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The Australia-China Chamber of Commerce and Industry of New South Wales |
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TRADE AND INVESTMENT STRATEGIES WITH CHINA Implementation of the Key Cities Strategy in China CONTENTS |
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The booklet is prepared by the
Commercial Committee of the Australia China Chamber of Commerce and Industry
of New South Wales, which is responsible for the implementation of ACCCI Key
Cities Strategy by: v
arranging for Chinese business delegations to visit
Australasia with a view to investigating business opportunities, making
contact with appropriate potential business partners and assisting in
negotiating business cooperation arrangements, v
organising Australian business delegations to visit
China for a similar purpose of investigating business opportunities, making
contact with appropriate potential business partners and assisting in
negotiating business cooperation arrangements, and v
arranging and/or providing business services for
both Australian and Chinese enterprises to achieve their business
objectives. The principal objective of this
booklet is to describe how and when these implementation tasks will occur. The Chamber currently plans to sponsor six
delegations to China each year, so that all of the key cities can be visited
every three years. Incoming delegations from China
are likely to be at least double than number. In order to maximise the benefits obtained from these organised
delegations, each one will be fully planned and coordinated within the
overall Key Cities Strategy. |
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At the most basic level, the Key Cities Strategy is simple
and straightforward. It is to share
that experience with all Chamber members and with cooperating organisations
in Australia and China. The Chamber has consistently
adhered to three basic objectives: v
To promote Australian business, in general, within
the context of two-way trade and investment with China. v
To promote the Chamber and the businesses of its
member companies with businesses and organisations in China. v
To promote various Chamber projects, such as Rugby
Union Football and Dragon Boat Racing in China and Australia, which have the
principal purpose of bringing the business communities together. The Chamber recently
consolidated strong relations with the following organisations in China: v
The China Chamber of International Commerce
(CCOIC), also known as the China Council for the Promotion of International
Trade (CCPIT) v
The Chinese People’s Association for Friendship
with Foreign Countries (CPAFFC) v
The China Economic and Trade Consultants
Corporation (CONSULTEC) of the Ministry of Foreign Trade and Economic
Co-operation of China (MOFTEC) In addition, negotiations are
underway to establish closer institutional co-operation with the following
organisations in China: v
The All-China Federation of Industry and Commerce,
also known as the China Chamber of Commerce v
The China Academy of Urban Planning and Design v
The China Sports Administration Centre v
The China Society for Strategy and Management
Research |
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During 1995, the Chamber
received the honour of being invited to sign a cooperative agreement with the
Beijing Sub-Council of the CCPIT.
Because Beijing does not have a Sister City Agreement with any
Australian city, unlike Sydney-Guangzhou, Melbourne-Tianjin or
Brisbane-Shanghai, ACCCI with its headquarters in Sydney has now accepted
such an agreement with Beijing. Signing the agreements is only
the beginning of the process of mutual co-operation. During the next several years, the Chamber
intends to implement the agreements with a view to ensuring that two-way
trade and investment between Australia and China grows at an increasingly
rapid rate. |
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v
mayors and senior government officials, v
heads of CCPIT branches and sub-branches, v
Communist Party Secretaries and related committee
personnel, and v
managers of major industrial enterprises and
subsidiaries. This task has been given a high priority by the ACCCI
State Council. |
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As a result, keeping track of
the latest developments in an effort to determine the most advantageous trade
and investment opportunities has become increasingly more difficult. Through contact with the
cooperating organisations in China, the ACCCI expects to accumulate a wider
range of information relating to these opportunities than can be obtained by
any other means. This information
will be made available to Chamber members in the following ways: Workshops in selected areas of trade and investment will be conducted for the
purpose of canvassing members’ interests and commitments in those areas. Follow-up work will include a request for
similar information from the Chinese counterpart organisations. Seminars for members and friendly
organisations will be convened for the purpose of announcing recommended
strategies in particular aspects of two-way trade and investment with
China. These seminars will include a
variety of participants, each of which will possess special knowledge and
experience that will be of value to other member companies. Import/Export Forums
represent the next tier in the planned exchange of information between the
Chamber and its members. The basic
idea of a forum is to bring together a wide range of people for the purpose
of discussing common problems and considering common solutions to those
problems. Forum topics will be
general in nature, in the sense that they will apply to many types of
enterprises, but each such topic will represent a practical aspect of trade
and investment relations. Publications will be released from
time to time containing information in a compact and useable form. Most of these publications will be
available free of charge from the appropriate Chamber committee. However, larger and more extensive
collections of information in the form of handbooks or other major reference
books will most probably require payment of a fee to cover the printing
costs. |
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A full range of documents will
be prepared in advance of departure dates.
These documents and the discussions associated with them will comprise
“homework” for the participating Chamber members and cooperating organisations. The nature of the briefings will
depend to a large extent on the prior knowledge and experience of the
participating companies and organisations.
