MAKING SISTER CITY RELATIONS WORK FOR THE ECONOMIC
12 March 2002
Local Government and Shires Associations NSW (LGSA)
Australian Sister Cities Association (ASCA)
Australia China Chamber of Commerce and Industry of New South Wales (ACCCI)
ACCCI Key City Strategy and Programme in China 2002/2004
From my quite lengthy remarks in the earlier session this afternoon you will understand that Chamber has had both successes and failures in China over the last 25 years since its foundation on 16th September 1976.
Indeed the very establishment of ACCCI, after the formal recognition by the Whitlam Labor Government of the People’s Republic of China as the sole legitimate authority in China, effective from December 1972, can be viewed as a struggle between those wishing a centralised operation out of Canberra and those believing in a business based decentralised structure out of Sydney, the financial and commercial capital of Australia and New Zealand.
There is a continuing philosophical contest in Australia between ACCCI and other organisations with agendas Chamber believes to be too heavily influenced by the competing political parties in their campaigns for control of federal government, large overseas professional legal and accounting bodies and major corporate groups in mining, banking and media, just to mention a few.
I repeat again, Chamber is a non-government, non-profit, voluntary association of business organisations and persons working to strengthen and deepen non-government economic linkages between Australia and China.
From the Australian and New Zealand perspective this essentially means SME, small to medium sized business, linkages. The role of Chamber as an alternative to the influence of political parties, national professional bodies and international corporations, all of which have potentially massive economic power, remains a very worthwhile function in the facilitation of small and medium enterprises entering the China markets.
For SME success there needs to be a “level playing field” or equal opportunity in international business across national boundaries and regions, and that is why Chamber has concerned itself with both the global issues of the WTO, APEC and the various Human Rights Covenants, and also the legislative necessities of political good governance, professional duty of care and corporate ethical behaviour.
The ACCCI Key City Strategy encompasses all of these considerations and more.
It is about:
playing a small role in the opening up to the world
of the Chinese civilisation, over 20 per cent of the human race, a policy
launched in December 1978 by the Government of the PRC;
helping to spread the economic benefits and
opportunities of this global integration throughout all the great cities,
large and small, of China in a way, which maintains social stability; and
v assisting Australia’s, and New Zealand’s, penetration of the vastly different markets of China – akin to all of Europe between Gibraltar and the Russian Urals – in a way which enriches and celebrates our unique cultural heritage and place in this new global society of the 21st century.
As always there is a history to these things, and history must be understood if the same mistakes are not to be made over and over again – the invention of square wheels is I think almost legendary in Australia and perhaps New Zealand.
Therefore a little ACCCI history:
1974/76 – the separation from the Canberra
centrists with the establishment of ACCCI in New South Wales;
1978/82 – the establishment by ACCCI (NSW) of
Chambers in all States from Victoria in 1978 to Western Australia in 1982 –
as well as assistance for New Zealand;
1979/85 – the contest to control ACCCI nationally
between NSW companies and the “Melbourne lawyers and their allies” ending
with their expulsion/departure and the establishment of the rival ACCCI LTD
1985/91 – the years of the takeover battles, legal
actions and unification negotiations ending with the ACCCI of New South Wales
deciding to implement its own city based China strategies;
1991/96 – the struggle for the recognition of the
Chinese Central, Provincial and Municipal Governments, and the Australian
Federal and NSW Governments, ending in the collapse of ACCCI Ltd in Canberra
and its takeover by the ACBC (Australia China Business Council); and
v 1996/2001 – the build up of ACCCI experience and expertise through the signing of ultimately 43 Co-operative Agreements with key Chinese cities at the official levels of Chief Trade Representative, appropriate Deputy Mayor and Party Secretary and ending with the decision to launch the ACCCI Website on 14th September 2001 and to concentrate on 200 Chinese cities and 100 Australian and New Zealand cities.
In outlining and discussing the Chamber strategy and programme I ask you to keep in mind this history. The key city strategy is not static, it has evolved over time and will continue to do so in the future. The programme is subject to cultural, economic and political influences and events not only in China and Australia but also in the Asia Pacific region and globally.
As a general principle ACCCI has attempted to keep the political influences of Canberra, Sydney and Wellington in Australasia, and Beijing, Shanghai, Guangzhou, Hong Kong and Taipei in China, at arms length. There are many reasons for this policy too numerous to explain at this forum. Each of these cities has been treated in a special way, which I will briefly touch upon in a few minutes.
But first I want to give you an overview of the line of march for the next few years – say 2002/2004.
ACCCI as you know has four front line committees – Trade Policy, Commercial, Public Affairs and Cultural – reporting to the two Vice Presidents. It also has three functional committees reporting to the President – National Liaison, China Liaison and Financial.
In dealing with a country/region such as China your organisational structure is vital – a truly make or break factor in success. From the beginning just as Chamber wanted the Australian base to be Sydney and the NZ base out of Auckland, in China the decision was to by-pass the major coastal cities for Continental China and in particular Wuhan in Hubei Province, Central China, because of its strategic logistical position and cultural heritage as a leading city of modern China.
