive advantage that speaks to
join the back of the catwalk.
unique and quintessentially “Aussie”
established in 2005. As it turns out being strategically, if
China’s fashion market has tripled since Vogue China’s inception. At
The latest figures on the Chinese
offering. It seems that 76 percent of the
APRIL / MAY 2016
middle class make Australian
FOCUS ON ASIA
opportunities in China more conspicuous than a fake Louis Vuitton bag. China’s middle class now outnumbers the US equivalent by roughly 17 million. In 2015, Chinese tourists in Australia spent $7.7 billion, up from $3.3 billion five years earlier. Currently only six percent of the Chinese population holds a passport. It’s not difficult to see the scope for growth. Back to the F word. The typical Chinese fashion consumer is depicted as buying high-end, heavily branded luxury apparel. But Cheung underlined the growing Rather than be depressed about
sophistication in the Chinese market;
exports, the Australian wool industry
the Chinese fashion consumer is
is looking at ways to innovate and
China’s move from manufacturing to
increasingly willing to take risks.
adapt to a market that is moving from
consumption, Australian industries
Why does that matter for Australia?
manufacturing towards consumption.
should see this massive market as
It makes room for high-quality
Clothing expenditure in China is
its biggest economic opportunity
Australian designers who may not
projected to grow by 11 percent
yet. It can move from exporting raw
have the same name value as the
annually over the next five years,
resources to producing innovative
perennial Italian or French labels.
more than two and a half times that
high-quality, distinctively Australian
These designers appeal to the
of the US Australian Wool Innovation
products and services – whether they
consumer who sees an “Australian
is developing highly advanced
may be in the form of fashion, food or
Made” label they know they can trust.
technologies in wool processing
anything else that might be financially
Alice McCall for example became
enabling lightweight, waterproof
the first Australian designer to open
outdoor wear as well as breathable
a stand-alone boutique in China last
sportswear to be made from 100
year, a move that could pave the way
Yves Saint Laurent once said that “fashion fades but style is eternal.” Australian producers and service
This appeals to the Chinese market
providers will always have their
on two levels – one is the huge
competitors but no other country can
China’s slower growth coupled with
growth in the sportswear market
replicate the genuinely Australian
Australia’s post-mining boom anxiety
and the other is the demand for
brand. The lesson from Vogue China
disorder has led many Australians
environmentally sustainable products.
was that demand for any industry can
to prematurely don black mourning
Eighty percent of Chinese consumers
wax and wane but true Aussie style
suits. But if they swap their synthetics
think of wool as a sustainably
will never fade. •••
for more natural fibres they might find
produced commodity and Australian
there are many industries in Australia
wool is seen as the best in the world.
just starting to find some momentum.
This is not to simplify the complex
China buys 80 percent of Australian
challenges facing the wool sector, but
to highlight the simple lesson at the
The doom and gloom about
Although much of this is in raw
Hannah Bretherton is a Researcher at the Australia-China Relations Institute, UTS.
heart of this story.
APRIL / MAY 2016
How Chinese influencers can boost your brand Chinese influencers can be a valuable tool for Australian brands looking to deepen their relationship with the Chinese market.
help Australian businesses boost their brand. The behaviour of Chinese online consumers means influencers have a great power, possibly more so than their Australian counterparts. With 46 per cent of Chinese online consumers reporting they find out about overseas products from friends, and another 34 per cent discovering new overseas goods from social media, according to research from Think China, the reach of micro-influencer isn’t so little after all.
The reviews of friends and trusted
hether they’re a
households around China, working
influencers are particularly important
with an influencer can strengthen your
in China due to the abundance of
who shares their
relationship with Chinese consumers
counterfeits products. With consumers
thoughts on the
and expose your business to a broader
often coming across fake clothing,
handbags, and even counterfeit
latest products as a hobby, or a glamourous film celebrity known in
These are the ways an influencer can
APRIL / MAY 2016
food, a trusted recommendation or
warning from a fellow customer can give a consumer the confidence to try your product or even abandon their shopping trolley.