In each case, however, short biographical data will be available on
key personnel and full descriptions will be made available relating to
company or organisational profiles. The purpose of this information
is to enable the “stage to be set” for mutually productive discussions and
negotiations, thus avoiding the loss in time that would otherwise be required
to obtain the information during the discussions or negotiations. |
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Market research: |
In addition to establishing
cooperative arrangements with CONSULTEC, the Chamber has also established
working relations with a number of consulting firms whose principal business
is the evaluation of trade and investment projects with China. The role of the Chamber in these
activities is to ensure that the quality of the market research services is
maintained by those consulting firms receiving Chamber recommendation. The Chamber can also be of assistance in
communicating the research needs of particular members, and thus to avoid
misunderstandings relating to the market research tasks. |
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Much information can generally
be obtained from experiences of other Chamber members. One of the objectives of the Chamber’s
Executive is to assist in avoiding the practice of “rediscovering the wheel”
by encouraging a greater degree of cooperation among members. |
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The task of matching needs in
China with Australian enterprises that can potentially satisfy those needs is
an important as a first step in the search for joint-venture partners. Much assistance in performing this task will
emerge from the exchange of information as described above. |
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To assist in this area, the
Chamber has taken several initiatives:
The first is to maintain a
strong and active Cultural Committee within the Chamber. The second is to ensure that all
members are sufficiently versed in these matters to avoid potential
embarrassment. The third initiative is to keep
Chinese visitors, as well as hosting organisations in China, informed of
Australian practices so that different rituals, ceremonies and protocols are
mutually understood. |
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Since it has become clear that
no other organisation in Australia has acquired the same degree of “Old
Friend” status, that position entails a substantial responsibility. In order to preserve the status, which was
acquired over a long period of time, care must be exercised in responding to
these requests. To make the process clear to all
who might desire such assistance, a few guidelines have been established and
are described in Appendix 1. |
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Although such a strategy is
likely to have less immediate effects than the direct promotional campaigns
that are undertaken by the Chamber’s Public Relations Committee, a focus on
longer-term relationships is the only way to ensure that the benefits from
enhanced trade and investment can be sustained. Chamber members will also
benefit from the more general, longer-term focus of building a solid basis
for trade relations. Members will
also receive a reduction in fees and charges for Chamber activities and
services. Perhaps of greater importance is
the advantage given to members as exclusive participants in small-group
activities and in their ability to make first claims on the Chamber’s
resources. The objective of promoting
Chamber activities for the purpose of bringing the business communities
closer together can succeed only with support from Chamber membership. In all cases, this support will be
publicly recognised, both in Australia and in China. The resulting benefits are
generally intangible, but they are nevertheless extremely important to
business success in China. Support
for these cultural activities will be interpreted as support for the
objectives promoted by the Chamber.
This will convey a stronger sense of organisational inter-linking than
would otherwise be apparent. In Australia, this inter-linking
is not obvious to outsiders and is generally less visible than efforts to
appear individualistic. In China,
however, organisational inter-linking is easily understood and appreciated,
while attempts to downgrade it are often regarded with suspicion. Organisational ties are a
fundamental part of joint ventures, and the willingness of Australian
businesses to recognise these ties must be demonstrated to potential joint
venture partners. The Chamber has
painstakingly built up a superstructure of linkages, the purpose of which is
to facilitate counterpart linkages between individual enterprises. |
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Urban Services Rural Industries Infrastructure Commercial Culture The Chamber’s booklet entitled The Network of
Cooperative Agreements with Cities and Provinces in China provides
a basic definition of each of the four areas. For the implementation of the Key Cities Strategy, these areas
form the basis of the commercial activities that are being sponsored by the
Chamber. Urban services applies to
general services and all commercial activities in urban areas, except for
public utilities and construction which are included in infrastructure. The concept of services is interpreted
broadly to include activities of the manufacturing sector that are located in
urban areas. Thus, a distinction is made
principally between urban and rural locations, with infrastructure comprising
activities that generally serve both locations. Since it focuses on the location
of the market served by the respective enterprises, the distinction between
urban services and rural industries is made with a view to facilitating trade
delegations to China, as well as delegations from China to Australia. It is also likely to achieve greater common interest among
businesses than normally occurs with the more traditional classification
according to primary, secondary and tertiary industries. For example, rural-based
manufacturing enterprises are typically more closely related to agricultural
interests than to other enterprises normally classified as being part of the
more widely defined secondary industries.
Similarly, establishments supplying services to urban centres are
normally different from those serving rural areas, despite the provision of a
similarly classified service. Sub-divisions within this area
of activity include the following: v
manufacturing; v
urban transport, storage and local-area
communications; v
finance, insurance and business services; v
international trade services; v
real estate and property; and v
a range of government services, such as public
administration and health administration. The implementation of the Key
Cities Strategy in the area of urban services will adhere generally to these
sub-divisions, with an expectation of a gradual narrowing of focus depending
upon trade and investment opportunities in both Australia and China. For example, specific
manufacturing industries would be designated as major areas of activity for
the Chamber if sufficient interest is generated from both Chinese and Australian
enterprises. This includes activities that
are conventionally defined in terms of primary production, secondary
industries that are either located in rural areas or have a heavy dependence
upon rural output, and rural services.
