OUR reputation precedes us in the Chinese market, but it’s not enough to think we can still trade solely off that reputation.
A 10-day trip through Guangzhou, Shanghai and Beijing has widened - in fact, completely shifted - my perceptions of this complex market.
China is a must-see, and you have to see it to believe it. I visited a number of companies, privately owned, state-owned enterprises (SOE) and joint ventures (half SOE, half international).
All business leaders and executives I heard from all emphasised the need to focus on the domestic market. The export opportunities from China have shrivelled as costs have risen, and their minimum wage went up 18 per cent last year, almost catching up with the US now.
“Agriculturally speaking, we’re dragging our heels”
The themes that came through discussions, no matter what the industry, boiled down to the provision of life's necessities, like energy and food. I was in my element and so lucky to be around conversations about food, agriculture, what Chinese people want and where Australia sits in that conversation.
But agriculturally speaking, we’re dragging our heels. The ‘Aussie Battler’ lives on, but we can't afford to be the battler. We need to be the leader.
It's true the Chinese don’t ask questions when buying Australian and will happily pay a premium for our produce, especially for our beef that dominates the list of imported competitors.
But: we grow more than beef, and New Zealand has left us for dead.
France and Canada are also doing very clever things in China and are engaged at numerous levels of supply. They’re all after that premium market share, and as our reputation only just holds on, it’s being overshadowed by the engagement, activation and effort these other countries are delivering on the ground. With Chinese business people, trade is about relationships, not reputations.
So how do we get the cream of Australian crops to rise to the top?
Well, it was ironic that whilst I was in China - seeing evidence of their insatiable demand for just about everything, and our diminishing opportunities to hold substantial market share - that the National Farmers’ Federation (NFF) and Meat and Livestock Australia disclosed their plans for a national export brand that covers all commodity groups: the 'True Aussie' brand..
“Make no mistake, Australia desperately needs a strong national brand”
This brand push comes off the back of the new digital ecosystem the NFF is developing to unite the industry and Aussie consumers, thus creating political and corporate leverage for the sector, amongst other positive outcomes like lifts in production, consumer engagement and buying power for inputs.
Make no mistake, Australia desperately needs a strong national brand - and for it to be delivered in person and on plate over numerous occasions for years with key players in China. They respond to relationships, not logos smacked on a carcase. We need a brand that represents that relationship, a brand culture worth buying into over that of our competitors.
We need a co-ordinated, united industry with a strong brand to create that leverage in overseas markets. At least that was my takeaway message from discussions I had with Austrade and executives from a large, multinational food company. Because at the moment, we don’t have that, and it’s obvious.
In my opinion, the finger pointing and ‘each to their own’ has to stop and a united forward focus needs to be adopted.
NFF's new online platform will give us that united voice and the power in numbers that’s needed to instigate change.
And then Trade Minister Andrew Robb and Agriculture Minister Barnaby Joyce can be led by the Aussie producers, to engage Austrade and the other stakeholders we need to develop those relationships for us.
That’s their job, because we’re busy growing stuff and last time I checked, margins were as thin as a stick.
“We cannot afford to get left behind in a market this big”
And if you needed some clarification on the scale of the China market and its potential, here are a few highlights of my trip to chew on.
I stood on the production floor in Volkswagen where they pump out cars for the domestic market. They’re investing a further 14 billion euros (19 billion AUD) into China over the next four years and have to build two car plants every three years to hold market share.
I saw an 850-metre long production line at Baosteel process 10 tonne slabs of red-hot iron into rolls of steel for shipbuilding. They make one of these every four minutes, and buy off BHP, mostly for the domestic market.
But the Canton Fair blew my mind. I spent a day there, and walked 17 kilometres - still didn’t see everything. The biggest trade show in Asia had an indoor exhibition space of 34 hectares (84 acres), 110ha in total for the site. They host 24,751 exhibitors over three weeks and receive 370.6 billion AUD in sales (about a quarter of Australia’s GDP).
China has more than 180 cities the size of Brisbane and larger. And Shanghai and Beijing home around 24 and 20 million people respectively.
The scale even left ME lost for words (and that's saying something). We cannot afford to get left behind in a market this big or just flog them a commodity product.