‘Celebrity influencers can have a large impact on your brand’
The wariness of Chinese consumers mean influencers can help Australian
Being an influencer isn’t a full-time
to receive samples of your products in lieu of payment.
SMEs gain trust in their brand and
job for micro-influencers – most do
products, which is especially important
it as hobby. They genuinely love the
Working with a professional KOL
if they are beginning exports to China
products, sharing their opinions, and
can be expensive, depending on the
for the first time or are relatively
trying new brands.
size of their fans and the commitment
unknown in the region.
Since micro-influencers are genuine
required. For example, providing a
fans of the products they review and
product mention or simple product
influencer” may have only 500 friends
don’t rely on being an influencer alone
review on one social media platform
on social media platform WeChat, their
for their income, it is often simpler to
will be less expensive than requesting
relationships with these influencers are
negotiate a deal which suits both your
multiple mentions and instructional
more likely to be stronger. A micro-
business and the blogger.
videos on multiple platforms as this
Although a so-called “micro-
influencer’s contacts are more likely to
On the other hand, self-professed
will require a larger investment of
be “offline” relationships, such as those
KOLs are more likely to make a
their time. However, for larger brands
with family, friends, colleagues, and
career out of becoming an influencer.
looking to make the greatest impact
classmates, and as result, their opinion
Although this means they may have
in the Chinese market, working
can have an equal, if not greater,
more experience in reviewing goods
with Chinese celebrities, such as
impact than that of a more prominent
and dealing with brands, you can
engagements from actors, musicians
bet that they are also working with a
or socialites, can attract plenty of
number of other businesses – some
attention to your business.
One of the most underappreciated types of micro-influencers are “mummy bloggers,” those that review baby and pregnancy products. These women are powerful as they often have a tight-night community of
‘There are influencers for every budget’
Engaging with influencers will have a greater impact for certain products and industries.
friends going through a similar life
of which may be your competitors.
Women are more likely to be swayed
stage of pregnancy or raising a young
Working with a “professional” KOL
by influencers and reviews, with 37
family. With 85 per cent of Chinese
means running the risk of having them
per cent of females reporting a peer
mums naming safety as their top
recommend your brand this week, and
influence as a reason for buying
concern when buying baby goods
your rival’s the next.
an overseas product, compared to
For the majority of Australian SMEs
only 29 per cent of men. With this
CTR, achieving trust from this group is
looking to enter the China market for
in mind, it can be more effective to
the first time, their budget is often a
use influencers for products that
chief concern. Since micro-influencers
are purchased by women, such
can have a large impact on your brand.
don’t rely on being an influencer
as vitamins, beauty products, or
Even a small engagement such as a
as their main source of income,
pregnancy goods. •••
repost or mention on Chinese micro-
arrangements with them are often
blogging platform Weibo can amass
much cheaper, and as a result, are
a significant number of new fans,
often a better choice for brands with a
assisting a brand to broaden their reach
online according to research from
More prominent celebrity influencers
to an untapped wider audience.
Many micro-influencers will be happy
APRIL / MAY 2016
Benjamin Sun is a director and co-founder of Think China, an Australian agency specialising in marketing and analysis to help customers access the Chinese market. www.thinkchina.com.au
Call for national brand on all Australian food exports Mining magnate Andrew Forrest wants a national brand and logo to identify Australian food exports – particularly for the lucrative Chinese market.
r Forrest, who addressed the Boao Forum on China’s Hainan
Island last month, said Australian food suppliers are missing opportunities in China because of poor branding. “This is because we insist on having our own little corporate brands or our little State brands
‘The power of consistent branding, both here and overseas, cannot be overstated’
competing with each other,” he said. Mr Forrest said a host of Chinese business leaders had urged Australia to export food and produce under one brand and logo. “We might be reasonably sized fish in a little pond in Australia but get up here and no one has ever heard of you,” he said. “What they are really interested in is are you Australian or not and is your product genuinely Australian.