The importance of the rural sector to China is emphasised by the
employment of about 68 per cent of the workforce. In Australia, the sector employs
only 5.3 per cent of the workforce, but it is nevertheless recognised that
Australia is a major producer of agricultural products. Both nations have about the same amount of
land in agriculture – 470 million hectares in Australia compared to about 400
million hectares in China. The generally understood
sub-groupings within rural industries include the following: v
agriculture. v
aquaculture, including fisheries and the processing
of fish products, v
livestock and animal husbandry, v
forestry and timber industries, v
mining and energy production, and v
township and village enterprises. As noted in the previous
discussion, many of these sub-groupings supply products and raw materials for
manufacturing. Hence, the linkage
between urban services and rural industries is generally strong. In developing strategies for
rural industries, the Chamber expects to devote a considerable amount of
attention to the differences among the various regions in China. For example, fisheries in China are
located mainly along the coastal region, but 40 per cent of the annual catch
of about 10 million tonnes of fish and shellfish comes from freshwater
fisheries. Similarly, forestland in China
is concentrated in the northeast (Heilongjiang, Jilin, and the eastern part
of Inner Mongolia) and in the southwest (the eastern part of Tibet, Sichuan,
Yunnan and clusters of mountainous regions to the east). Hardwoods in these forests are utilised in
the production of high-quality hand-carved furniture for domestic and
international markets. Mining and energy production in
China is associated mainly with the western provinces, as well as the uplands
of South China and the northeast.
Because of its geologic diversity, China possesses an extremely wide
array of mineral resources. The only
minerals in which the country appears to be deficient are vanadium, chrome,
and cobalt. Another important element in the
Chamber’s Key Cities Strategy is the identification of both the differences
and similarities between Australia and China that are likely to give rise to
trade and investment opportunities. For example, despite having
large amounts mineral resources, China relies on the importation of ore and
scrap metals to satisfy the domestic demand for ferrous and non-ferrous
metals, and to supplement local supplies.
With some agricultural products,
Australia and China are very similar.
For example, in 1992, both nations produced nearly the same amount of
barley (3,242,000 tonnes for Australia, compared to 3,230,000 tonnes for
China). Both countries are major
producers of wheat. China ranked
first in the world in 1992, producing 91,002,000 tonnes, and Australia ranked
14th with 14,200,000 tonnes. There are other instances for
which the two sectors are quite different.
Australia is among the top 10 exporters of food and animals, whereas
China’s agricultural sector is oriented principally to supplying food for its
own population. This situation could change,
however, as China is beginning to specialise in particular rural products and
export them in exchange for other products for which it is unable to achieve
global efficiency. The strong incentive for national
self-sufficiency that occurred for several decades after 1949 is slowly being
replaced by a desire to achieve international specialisation in production
and trade. Although this desire is
more apparent in manufacturing, it can be expected to occur also in rural
industries. This refers to the framework or
foundation of support for enterprises or public sector activities. Common usage of the word, according to Merriam Webster’s Dictionary of English
Usage, is rather vague but typically includes such things as power
supplies, sewers, bridges, roads and refineries. In more general contexts, it
refers to a set of economic or social factors that contribute simultaneously
to increased productivity in more than one enterprise. Intellectual infrastructure, for example,
includes various skills and acumen that assist in achieving success in
virtually all areas of business activity. Convenient sub-groupings for
this category include the following: v
land transport systems (rail and road), including
passenger and freight facilities, railway and road construction, traffic
control systems, and terminal security systems; v
air transport systems, including airport passenger
and freight facilities, aircraft take-off and landing facilities, aircraft
ground and flight control, and airport security systems; v
sea transport systems, including passenger and
freight dock facilities, seaport construction, port control systems, port
security systems; v
telecommunications, including public switched
telephone networks, local area network facilities, personal and business
telecommunications equipment, microwave transmitters, optical fibre cable and
satellite earth stations; v
electricity supply, including generation,
transmission and distribution; v
gas supply, especially transmission and
distribution; v
urban and rural water supply and reticulation; v
wastewater treatment; v
solid waste disposal; and v
pollution control. Although many of these sub-group
activities are generally associated with urban problems, the nature of
infrastructure is that its beneficiaries are widely spread and are not
necessarily associated with a specific area.
Infrastructure needs
nevertheless vary according to region.
