27/03/2015 - 13:10

Business urged to gear up for China trade

27/03/2015 - 13:10

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Australian businesses should prepare now to take advantage of the recent free trade agreement signed with China, according to a recent report by ANZ.

MOST FAVOURED: Businesses should get ready for China, ANZ said. Photo: iStockphoto

Australian businesses should prepare now to take advantage of the recent free trade agreement signed with China, according to a recent report by ANZ.

According to the bank, only 19 per cent of exporting businesses have fully taken advantage of the benefits offered by the FTAs signed by Australia during the past decade; among those that have, however, 75 per cent experienced export growth.

ANZ chief executive of international and institutional banking Andrew Geczy said the agreement was significant because China was Australia’s largest two-way trade partner.

“The FTA will eventually lead to 95 per cent of Chinese goods becoming tariff free, benefiting both consumers and businesses,” he said.

The report, ‘Opportunity in China’, highlights that businesses need to take time to understand Chinese consumers and business customs before entering the market.

One such example was to hire Australian employees with Chinese heritage and language capabilities, who would have the capability to assist at business meetings, the bank said.

As the country becomes wealthier and the middle class expands, Chinese consumers were more likely to want clean and green products and focus less on price alone, the report said, particularly in agriculture.

Beef was among a range of agricultural products that were predicted to provide opportunities, with wine and sheep meat also key Western Australian exports that would benefit.

Sheep, lamb and mutton exports were worth a combined $480 million to the state’s economy in the 2014 financial year, with exports to China just more than $100 million, according to the Department of Agriculture and Food.

Beef exports were only $7 million, however.

The report noted that although the eventual elimination of tariffs was positive, there would be questions on the ability of Australian producers to meet China’s demand.

“Many exporters may be reluctant to switch export volumes to China and risk being shut out of the key Indonesian market,” the report said.

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