haven’t heard of your
a strong legal system
was not in danger of running
“Their message is ‘it is
company, we haven’t heard
and excellent quarantine
out of food and that it was a
Australia we have heard
that much about your State,
mistake to think that much
about since school, we
but we all know Australia
haven’t heard of your
to be clean, green, well-
industry association, we
managed, reliable, have
“That is what they want to buy.” Mr Forrest said the world
APRIL / MAY 2016
of China’s population did not already eat well. “There will be no shortage
of food. There will be a
brand that worked to the
overseas, cannot be
Australian produce in export
shortage of quality food,
benefit of that country’s
overstated,” Mr Harrison
markets for 30 years with
reliable food, of source-
great success, so there is a
identifiable and sustainably
The Australian Made
Mr Harrison said the
pivotal role for the symbol to
Campaign has supported Mr
play in any ‘Brand Australia’
Forrest’s call for a national
Australian Made, Australian
strategy,” Mr Harrison said.
the Federal Government
brand and logo on food
Grown logo should form
“Australia enjoys a strong
was close to endorsing a
part of the food labelling
reputation internationally for
Australian Made Campaign
system envisaged by
its clean, green environment
supplied food,” he said. Mr Forrest said he hoped
national brand and logo.
Chief Executive, Mr Harrison
Mr Forrest, to provide
and high standards for
Colbeck, who was at the
said Australia’s food and
consumers in markets
the production of food, so
forum, has said he will lead
agriculture sectors should
everywhere with better
it makes sense to place
the push for an Australian
work closely together to
surety of the true origin
a strong emphasis on
brand to sell food and a
promote their products
of the food they are
promoting the Australian
range of other products.
using a “Brand Australia”
brand and defending
Tourism Minister Richard
Senator Colbeck cited 100% Pure New Zealand as an example of a national
“The iconic green-and-
strategy. “The power of consistent branding, both here and
the authenticity of food
gold kangaroo logo has
supplied from this country.”
been clearly identifying
APRIL / MAY 2016
Qatar Airways launches new service to Sydney Qatar Airways has launched direct flights between Doha and Sydney – the airline’s third gateway in Australia.
Officer Kerrie Mather. “It will also foster trade, providing greater air cargo capacity and access to the Middle East. Australian exports to Doha grew by 23 per cent last year, and the State of Qatar’s high demand for livestock, cereal, meat, dairy products and crops provides a significant opportunity for Australian exporters.” Qatar Airways’ hub, Hamad International Airport in Doha, offers passengers travelling from Sydney a comfortable and efficient transit with an average connection time of just 90 minutes. The luxurious and modern airport, less than two years
old, has more than 40,000
he new service is
thinking, Mr Al Baker
exporters to Qatar Airways
sqm of retail space and
expected to bring
said. “These qualities are
Cargo’s global network,
restaurants including more
an additional $240
reflected in the strength of
providing 84 tonnes of cargo
than 70 retail and 30 food
million to the local
our current trade, totalling
capacity per week.
and beverage outlets, as
economy each year.
$1.56 billion in 2014. We look
Qatar Airways Cargo is the
well as a 25m swimming pool, gym, hotel and spa.
forward to building on this
third largest international
announced a new service
success and to going places
cargo carrier, already
between Dohar and
carrying 301 tonnes of
board the Qatar Airways
The airline has also
Adelaide later this year. Qatar Airways Group Chief Executive, His Excellency Akbar Al Baker said the new services would double the airline’s capacity to and from
Passengers travelling on
freight in the belly hold of its
Boeing 777 to and from
serving Australia since 2009
passenger aircraft into and
Sydney in Business Class
when it began flights
out of Perth and Melbourne
will be treated to fully-flat
beds as well as an on-
Qatar Airways has been
from Melbourne. In 2012 it added flights from Perth. The award-winning airline
“Qatar Airways’ new daily
demand à la carte menu
service will boost tourism,
service at any time during the flight.