In most parts of China infrastructure development has not kept up with
the need for improvement. This has
resulted from the rapid rate of economic growth and from the inability to
assess infrastructure requirements associated with the faster pace of
economic activity. Chamber strategies include the
identification and monitoring of infrastructure needs of the key cities and
their surrounding areas. The process
will rely heavily upon information supplied from the cities and provinces
that have entered into cooperative agreements with the Chamber. The task is then to match the
needs of China with Australian enterprises that are able to meet those needs. Commercial culture potentially
includes all performing and visual art forms. Suggested projects are assessed jointly by the Chamber’s
Cultural Committee and the Funding Committee in terms of their cultural
integrity and their ability to attract major sponsorship. The notion of commercial culture
recognises that the international transfer of cultural activities involves
major costs in organising the transfer by way of remote exhibition, tour or
demonstration. These costs arise from promoting
the activities and giving them logistical support in the form of security,
insurance, venue, travel, accommodation and payment to performers and other
persons involved. The notion also recognises that
a number of cultural activities are capable of generating sufficient funds to
offset these costs. However, if
outgoings cannot be recouped from box office takings, then supplementary
funding in the form of sponsorship may be required. The Chamber has maintained over
a long period of time that cultural and sporting exchanges with China provide
an excellent means for facilitating business interests. The corporate world has long recognised
that such sponsorship on a domestic basis yields excellent dividends in
goodwill. The same should apply in
the task of obtaining support for new international ventures. The Chamber’s principal role in
this area of concentration is therefore one of assessment and administration
on behalf of corporate contributors.
In so doing, the Chamber provides a coordinating function that
minimises duplication of effort and ensures that maximum benefit is obtained
from these exchanges. In working closely with
counterpart organisations in China, the Chamber is in a position to encounter
a wide variety of commercial culture prospects. |
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In order to achieve maximum
benefit for participants, each visit concentrates on opportunities in a particular
business zone (discussed more fully below). The Chamber has developed a
process to enhance the value of these visits. The process involves the following: Participants are
initially briefed on the opportunities available in China. Documents are provided giving details of specific needs and the
current business activities of Chinese enterprises in each business
zone. Workshops and
seminars are
conducted prior to the departure.
These activities are intended to insure that each trade delegation to
China ‘does its homework’, thus utilising the time in China more efficiently
and effectively. Where possible,
complete information is made available about the Chinese personnel who will
be meeting the delegation. This
generally saves considerable time in determining who’s who in China. Brief seminars are conducted on arrival in
China for further briefing and initial discussions with Chinese parties to
clarify particular issues. On-site inspections relating to opportunities of
interest are arranged to suit the needs of the Australian enterprises that
have joined the delegation. This
information is generally compiled during the initial workshops, seminars and
briefings and varies considerable from one visit to another. It reflects the Chamber’s desire to customise
each visit for the purpose of achieving specific objectives and of providing
the maximum assistance to the participants. Where appropriate, Chamber
representatives participate in the initial business negotiations with
translators and specialists in particular aspects of business support
services. In most cases, the visits are
accompanied by cultural activities including sightseeing. These are designed to improve the level of
understanding between Australia and China and to allow an opportunity for
discussions to extend beyond the main area of business interests. Participation in Chinese Trade Exhibitions The Chamber invites
manufacturers and suppliers of machinery or other products or services to
participate in the major trade exhibitions held in China on a regular
basis. These exhibitions give wide
exposure to potential buyers and joint venture partners. Prior to participation, the
Chamber’s Commercial Committee makes every effort to obtain a genuine
appraisal of market opportunities in China for particular products and
services offered by Australian companies and to pre-arrange meetings with any
interested Chinese parties. The Chamber liases directly with
the Australian exhibiters and the Chinese exhibition organisers to ensure
that all Australian exhibiters get maximum value for their promotional
investment. This liaison is particularly
important in making allowances for the substantial differences among regions
in China. Since each exhibition must
necessarily be directed toward local interests and needs, it is essential to
determine these local conditions well before the exhibition takes place. |
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The seven zones are as follows: v
Beijing (and Hebei Province) v
Northeast China v
East China v
South China v
Central China v
Northwest China v
Southwest China Beijing Zone (Beijing, Tangshan and Handan) The best time to visit Beijing
is from September to November, when autumn temperatures are relatively
cool. It is neither hot nor humid and
the foliage is always pleasant.
Winter can be interesting but the temperature during those months can
drop to as low as –20oC, and most Australians consider that to be
a disincentive for late-night strolling.
Spring is short, dry and dusty.
During April and May, the city
experiences the “yellow wind” which brings fine dust particles from the Gobi
Desert. In the summer (June, July and
August) the average temperature is 26oC. Although the temperature falls at night, the humidity often
remains, especially in July. The Beijing Zone covers the
province of Hebei (population 63 million) and the special municipalities of
Beijing (population 11 million) and Tianjin (population 9 million). The two municipalities are considered equal
to provinces in terms of the administrative arrangements in China. The Chamber has cooperative
agreements with Beijing, Hebei Province, Tangshan and Handan. Tangshan is in the eastern part of Hebei
Province, between Tianjin and the border with Liaoning Province. Handan is in the southern part of the
province, not far from Henan Province. Another major city is
Shijiazhuang (population 8 million).