From about 1982 Chamber received many delegations from Hubei Province. Indeed some 17 meetings took place to facilitate a Sister City Relationship between Newcastle and Wuhan , which ended in failure with the events of June 1989, and Australian trade sanctions.
Nevertheless the 1980s experience toughened the ACCCI resolve, and meetings with Hubei resumed by the end of 1990. Indeed the first official co-operative agreement signed by me on behalf of ACCCI was in the presence of, and at the direction of, the Governor of Hubei Province at a ceremony in the Mitchell Galleries, State Library of New South Wales, in 1992.
In September 1994, together with current Vice President Marilyn Walker, I publically announced that ACCCI would seek to develop a special relationship with Wuhan City. That decision was then pursued relentlessly until the formal launch of the ACCCI CCCC (Central Communications Centre in China) in Wuhan on Australia Day, 26th January 2002.
It has taken almost 20 years for Chamber, against all the objections and despite all the difficulties, to achieve this city based strategy objective. I hope it does not take another 20 years before I can be present in Wuhan when the Chamber officially opens, at another Australia Day Ceremony, the ACCCI Plaza incorporating the offices of our national CCC Headquarters for China.
Regional Communications Centres (RCCs)
Again, as you can note from the Key Cities page on this Internet site, Chamber has divided China into seven (7) zones or groups of provinces and cities. It is anticipated that by the end of 2002 there will be functioning Australian Educational and Business Training Centres acting as Regional Communication Centres for Chamber in:
Changchun (North East),
There may even be an eighth RCC for the Sub-border Zone provinces of Yunnan and Guangxi Autonomous Region – perhaps Nanning as Austrade already has an office in Kunming, and Chamber policy has always been to avoid the doubling up of limited Australian resources.
Each of these RCCs would obviously be responsible for the provinces in the Zone, and more importantly the 200 target cities designated on the ACCCI Website which would include among other things helping existing and future Sister City Relationships with the 100 Australian and New Zealand cities as explained earlier this afternoon.
Chamber is gradually formulating a criteria for evaluating Chinese and Australian cities and thereby the ability to set priorities for commercial activities. The objective is to be able to assess each city in terms of at least four criteria:
Trade – between the Chinese city and Australia and the companies involved. It may not be possible to identify trade between an Australian city and China.
Investment – outward investment from Chinese cities to Australia, and inward investment by Australian companies to Chinese cities. Investment strategies and priorities of cities in both countries should be available.
Industry – plans by Municipalities and major locally based companies should be accessible to identify both immediate opportunities and growth complementarities with cities in the other country.
Commerce – business relationships are usually confidential, however a great deal of information on relevant matters are on the public record through government agencies, trade associations, universities and media outlets.
A pattern of economic relationship between China and Australia can be built up in this way suitable for evaluation purposes and deciding priorities among cities and therefore useful for decision-makers in SMEs
There are approximately 665 official cities in China. These are grouped into about 5/6 categories according to population. They cannot be approached in the same way for many reasons apart from population and province considerations. This was learnt by Chamber very early in the 1990s.
Hence a “social” perspective was developed with a strong human rights overlay, namely viewing China according to the needs of its people and their aspirations for a better life. Chamber has formulated a programme, which looks at:
the rapid urbanisation of China and the need for
the rural areas of China and the need for
industries to provide work,
the economic infrastructure to open up China
domestically and internationally,
v the cultural, recreational and sporting aspirations of the Chinese people
Australian SMEs with clearly appropriate capabilities are being facilitated to compete for the identified economic opportunities presented by Chinese cities and their resident business organisations whether SOEs or private businesses.
Each year ACCCI organises four Workshops to review current trends and hone the strategy and programme of the Chamber in these four areas of Urban Services, Rural Industries, Infrastructure and Commercial Culture.
More than 20 years ago Chamber recognised the special circumstances of cities such as Beijing, Shanghai, Guangzhou, Hong Kong and Taipei, and that their unique characteristics in China required tailored approaches.
Because Beijing is the political capital of a communist ruled country, it is of overwhelming strategic importance – much more so then even Washington, USA. The problem is how to deal with this overwhelming presence.
The Australia China Bilateral Government relationship, and specifically the annual ministerial meetings held alternatively in Beijing and Canberra, in theory determine the priorities of the economic relationship. These priorities on the Australian side are set by the political party controlling federal government, and are influenced by the major mining companies, agricultural associations, banking, media and international law and accounting firms.
This strategy in terms of benefiting SMEs was always destined for failure.
Firstly, because governments in democracies have a bad habit of changing - both the political party and the ministerial control are usually short term and therefore not good for planning purposes or institutional memory.
Secondly, because the enormous growth in the Chinese economy over the last 24 years could be anticipated so that it was well known Australia’s importance to China was a diminishing factor - therefore the Canberra/Beijing annual meetings may well become a relative strategic and economic irrelevancy.