Australia in the first half of
will fly a Boeing 777-300
providing an additional
daily from Sydney to Doha
245,000 seats per year,
generating an estimated
the state-of the-art Oryx
similarities in our cultures
passengers to its global
3,000 jobs and contributing
One entertainment system,
and home countries – Qatar,
network of more than 150
more than $240 million to
with more than 3,000
like Australia, is known for
the Australian economy, said
entertainment options on
Sydney Airport Managing
individual screens in all
Director and Chief Executive
“There are many
its hospitality, its warm welcome and its forward
And the new service will connect Australia’s leading
APRIL / MAY 2016
The aircraft also features
Germ free flights: Boeing develops self-cleaning toilets
Boeing has developed a self-cleaning toilet prototype that uses ultraviolet (UV) light to sanitise its surfaces.
ngineers and designers estimate that 99.99 percent of germs are killed with all surfaces disinfected in just three seconds.
even helps eliminate odours.” The cleaning system, which will require further study before it can be offered to airlines, would lift and close the
The lavatory uses Far UV light, which is different
toilet seat by itself so that all surfaces are exposed during
from the UVA or UVB light in tanning beds, and is not
the cleaning cycle. The design also incorporates a hands-
harmful to people.
free tap, soap dispenser, rubbish bin flap, toilet lid and seat
Nevertheless, the Far UV light would be activated only when the lavatory is unoccupied.
and a hand dryer. A hands-free door latch and a vacuum vent system for the floor are also under study, all to keep
“We’re trying to alleviate the anxiety we all face when using a restroom that gets a workout during a flight,” said Jeanne Yu, Boeing Commercial Airplanes Director of
the lavatory as hygienic as possible between scheduled cleaning. “Some of the touchless features are already in use on
Environmental Performance. “In the prototype, we position
some Boeing airplanes today,” said Yu. “But combining that
the lights throughout the lavatory so that it floods the touch
with the new UV sanitising will give passengers even more
surfaces like the toilet seat, sink and countertops with the
protection from germs and make for an even better flying
UV light once a person exits the lavatory. This sanitising
APRIL / MAY 2016
Expressions of interest called for Port Melbourne sale After an intense political battle the sale of Port Melbourne, Australia’s biggest port, has now begun.
he sale – one of the nation's largest privatisations – is expected to reap the Victorian government
major port facilities. The Port of Melbourne will be sold as a 50-year lease, with the proceeds to be allocated to roads and
more than $6 billion. VIC Treasurer Tim Pallas launched the formal
transaction process for the 50-year lease of the port last
infrastructure projects across Victoria. A new $200 million Agriculture Infrastructure and Jobs Fund will also be established.
month, calling for expressions of interest. The deal is expected to be finalised before the middle of
"This will drive economic growth in our regions, boosting exports and supporting Victorian farmers from paddock to
next year. Overseas bidders, including those connected to foreign governments, will be welcome to bid, but they will be
port,” Mr Pallas said. "The lease will make our port even better, increasing
subject to the approval of the Foreign Investment Review
efficiencies and competitiveness, and will reinforce
Board. The sale of Darwin's port to a Chinese company
Victoria's position as the freight and logistics capital of the
earlier this year sparked controversy and concern from
the United States, underlining the strategic importance of
The government expects to announce a preferred
APRIL / MAY 2016
leaseholder before the end of 2016. The deal should be
meaning it will expire in about 2031. A source close to the bidding process said there would be
finalised by mid 2017. "We're moving to market quickly because of the strong
political interest in the sell-off, nationally and internationally,
bidder interest in the Port of Melbourne and we're
as Melbourne is Australia's biggest port, but added "it is
confident the lease will deliver significant, long-term
less strategically sensitive than the port in Darwin". The sale of the Port of Darwin to Chinese investors
economic benefit to Victorians," Mr Pallas said.