It became the provincial capital when Tianjin came under central
government administration as a special municipality. It is about 250 km southwest of
Beijing. Beijing and Tianjin dominate the
industrial activities in the zone, but there is a substantial amount of new
industrial development along the coastal strip from Tangshan to
Qinhuangdao. Coal is a major resource
in the province, and a main attraction is the Great Wall which spans the
province to the north. Northeast Zone (Changchun, Hunchun/Tumen, Hailar
and Fushun) The best month to visit is June
when the average temperature is relatively comfortable at 10oC to
20oC, though May to September can be relatively pleasant. The very northern part of this zone holds
the record for the coldest January temperature recorded in China, –52.3oC. The Northeast Zone covers the
provinces of Liaoning (population 40 million), Jilin (population 26 million),
Heilongjiang (population 36 million) and the eastern half of the autonomous
region of Inner Mongolia (population approximately 11 million in that
portion). The Chamber has cooperative
agreements with Changchun, (the capital of Jilin Province), with
Hunchun/Tumen (along the China/North Korean border), Hailar (in Inner
Mongolia) and is entering into an agreement with Fushun (near the capital of
Liaoning Province). Other major cities
in the zone are Shenyang, which is the capital of Liaoning Province, and
Harbin, the capital of Heilongjiang Province. The zone is an important one for
many reasons. Liaoning is highly
industrialised, getting its start during Japanese occupation prior to World
War II. Although the other two
provinces lag behind, they are now beginning to develop rapidly. The northeast region is also rich in
natural resources, with large deposits of coal, iron ore, magnesium and
petroleum. East Zone (Ningbo, Changshu, Linyi and Yantai) The best months to visit are
during the Chinese spring and autumn (April/May and September/October). The winter temperatures fall below
freezing and the steady drizzle can be annoying. During summer, the region can be hot and humid, with
temperatures as high as 40oC. The East Zone covers the
provinces of Zhejiang (population 43 million), Jiangsu (population 70
million), Shandong (population 86 million) and Anhui (population 59 million)
as well as the special municipality of Shanghai (population 14 million). The Chamber has cooperative
agreements with Ningbo, Changshu, Linyi, and Yantai. Other major cities in the business zone
are: Hangzhou (capital of Zhejiang Province), Nanjing (capital of Jiangsu
Province), Jinan (capital of Shandong Province), and Hefei (capital of Anhui
Province). Other important centres in
Zhejiang include the islands of Putuoshan and Zhujianjian as well as Wenzhou
in the southern part of the province.
In Jiangsu Province, Zhenjiang and Changzhou are important cities
along the southern bank of the Yangtze River. In Shangdong, Qingdao is well
known and Weifang, Zibo and Jining are important. Anhui is mainly an agricultural-based province, but
manufacturing is developing in Anqing and other cities along the Yangtze
River. The business zone is diversified
and represents an exceptionally large population. This region has developed rapidly in recent years. South Zone (Shenzhen, Fuzhou, Nanning and Basuo/Sanya) The best months to visit are
October through to March when the average temperature ranges between 10oC
and 25oC. The climate from
April to September is hot and humid, with a possibility of typhoons from July
to September. The South Zone covers the
provinces of Guangdong (population 66 million), Fujian (population 32 million),
Taiwan (population 22 million), Jiangxi (population 40 million) and Hainan
(population 7 million), Guangxi Autonomous Region (population 44 million) and
Shenzhen Special Economic Zone (population 1 million). The Chamber has cooperative
agreements with: Shenzhen; Fuzhou, capital of Fujian Province; Nanning,
capital of Guangxi Province; and Basuo/Sanya in Hainan Island. Other major cities are Taipei,
capital of Taiwan Province; Nanchang, capital of Jiangxi Province; Xiamen
Special Economic Zone in Fujian Province; Zhuhai Special Economic Zone near
Macau; and Haikou, capital of Hainan. Central Zone (Luoyang, Wuhan, and Zhuzhou) As with East China, the best
months to visit are during the Chinese spring and autumn (April/May and
September/October). The winter
temperatures fall well below freezing and the region can be very hot during
the summer. The Central Zone covers the
provinces of Shanxi (population 30 million), Henan (population 89 million),
Hubei (population 57 million), and Hunan (population 63 million). The Chamber has cooperative
agreements with Luoyang, Wuhan, capital of Hubei Province, and with Zhuzhou,
a city in Hunan Province. Other major cities are: Taiyuan,
capital of Shanxi Province; Zhengzhou, capital of Henan Province; and Changsha,
capital of Hunan Province. Northwest Zone (Xi’an, Urumqi, Gansu and Qinghai) Winters are to be avoided in
this region since the minimum temperature could be as low as –30oC. Although summers can be hot, at least it
is dry. The best months to visit are
September/October and March/April when the average temperature is between 0oC
and 25oC. The Northwest Zone covers the
provinces of Shaanxi (population 34 million), Gansu (population 23 million),
Qinghai (population 5 million), the western half of autonomous region Inner
Mongolia (population 10 million) and autonomous regions of Ningxia
(population 5 million) and Xinjiang (population 16 million). The Chamber has cooperative
agreements with: Xi’an (capital of Shaanxi Province), Urumqi (capital of
