Get on the fast boat to China

You’ve heard of the slow boat to China, well now the emphasis is on speed

China is opening up as an excellent market for Australian marine exports in major cities like Shanghai and the “second tier” cities Qingdao (described to me as a “small country town” of only eight million people!)

In fact the attraction to all things boaty is contagious in China. According to the Australian International Marine Exporters Group, the China International Boat Show attracted more than 20,000 visitors and 320 exhibitors this year in Shanghai. According to Peter Ironmonger, Australia’s Trade Commissioner in Shanghai: “Australia has a great reputation at these shows and our contingent this year was double that of last year”.

There’s a wide range of marine exporters in China as Australia exports everything from luxury yachts to dinghies. Companies like Mustang (which sells luxury powerboats) are doing well, as is Coursemaster (which designs high-tech autopilot steering systems) and Ever Peace Industry (which sells small Australian sailing dinghies).

Mustang has an office in Qingdao as well as the port city will be hosting the sailing at the 2008 Beijing Olympics and sees Australia as a natural partner.

As Austrade’s Huang Yong Tao says: “Qingdao is famous for three things: German heritage, beer and sailing. Whilst the Germans brought the beer and the architecture, it is definitely the Australians who are influencing the sailing. Australian companies do everything from yacht design to catamaran techniques as well as speedboats.”

The success of Australia’s marine industry is a good example of the growth in the export activity of Australian small and medium sized enterprises (SMEs). In fact, again this is a matter of speed.

Around two years ago, only around 10% of Australia’s exporting SMEs sold to China. Now, according to new research by Austrade and Sensis, that figure is now 20%. In fact, more Australian SMEs now export to China than the whole of continental Europe.

It just shows that China’s rapid economic growth means that you don’t have to be a big fish like Rio Tinto or BHP Billiton to succeed in the Chinese market. In fact, Austrade research shows that there are now over 3200 companies exporting to China in merchandise trade alone and its growing rapidly.

Australia’s marine exporters have stuck their toe in the water, and there’s plenty of room for other small business Australian exporters to do the same.

Doing business in China

Key facts:

• Australian goods exports to China: $18,093 million (key sectors: iron ore, wool cooper, alumina, wheat and sugar), 2005-06.
• Australian services exports to China: $3,212 million (key sectors: education, tourism)
• Australian-China two-way trade: $41,295 million, 2005-06
• Key growth sectors: resources, agribusiness, education, professional services, consumer/lifestyle products
• Number of Australian businesses exporting goods to China: 3245

Source: DFAT, ABS, Austrade.

Tips for new exporters:

• Halve expectations, double time and budget.

• Research the market – internet and consultants.

• Seek advice and keep on seeking it.

• Take qualified advice on taxation, IP, business structuring, contracts.

• Selection of quality partners is absolutely critical.

• Beware the “guanxi” waver.

• Start where you have a connection.

• Consider second and third tier locations.

• Go for organic growth rather than big bang.

There is no single sustainable magic bullet.

*Tim Harcourt is chief economist of the Australian Trade Commission and author of Beyond Our Shores: www.austrade.gov.au/economistscorner