The Australia-China Chamber of Commerce and Industry of New South Wales
TRADE AND INVESTMENT STRATEGIES
Implementation of the
Key Cities Strategy in China
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:
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,
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.
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:
To promote Australian business, in general, within
the context of two-way trade and investment with China.
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:
The China Chamber of International Commerce
(CCOIC), also known as the China Council for the Promotion of International
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:
The All-China Federation of Industry and Commerce,
also known as the China Chamber of Commerce
The China Academy of Urban Planning and Design
The China Sports Administration Centre
The China Society for Strategy and Management
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
mayors and senior government officials,
heads of CCPIT branches and sub-branches,
Communist Party Secretaries and related committee
v managers of major industrial enterprises and subsidiaries.
This task has been given a high priority by the ACCCI
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
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.
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.
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.
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.
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
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.
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.
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:
urban transport, storage and local-area
international trade services;
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:
aquaculture, including fisheries and the processing
of fish products,
livestock and animal husbandry,
forestry and timber industries,
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:
land transport systems (rail and road), including
passenger and freight facilities, railway and road construction, traffic
control systems, and terminal security systems;
air transport systems, including airport passenger
and freight facilities, aircraft take-off and landing facilities, aircraft
ground and flight control, and airport security systems;
sea transport systems, including passenger and
freight dock facilities, seaport construction, port control systems, port
telecommunications, including public switched
telephone networks, local area network facilities, personal and business
telecommunications equipment, microwave transmitters, optical fibre cable and
satellite earth stations;
electricity supply, including generation,
transmission and distribution;
gas supply, especially transmission and
urban and rural water supply and reticulation;
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.
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.
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.
The seven zones are as follows:
Beijing (and Hebei Province)
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:
Exploratory visits and arrangements for special
events such as trade fairs and exhibitions.
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.
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:
Agriculture - barley, cattle, dairy products,
fruits, sheep, sugar cane, wheat and wool.
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:
Agriculture - apples, barley, cattle, Chinese gooseberries
(kiwi fruit), dairy products, onions, potatoes, beef, mutton and lamb, wheat,
Forestry - Douglas fir, radiata pine.
v Manufacturing - automobiles, cheese, chemicals, dried milk products, iron and steel, machinery, paper, textiles, wood products
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:
initial briefing on opportunities available in
seminars with Australian business executives on
business opportunities in China with a focus on particular issues,
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.
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.
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:
New South Wales (population 6 million),
Victoria (population 4 million),
Queensland (population 2 million),
South Australia (population 1.5 million),
Western Australia (population 1.5 million),
Northern Territory (population 0.2 million),
Tasmania (population 0.5 million) and
v Australian Capital Territory (population 0.3 million),
It also includes the external territories of
Christmas Island (population 3,000),
Norfolk Island (population 2,000),
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:
Sydney (population 4 million),
Melbourne (population 3 million),
Canberra, (population 0.3 million)
Brisbane/Gold Coast (population 1.5 million),
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
the North Island (population 3 million),
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:
Auckland (population 1 million), and
Wellington (population 400,000) on the North
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.
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.
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.
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.