Xinjiang Autonomous Region), and with Gansu and Qinghai Provinces. Major cities include Lanzhou (capital of
Gansu Province) and Xining (capital Qinghai Province). Yinchuan is the capital of Ningxia
Autonomous Region. Southwest Zone (Nanchong, Chongching, and Kunming) The best months to visit are
September/October and March/April when the average day temperatures are in
the 20oC to 25oC range. The Southwest Zone covers the
provinces of Guizhou (population 35 million), Sichuan (population 111
million), and Yunnan (population 39 million), and the autonomous region of
Tibet (population 2 million). Apart from Sichuan Province, the
southwest is relatively underpopulated and less developed. The railway line between Chengdu and
Kunming (completed in 1970 after 12 years of construction) stimulated
population growth along that corridor, with new industries including iron,
steel, farm machinery and chemical fertilisers. The natural resources of the region are considerable and remain
largely untapped. The growth potential
for that part of China is therefore believed to be substantial, though it
make be some time before this potential is realised. The Chamber has cooperative
agreements with Nanchong, Chongching, and Kunming, capital of Yunnan
Province. Other major cities
include: Guiyang (capital of Guizhou Province), Chengdu (capital of Sichuan
Province) and Lhasa (capital of the Tibetan Autonomous Region). Several types of visits are
possible. These include the
following: v
Exploratory visits and arrangements for special
events such as trade fairs and exhibitions. v
Evaluation of specific business opportunities with
meetings and site visits fully planned in advance. v
Follow-up visits for detailed information or for
negotiations. The duration of the visits
depends upon the relevant business zone and upon the objectives of the
visit. The Chamber will distribute
preliminary plans well in advance of each delegation to China, and allow for
changes to suit interested Australian companies. The Chinese typically “make
friends” before conducting business.
This arises from their more tradition-based background, where much
depends upon guanxi (connections
or relationships). One of China’s
many inventions was a formalised bureaucracy. This allowed tradition to be
maintained while connections and relationships were revealed in a discrete
but verifiable manner. It also
permitted the introduction of exceptions to general rules without creating a
precedent that resulted in a change in those general rules. In business transactions,
seemingly trivial details are frequently discussed first, with the view to
creating the appearance of insurmountable barriers. The way in which these barriers are overcome not only measures
willingness to continue, it also reveals much about guanxi.
The bureaucratic-like process
thus begins several levels from the top.
Progress is not perceived on the basis of the number of agenda items resolved,
but upon the way in which higher-level participation results in an evolution
of agenda items. This creates a
“thread” that is sometimes difficult to unravel. Australians, in contrast, have a
more legal-based background and adopt a more adversarial approach to business
transactions. Friendship normally
begins when negotiations on basic principles are completed. Details are typically discussed later
during “lower level” negotiations. These differences frequently
give rise to impatience on the part of Australians and to somewhat confused
assessments of willingness to continue on the part of the Chinese. Although the directness of Australians’
presentations is generally appreciated by the Chinese, in contrast to a more
round-about approach of other non-Chinese, the failure to establish guanxi frequently leads
to later difficulties. For both incoming and outgoing
business delegations, the Chamber consistently seeks a “middle ground” in
these approaches. The basic
foundation for the connections and relationships has already been established
with the Chamber’s Key Cities Strategy.
This foundation will become
extended during the next several years through direct participation by the
Chamber, its members and friendly organisations. Each visit will add to that structure and will thus allow a
greater amount of “streamlining” for all future visits. This structure, built upon mutual
cooperation, will therefore become an important asset. Much attention has recently been
given to seminar topics dealing with “Doing Business in China” (or in other
Asian nations). While these
general-instruction forums are valuable in exchanging business experiences,
they are rarely adequate in providing a satisfactory background for the
enormous diversity of China. “Doing Business in China”
requires knowledge of “Doing Business in Wuhan” (or other cities in China) as
well as doing business in a specific industry of industrial sub-sector. As noted previously in this booklet, the
Chamber will provide a substantial amount of information about these more
detailed how-to-do-it items for each visit to China. The basic objective of the Key Cities
Strategy is to establish a procedure so that this information to be collected
and compiled in an effective way. |
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Because of the great difference
in population (Australia has only one sixty-fifth the population of China),
Australia represents a relatively small consumer market for China. However, Australia’s income per capita is
comparatively high, and this contributes to a rising demand for imported
products. Additionally, in many areas of
product design and manufacture, Australia has been successful in developing
and applying modern technologies.