attracted widespread criticism, including from Australian
It is understood that major Australian super and investment funds, including IFM and Hastings, are likely to bid for the port. International consortiums are also
Defence officials. Following the controversy, the federal government
likely to express interest. Morgan Stanley is advising the
directed the Foreign Investment Review Board to review
government on the process.
what are known as "critical infrastructure assets" sold by
The bill enabling the leasing of the port was passed by the Victorian Parliament on March 10, following a stand-off with
state and territory governments to private investors. The Victorian Chamber of Commerce and Industry said the lease of the port will have a significant impact on
the opposition. The Labor government eventually agreed to dramatically
Victoria’s economic future.
water down a controversial clause exposing the state to a
“The estimated $6 billion to be generated is essential to
compensation payment to the future owner if a rival port is
progress our state’s infrastructure priorities,” the Chamber
built that undercuts its business.
said in a recent statement.
Labor previously insisted the compensation regime apply
“The port will continue to be a significant piece of infrastructure to Victoria as container throughput is
for at least 30 years. But under the new agreement, the compensation regime only applies for 15 years from the day the port is sold,
expected to more than double to nearly six million units per annum in the next 15 years.” •••
APRIL / MAY 2016
Logistics Executive Group promotes Australian business in Jafza
Done deal … (from left) Adil Al Zarooni, SVP – Global Sales, Khalid Al Marzooki Senior Manager - Asia Pacific Region Jafza and Global CEO Kim Winter formalise the agreement
Jebel Ali Free Zone (Jafza) is one of the world’s leading free zones.
ocated between a top container terminal (Jebel Ali Port) and a top international airport (Al Maktoum
International Airport), it is the region’s most efficient logistics hub. The flagship free zone entity of Dubai has always been an attractive destination for Australian companies looking to expand their business in the Middle East, North Africa, South Asia (MENASA) region. An Australian company, Logistics Executive Group, was recently chosen to represent Jafza in the ANZ region for the third consecutive year. Established in 1999 Logistics Executive Group has a well-
South, South East and North Asia
food & beverage, electronics and
established global office network.
electrical, readymade garments
The company has been operating in
Making the announcement, Khalid
group and motor vehicles and auto
Dubai since 2004 and boasts offices in
Al Marzooqi, Senior Manager-Asia
Sydney, Melbourne, Perth, Singapore,
Pacific Region said 55 Australian
Hong Kong, Shanghai, Chennai,
and New Zealand companies are
geographical advantages that give
Mumbai and London.
represented in Jafza with trade worth
inroads to the regions such as the
US$262 million in 2014.
Middle East, Africa and North Asia
Logistics Executive Group has developed a strong reputation
“We have some of the renowned
spare parts.” Al Marzooqi said Jafza has
regions, including the Jebel Ali Port,
for assisting Australian and new
companies operating in various
Dubai International and Al Maktoum
companies to establish and grow
sectors such as equipment and
businesses in the Middle East, Africa,
machines, building materials trading,
APRIL / MAY 2016
“We have been attracting
and the West, contributes 20 per cent of Dubai’s economy. It is well connected to all corners of the world by land, sea and air. In 2014 the Free Zone generated trade worth US$96.5 billion. The Free Zone offers world-class infrastructure, logistics, zero tax regime and a 100 per cent foreign ownership to mention a few of the advantage. Jafza’s product offerings include plots of land, warehouses, showrooms, customised development solutions, offices, retail companies from Australia to set up
to set up an operating base here,” he
outlets, a business park and on-site
manufacturing and processing units
providing them with all the support
Jafza, the bridge between the East
Cargo theft remains top supply chain risk in 2016
In Europe, disruptions in trade caused by the ISIS terrorist group clearly highlighted the link between terrorism and the supply chain. Border controls in France following
upply chains across the
increase in cargo truck hijackings
the November attacks in Paris are
world face a number of
over the last year, with thieves using
estimated to have cost the Belgian
challenges and one of
high levels of violence and switching
shipping industry $3.5 million.