Thirdly, because major Australian trading companies have been either Branch Offices or subject to overseas takeover and hence decisions on China are not made here – note BHP, TNT, AWA and News Corporation to mention a few. Likewise regular corporate collapse – HIH, Ansett, NSW Grains Board, Burns Philps and so on – also denies “flagship” potentially similar to Japanese, USA and EC corporations.
Fourthly, because major international legal and accounting firms are about “intellectual asset stripping” that is gathering information and reselling it, not providing facilitation services for small to medium sized Australian trading and investment firms
Thus Chamber had to explore new ways of relating to Beijing.
In May 1995 ACCCI signed a Co-operative Agreement with the Beijing CCPIT. This was in many respects a ceremonial relationship as there was no effective way Chamber could meet the demands of economic opportunities in competition with the major companies of North America and Europe without substantial Australian Government and corporate support. It did however give ACCCI a window into Beijing and its twin city Tianjin.
Out of the meetings however came the realisation of the diversity of Australia China economic relations and how little was really known in Australia as compared to China. A previous and limited attempt to compile a definitive paper by the Keating Government in 1992 also pointed in this direction.
Chamber from about late1997 began to promote the idea of some form of Australia China Trade Treaty, which would provide an umbrella co-operative agreement in which future Chinese needs, and Australian capabilities could be identified. Subsequently the Australian Labor Party, in opposition from March 1996, took up the idea of such a Treaty, which was strongly advocated, by Kim Beazley and Senator Peter Cook from about 2000.
About this time the ACT Government entered a Canberra Beijing Sister City Relationship, which from the Chinese perspective is an excellent back door entry to the Federal Government Bureaucracy and Departments since there are a very small number of business opportunities for Beijing in Canberra.
This in turn has given Chamber the incentive to approach the Beijing City co-operation question in a new way and we are currently talking to several “think tanks” with whom ACCCI has co-operated over recent years.
Shanghai has a Sister State and Sister City Relationship with Queensland and Brisbane respectively. The city sought a relationship with Sydney in the early 1990s but this was declined by the Council of the City of Sydney, whilst the NSW Government was not interested because of the existing NSW/Guangdong Relationship.
Yet Shanghai is likely to become the financial and commercial capital of East Asia within 50 years, eclipsing Singapore, Hong Kong and Tokyo as strategic economic centres. The only credible economic partner in Australasia is Sydney.
A number of years ago, Chamber entered very serious negotiations over a considerable period of time with Shanghai based public and private organisations to establish a Sydney/Shanghai Economic Corporation with the purpose of developing institutional connections between the two cities. The negotiations collapsed due to an inability to agree on both managerial responsibilities and financial benefits among the potential shareholders.
Nevertheless Chamber still believes there is an opportunity for a provincial level relationship between New South Wales as the gateway to Australia and New Zealand, and Greater Shanghai as the gateway to Central China. A submission to the NSW Premier’s Department has recently been made on this “project” and a number of meetings held with the NSW Department of State and Regional Development (DSRD) concerning inward investment from Shanghai to Sydney. ACCCI has also spoken to Invest Australia and Invest New Zealand.
In 1979 Chamber supported the establishment of the first Australian Chinese Sister State Relationship between New South Wales and Guangdong Province, and again in 1986 the Sydney-Guangzhou Sister City Relationship.
ACCCI has strongly supported the annual Ministerial meetings and business seminars and recognises this economic partnership over more than 20 years as critical for NSW economic development. It will be interesting to see whether Guangzhou as the capital of Guangdong Province begins to assume much of the financial and commercial power of Hong Kong over the next 50 years.
From the Chamber perspective this relationship provides an opportunity for the exploitation of business opportunities not possible elsewhere in China simply because of the cultural, social and economic understanding resultant from both the longevity of the relationship and the historical Cantonese speaking migrant population to Australia.
Unfortunately, as with many things in Australia, organisations only do half the job – NSW tends to concentrate on Guangzhou and has only recently focused on the other major cities in Guangdong Province, and the City of Sydney is really only the CBD and therefore does not include the other 40 plus councils of Sydney in Guangzhou activities.
Hence Chamber has decided to establish a non-government Sydney-Guangzhou Sister City Relationship based on the councils of Greater Sydney (Newcastle/Wollongong/Penrith) and Greater Guangzhou re the Pearl River Delta. ACCCI is currently seeking the right organisation to provide the secretariat in both Guangzhou and Sydney.
I have now been speaking for quite awhile and apart from chairing the Sister City Forum this is my third speech today. Therefore I will spare you the details of Chamber’s involvement with the Hong Kong SAR and Chinese Taipei or Taiwan Province. Simply to say that the ACCCI brief is all of China and we take that mission very seriously and are working in a systematic way to improve relations with the great metropolis of Hong Kong and key cities in Taiwan Province such as Taipei, Tainan and Kao-hsiung.
I urge you to regularly visit this Website for a progressive update on Chamber strategies and programmes for individual cities in both China and Australia as they evolve.
this paper, and my previous ones today, have given you food for thought.