These range from agricultural machinery to energy production
(including pollution control). Main products are: v
Agriculture - barley, cattle, dairy products,
fruits, sheep, sugar cane, wheat and wool. v
Manufacturing - energy generation and distribution,
fashion and garments, food processing, household appliances, leather, metals,
paper and sugar. v
Mining - bauxite, coal, copper, gold, iron ore,
lead, manganese, natural gas, nickel, opals, petroleum, silver, tin,
tungsten, uranium and zinc. A close business alliance grew
between Australia and New Zealand during the 20th century (arising from
“mateship” during two world wars) so that the two nations are very closely
aligned in commercial relationships. Australia and New Zealand are
now major trading partners and jointly represent an opportunity for business
cooperation with China. New Zealand’s
main products are: v
Agriculture - apples, barley, cattle, Chinese gooseberries
(kiwi fruit), dairy products, onions, potatoes, beef, mutton and lamb, wheat,
wool. v
Forestry - Douglas fir, radiata pine. v
Manufacturing - automobiles, cheese, chemicals,
dried milk products, iron and steel, machinery, paper, textiles, wood products
Visits to Australia and New Zealand As Sydney is the business and
commercial capital of Australia, business visits start in Sydney and then
extend to other cities and towns as appropriate to the objectives of the
delegation and its members. To achieve maximum benefit for
participants, each member is requested to provide corporate or department
details, objectives of their visit, including detailed information about
projects and business opportunities to enable research to be carried out and
tentative appointments made with potential business partners prior to arrival
of the delegation in Australia. On arrival, participants receive
the following: v
initial briefing on opportunities available in
Australia, v
seminars with Australian business executives on
business opportunities in China with a focus on particular issues, v
visits to Australian business premises, and v
where appropriate, assist with initial business
negotiations. The initial exchange of
information is an important element in the effectiveness of the visit. Australia’s manufacturing sector is more
specialised than China’s, so that considerable time may be wasted in seeking
joint venture partners or other forms of business cooperation in areas for
which Australia has not sought to develop an expertise. Participation in Trade Exhibitions The Chamber invites Chinese city
officials, manufacturers and/or suppliers of machinery or other products or
services to participate in the major trade exhibitions held in Australia and
New Zealand on a regular basis. Prior to participation, the
Chamber’s Commercial Committee makes every effort to obtain a genuine
appraisal of market opportunities in Australia for particular products and
services offered by the Chinese side and to pre-arrange meetings with any interested
Australian parties. The Chamber liases directly with
the Chinese exhibiters and the Australian exhibition organiser to ensure that
all Chinese exhibiters get maximum value for their promotional investment. Australia Zone The best months to visit are
from September to November and from March to June when the average
temperature is between 10o and 25oC (warmer in the
north, cooler in the south). The Australia Zone includes the
states and territories (provinces) of: v
New South Wales (population 6 million), v
Victoria (population 4 million), v
Queensland (population 2 million), v
South Australia (population 1.5 million), v
Western Australia (population 1.5 million), v
Northern Territory (population 0.2 million), v
Tasmania (population 0.5 million) and v
Australian Capital Territory (population 0.3
million), It also includes the external
territories of v
Christmas Island (population 3,000), v
Norfolk Island (population 2,000), v
Cocos (Keeling) Islands (population 1,000), and v
the unpopulated territories of Ashmore and Cartier
Islands, Australian Antarctic Territory, Coral Sea Islands and Heard and
McDonald Islands. Key cities are: v
Sydney (population 4 million), v
Melbourne (population 3 million), v
Canberra, (population 0.3 million) v
Brisbane/Gold Coast (population 1.5 million), v
Cairns (population 50 thousand) and v
Perth (population 1 million). Chamber membership extends
throughout Australia and provides a network of member companies in Australia. New Zealand is comfortable to
visit throughout the year with average daily temperatures between 10o
and 15oC (warmer in summer, cooler in winter). The New Zealand Zone includes v
the North Island (population 3 million), v
South Island (populations 1 million) and, v
off the southern coast of South Island, Stewart
Island (population less than 1,000). Key cities in New Zealand are: v
Auckland (population 1 million), and v
Wellington (population 400,000) on the North
Island, and v
Christchurch (population 300,000) and v
Dunedin (population 110,000) on the South Island. Chamber’s network of member companies extends to New Zealand through
subsidiaries and branch offices, particularly with major accounting and legal
companies. Past experience indicated that Chinese
delegations to Australia tend to serve a variety of purposes. The Chamber has consistently urged that
these purposes or objectives be narrowed in order to concentrate on specific
industries or industrial sub-sectors.
This concentration has started to occur, with most members of recent
delegation representing some special interest. The Chamber recently established
a China Liaison Office in Beijing for the purpose of assisting in the
organisation of Chinese business delegations to Australia. Initial contact regarding a possible visit
to be hosted by the Chamber should be addressed to the Chamber’s office in
Sydney. Based upon the information
supplied with the initial letter, the Chamber’s Commercial Committee will
make a decision about hosting the visit and contact the China Liaison Office
in Beijing for the purpose of obtaining the necessary details. It is only in this way that the Chamber
can manage to provide a useful service for the relatively large number of
potential visits to Australia. As noted in the previous
chapter, important Sino-Australian differences exist and are particularly
relevant to Chinese visits to Australia.