the biggest threats to the
from targeting only high value goods
global supply chain is cargo theft. Last year, according to BSI’s Supply
to also targeting lower value items. Daring vehicle shipment thefts have
Terrorist-linked smuggling rings were also identified to be colluding between Spain and the Middle East,
Chain Risk Exposure Evaluation
become increasingly commonplace
the groups illegally transporting
Network, damages caused by cargo
in China, with a recent series of in-
shipments of stolen electronics,
theft amounted to $22.6 billion – and
transit vehicle thefts occurring along
drugs, weapons and other
that figure is estimated to grow by a
the busy G45 highway.
further $1 billion this year.
More sophisticated attacks were
In addition to theft, business
observed in India throughout 2015,
continuity-related threats such as
particularly in China, Germany, India,
where criminal gangs masterminded
extreme weather events and political
Mexico, South Africa, and the US, BSI
new techniques to steal goods
and social unrest, led to significant
says in its latest report.
without breaking customs seals in
losses for individual companies and
order to avoid detection – a major
national economies last year.
There are increased concerns
BSI says most cargo thefts in 2015
The top five natural disasters in
could be attributed to security
risk for companies participating in
international supply chain security
2015 caused a collective $33 billion
of damage to businesses. •••
South Africa has seen a 30%
APRIL / MAY 2016
Agriculture on track to become Australia’s top export earner tim michael
Australia’s farm exports are forecast to reach nearly $45 billion this financial year.
hat’s a 37 per cent increase since 2010-11 –
(FTAs) with our three major markets in North Asia, and
and the figures are edging closer to Australia’s
eventually the TPP.
top export earner – mining-iron ore – which is
And Asia is not the only success story.
currently tracking at $49 billion.
“Last year US demand for Australian beef was so high
It also surpasses the Number 2 on the list – coal at $37
that export volumes exceeded the US’s WTO beef quota,” Senator Colbeck said.
Addressing the recent ABARES Outlook conference in
“Our producers had recourse to the special beef quota
Canberra, the Minister for Assisting the Minister for Trade
negotiated under the Australia-US Free Trade Agreement
and Investment, Senator Richard Colbeck, said Agriculture
for the first time since it came into force.”
is now recognised as one of Australia’s five “super-growth” sectors.
Senator Colbeck said Australia is perfectly positioned to grow its exports in key sectors, with access to more than
Other sectors include tourism, international education, gas/energy and wealth management.
600 million people in neighbouring countries alone. “Of great significance is that this population has age
“The size of these five collectively match that of mining at its peak,” said Senator Colbeck.
profiles that align to our service strengths, particularly tourism and education, and a growing middle class
“Together these sectors are predicted to add more than $250 billion (to the Australian economy) over the next 20 years.
seeking what we have to offer and that’s protein/food, energy and wealth management,” he said. “The increasing middle class of our major trading
“With the right tail winds there is a very real possibility we could see much more than that added to the economy and there is every reason to believe now is the time to capitalise on Australia's advantage.”
partners means the demand for protein is increasingly rapidly. “The world wants what we have got. And the more we play, the stronger we get.”
Senator Colbeck told the conference exports to Asian markets, in particular, are expected to grow even more as a result of the entry into force of free trade agreements
Free trade agreements are now in place with Korea, Japan and China. And the Trans-Pacific Partnership trade pact, signed by
APRIL / MAY 2016
About the conference
‘The world wants what we have got’
The ABARES Outlook conference is Australia’s premier information and networking forum for public and private sector decision-makers in the agriculture sector. The conference was held in Canberra on March 1-2.
