Aussie businesses struggling to bridge China divide

Australian businesses can help to close the cultural divide with Chinese companies by sending their “A-team” to China to develop effective working relationships, according to industry experts.

Tom Stanley, chief operating officer of global China practice at KPMG, says Australians’ lack of Chinese experience represents a major obstacle for companies looking to do business in China.

“Australians need to increase their language and cultural literacy to be effective in Chinese relationships,” Stanley says.

Stanley says companies should also make a point of sending their “A-team” to China to guarantee their best shot at success.

“I really do think that it is important for any company to really be diligent in terms of their decisions who to send to China or who to involve in the management of a Chinese venture or operation,” he says.

Stanley’s comments come on the back of an announcement by Foreign Minister Kevin Rudd, who recently launched a new phase of economic engagement between the two countries, which he has dubbed Australia-China 2.0.

This will see an expansion of Australia’s $100 billion resource-centric relationship with China, with opportunities in financial services, education, tourism and green technology.

“Australia is… well positioned to meet China’s traditional economy needs as well as those now generated by the great economic transformation now underway,” Rudd said in a speech.

“Australia has more to offer China than just minerals and fuels… China’s rapidly urbanising population is demanding more sophisticated services in areas such as in education services, banking, financial and wealth management services, architecture and design, green technologies, as well as tourism.”

“These are areas where further collaboration between Australia and China can bring great mutual benefit.”

Rudd said architecture and design represents a particularly promising area for Australian companies to do business in China.

“We are a world leader in innovative technology and designs that reduce the carbon footprint building… There are great opportunities for Australian companies to provide assistance and mentorship in many areas, including sustainable building,” he said.

Austrade chief economist Tim Harcourt agrees that Australia’s relationship with China extends far beyond the resources sector.

“A resources boom has many knock-on effects, particularly when Australian expertise in professional services is needed at the coal face,” Harcourt says.

“China’s domestic urbanisation is creating all sorts of demand for Australian services exporters.”

“In addition, China’s environmental concerns are creating major contracts for Australian clean energy exporters as well as demand for green designs from our architects and engineers.”

“In fact, new data shows that 23% of all exporting small and medium sized enterprises now sell to China, just behind traditional SME markets like New Zealand, USA and the UK.”

The Australian Chamber of Commerce and Industry says while it welcomes the increasing focus on service exports, it also puts pressure on companies to ensure they do their research on China in advance.

“The lesson for local exporters is there is no substitute for developing a serious business plan and carrying out due diligence,” the ACCI says.

“Accessing opportunities need to be tempered with a willingness to address barriers to doing business, including access to capital and the opaqueness of legal systems, including the need for clarity in contractual and intellectual property rights.”