For example, success with a business venture in Australia depends
largely on efficient communication of ideas, particularly through the inquiry
and negotiation stages and continuing after contracts are signed. As in the Chinese language,
individual words and phrases (particularly technical ones) are open to
different interpretations of meaning, depending upon the context. Implied meanings are not binding and, when
not clarified, the favourable interpretation can be claimed by each side,
thus leading to dispute. Additionally, business people in
Australia prefer to have a contract that is comprehensive and legally
binding. The terms of the contract
should be carefully defined in writing prior to being signed. Interpreters must be experienced
in specific technology, as well as formal language, to be capable of
acceptable interpretation and need to be completely non-aligned to be
acceptable to each party (often interpreters add, omit or change meaning to
provide a perceived advantage to the side to which they are loyal). Both sides (for their own protection)
should have their own business-interpretation facilities. These and other important
requirements for a successful visit are currently being compiled and will be
available shortly from the China Liaison Office in Beijing. |
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Chamber’s Letters of
Introduction and Invitations Letters Introducing Australian Companies to Chinese Officials A major obligation of the
Chamber, in facilitating trade and investment between Australia and China, is
to offer an official introduction for Australian enterprises that have no
previously established contacts in the relevant part of China. In such cases, the Chamber should be
informed of the specific business venture that is motivating the
request. General-purpose
introductions are not normally of value to potentially interested Chinese
counterparts. In order to avoid misunderstandings,
the Chamber will insist on official translations so that letters can be sent
in both English and Chinese. Since
the number of such requests has increased in recent years, the Chamber is
likely to seek reimbursement for these translations. The Chinese enterprises to whom
the letters are sent are likely to look upon the documents as a form of
recommendation from the Chamber.
Since knowledge of non-members’ capacity to undertake commercial
activities in China is almost certain to be substantially less than that
acquired from long-standing Member Companies, it will generally be necessary
for non-members to supply greater detail about their commercial activities in
Australia and overseas. As a consequence
of this additional input of time and effort on the part of the Chamber,
additional fees will typically be expected for these letters of introduction. Requests for letters of
introduction from the Chamber are often accompanied by requests for advice or
for additional information. Over the years,
the Chamber has accumulated a considerable amount of experience that could be
helpful to the initiating Australian enterprises. In some cases these requests for advice can be managed by
telephone, but a request in writing with a reply in the same form is
preferable in order that proper records can be kept. These requests should be addressed to the
Post Office box listed in the first inside page of this booklet. Requests for information that
require research or involve third parties will normally require a fee to
offset any expenses incurred. The
Chamber can act as administrator/manager in obtaining the services of
consulting firms, or can make recommendations regarding such services. The names and fax numbers of
officials in Chinese cities and provinces that have signed cooperative
agreements with the Chamber are regarded as the intellectual property of the
Chamber and its members. They will
not normally be issued to non-members.
In the past, letters of
introduction from the Chamber have been refused when the enterprises
requesting the letters have not demonstrated a bona fide approach to the
process of acquiring introductions.
This has occurred, for example, with enterprises that indicate Chamber
support prior to making requests to the Chamber and before discussions with
the Chamber have been arranged. The
policy of the Chamber is to withhold a recommendation or favourable report on
any business venture about which it has not been fairly and reasonably
informed. Letters of Invitation to Chinese Officials Over the past 20 years, the
Chamber has issued a large number of invitations for visiting Chinese
officials. In most cases, these
letters were issued by the President or by members of the State Council who
gave their time freely in making arrangements for visitors. Typically, reimbursement was not sought
for personal expenses incurred.
However, during the past several years the number of these invitations
has increased considerably, thus becoming a burden on the few Chamber people
who have been involved. Additionally, misunderstandings
have occurred regarding the Chamber’s responsibility in issuing letters of
invitation and in paying Australian-currency expenses for the visitors. Since the Chamber is not a government
organisation, it is able to recover costs only from Member Companies. In the past, sponsorship from a number of
members was often possible, but with a larger number of visits from China,
this also has become a burden. As a result of this increased
number of visitors, the Chamber is unable to absorb the costs associated with
the visits and has now imposed a charge on issuing letters of
invitation. The charge will vary with
the agreed upon responsibilities and commitments of the Chamber and its
personnel. The Chamber will continue to
seek sponsorship from members and from friendly organisation, but under the
current funding arrangements this could take some time to complete. Intending visitors should note that early
notification of forthcoming visits will therefore be necessary. First priority in the use of
Chamber resources for Chinese visitors will be given to ACCCI Key Cities, and
specifically to Honorary Directors, Associate Directors and Associate
Organisations. Other visitors are of course
welcome to request letters of invitation, but the Chamber may not be able to
comply in all instances, particularly on short notice. Intending visitors should
contact the Chamber President in the first instance (phone and fax numbers
are shown on the first inside page of this booklet) and in most cases, the
arrangements will be made by the Chamber’s Commercial Committee. The request should be accompanied by
details of the visit, including following: List of all participants and the
corporate or departmental position occupied by each. v
List of Australian companies, if any, to which
visits have been planned. v
The main reasons for the visit and the more
important projects that motivated the visit. Greater detail about the
objectives of the visit would be preferred.
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