Australia and 11 other countries earlier this year, would
trade agreements and strong international demand
provide further benefit to exporters.
are expected to provide ongoing support for Australian
“The Government has recognised the importance of active implementation and follow-up of these FTAs,” said
agriculture in world markets. Ms Schneider told the ABARES Outlook Conference
Senator Colbeck. “It’s not simply enough to negotiate a
these factors would underpin future opportunities for
great agreement – we need to explain to producers how to
agriculture in export markets. “The weaker dollar has supported average export
use it. “Accordingly, we have invested significant resources in
prices in Australian dollar terms across the board, and
explaining to business the opportunities these agreements
contributed to favourable farmgate prices, she said. “We’re
have opened up, through FTA information seminars across
forecasting the gross value of farm production will reach
the country, and through the creation of an FTA Portal,
a record high of more than $60 billion in 2016-17 and
which provides easy access to clear technical information
support exports of around $45 billion. “The recent trade agreements finalised with major
on how to use FTAs.” Senator Colbeck said good progress is also being made
regional trading partners and new market access protocols
in bilateral negotiations with India and “reinvigorated”
will provide opportunities in both new and established
And the Government is also moving toward establishing a comprehensive, high-quality FTA with the European
Ms Schneider also discussed the domestic factors affecting farm performance and trade opportunities. “On the home front the challenge is increasing
Union. (EU). “This is important for the agriculture sector, as the EU is the only one of our top ten export markets with which we
productivity to remain competitive in global markets,” Ms Schneider said.
have not already negotiated an FTA or with which we do
“We’re likely to face more intense competition in global
not have FTA negotiations in train,” Senator Colbeck said.
markets from countries such as Brazil and Argentina, which
ABARES Executive Director, Karen Schneider said a relatively weak Australian dollar, newly signed free
have invested significantly in reducing costs and boosting productivity in their beef and grains industries.” •••
APRIL / MAY 2016
Bicycle manufacturing keeps export wheels turning in SA
‘Titanium is a beautiful material’
A high-end bike manufacturing industry is emerging in South Australia as the state’s traditional car making sector winds down.
outique manufacturers Astir Frames, Bouwmeester Composites and Finch Composites are taking advantage of South Australia’s strong manufacturing history and
access to university testing facilities to gain a foothold in the potentially lucrative cycling market. The global bicycle industry was worth $US48 billion in 2014, driven by the sale of about 133 million bikes. It is expected to reach an estimated $65 billion by 2019 on the back of rising fuel prices and growing traffic congestion. General Motors Holden’s car manufacturing plant in Adelaide will close next year, costing thousands of jobs not only at the plant but also at component manufacturers that have supplied it for decades. Astir Frames specialises in long-lasting tailor made titanium bicycles. The bikes are built using parts from around the world and assembled in Adelaide, South Australia’s capital city. Founder James Moros said the decline of the automotive industry in the state was opening doors for him. “If there are factory machines that are idle, I’ll ask to use them. I’m not scavenging, but I’m utilising available equipment that other people aren’t using at
APRIL / MAY 2016
competitive against some of the big overseas
the time,” he said.
brands that predominantly have their wheels
“Titanium is a beautiful material. It is precious, low maintenance, and you can leave Moros has exhibited at the Tour Down Under for the past two years, and said it was a great
showing promise. The company is working on prototype carbon wheels equipped with disc brakes for
opportunity to showcase his brand. “People who
‘A wheel set sells for $3500’
made in Asia.” Finch Composites is another company
it out for years without painting it.”
bought my bikes
racing bikes. The UCI is allowing the use of disc brakes
saw me and
in 2016 and if this testing phase is a success,
talked about how
disc brakes will be permitted across the sport
pleased they were
with my bikes. It’s a testament that
Finch is looking to partner with car component manufacturers who are looking to
the bikes that I made for them are working
shore up new business ahead of the Holden
fantastically,” Moro said.
South Australia has hosted the southern
Co-founder Ben Tripodi said he was able to
hemisphere’s biggest cycling race the Tour
work with one of the local universities to test
Down Under since 1999. It has also produced
the quality of the products.
many of the nation’s best riders including
“We partnered with Flinders University
Rohan Dennis, Stuart O’Grady and Jack
last year and we had access to their
computational fluid dynamics (CFD), which
Astir Frames sold 30 bikes last year and is on track to increase sales by more than 30 per
allowed us to simulate many different wind conditions,” he said. Tripodi said disc brakes increased stopping
cent this year. Bouwmeester Composites is another company that has found success in South
performance for cyclists and the extra responsiveness made them safer. “It allows them to brake a lot later so they
Australia. Since the launch of its product at the
can keep their maximum speed a lot longer
end of 2014, sales have been in line with
into a corner, particularly downhill,” he said.
the forecasts with 50 per cent of sales
“Our target market really is professionals like lawyers and accountants who like to
contributed coming from exports.
ride on the weekend but have the money to
The company manufactures high performance carbon fibre wheels for off-road
spend and demand the highest quality and
Founder and CEO Mello Bouwmeester
“We believe the majority of them we can
brought the composites work to Adelaide
sell in Australia however, we do really want to
after previously manufacturing overseas.
target the American market.”
“We wanted to have total control over our
Prototype manufacture and final testing of
manufacturing and intellectual property,” he
Finch’s carbon wheels is expected to take
place in the coming months with the first
“Manufacturing in SA allows for us to speed up our R&D cycle and also maintain strict
production run coming towards the end of the year. •••
quality control practices. Source: The Lead
“A wheel set sells for $3500. Which is
APRIL / MAY 2016
1 September 9 China eCommerce Seminar Series 2015 Host: Austrade Where: National Wine Centre of AustraliaExhibition Hall Cnr of Botanic & Hackney Rds Adelaide Ph: 13 28 78
Industry & Innovation Workshop
Fine Food Australia Trade Show
Premier of Queensland Export Awards 2015
Host: Department of Industry Where: ANU Commons Building – Function Room Ground Floor Cnr Barry Drive & Marcus Clarke St, Canberra. Ph: 02 6125 0228
Where: Sydney Showground Sydney Olympic Park Ph: 03 9261 4500
Where: Brisbane Convention & Exhibition Centre Plaza Ballroom South Bank, Brisbane Ph: 07 3514 3134
7 October 28 Premier of NSW Export Awards 2015
Where: The Star, 80 Pyrmont St. Pyrmont, Sydney Ph: 02 9251 6492
2 September 10 Australia-Germany Business Conference Host: German-Australian Chamber of Industry & Commerce Where: International Chamber House, Conference Centre L5 121 Exhibition Centre, Melbourne Ph: 03 9027 5618
5 October 6 EMDG Coaching/ Information Session, Brisbane Host: Austrade Where: Level 16, 307 Queen St Brisbane Ph: 13 28 78
8 October 30 November 1
Good Food Show
Where: Brisbane Convention & Exhibition Centre, Merivale St South Brisbane Ph: 03 9261 4500
APRIL / MAY 2016
Expomin 2016 - Santiago, Chile Mining & minerals exhibition Where: Huechuraba, Santiago, Chile
1 April 11-15
Australia Week in China 2016 http://www.austrade.gov.au
China Luxury Travel Showcase 2016 Where: Shanghai, China
April 12-15 Food&HotelAsia (FHA) & ProWine Asia (PWA) 2016 Venue: Singapore Expo http://www.nab.com.au
Seoul Food & Hotel 2016 Food & beverage, hospitality
Australian Culinary Trails 2016 Flavours of Australia
Where: Seoul, Korea
Where: Bali, Indonesia www.austrade.gov.au/ events
Australian Agribusiness Research and Innovation Showcase 2016 Where: Hanoi, Vietnam http://www.austrade.gov.au
May 31-June 3 Broadcast Asia Technology Exhibition & Conference Where: Marina Bay Sands, Singapore
APRIL / MAY 2016
APRIL / MAY 2016
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