SA China engagement Strategy
Two Years On
SUBMISSION from City of Charles Sturt, August 2015
Table of Contents
Background .................................................................................................................... 2
Shandong Business Mission 2015 ................................................................................. 2
Engagement with Chinese Businesses and Government............................................. 3
Immediate Actions Arising from the Business Mission ............................................... 3
The Review of the SA China Engagement Strategy Two Years On .............................. 3
Key Action 1 Consolidate and promote SA’s capability as a partner in China’s
social, cultural and economic development................................................................... 3
Key Action 2: Coordinate and leverage Government activity to build a trade and
investment framework for business ................................................................................ 4
Key Action 3: Build and Support China Ready South Australian Businesses .............. 6
Key Action 4: Refocus Government Resources to Support the Strategy.................... 7
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
1.
Background
The City of Charles Sturt adopted a Western Adelaide China Business Engagement Strategy
in early 2015 (Appendix A). The aim of the Strategy is to work with local businesses and
prepare them for a long term trade relationship with businesses in China. The key element in
our strategy is to get our local businesses, China Ready.
The Strategy is based on research conducted in 2014 with 163 companies in Western
Adelaide. It is the only Australian evidence based local government research on SME
engagement with China. The City of Charles Sturt China Ready program was based on this
research.
The China Ready program is being adopted by many Councils and some RDA’s who are
engaging with China. Council has provided the Strategy to many Councils and RDA’s.
City of Charles Sturt has spent over $40,000 over the last 12 months to promote investment
in the City. The Invest in the West prospectus was launched by Martin Hamilton Smith in
August 2014.
The Investment Strategy and the China Business Engagement Strategy are paying dividends
for Council. City of Charles Sturt led a delegation of 10 businesses from Western Adelaide
who participated in the May 2015 Shandong Business Mission. As a result of the work
undertaken by the City of Charles Sturt ten recommendations have been developed for the
State Government to consider.
Shandong Business Mission 2015
It is understood that each of the 10 companies made significant business contacts. There will
be substantial benefits to local businesses as a result of the Business Mission.
Table 1: Western Adelaide Companies on Business Mission to Shandong in May 2015
Company
Sector
1.
Adelaide Airport Corporation
Tourism and transport
2.
Bio Innovation
Bio Tech
3.
Cavitus
Bio Tech
4.
CoombsBarei Constructions
Construction
5.
Don Alan
Advanced Manufacturing
6.
Dover Fisheries
Seafood
7.
ELWA
Water and Energy Saving
8.
Medvet
Health
9.
Nardone Baker Wines
Wine
10. Ziltek
Soil Remediation
The City of Charles Sturt as a result of the Shandong Business Mission has also made five
major Chinese private sector contacts that can benefit local business in the following areas:
•
•
•
•
•
Property developers seeking $5 -$10 million investment
Chinese companies seeking to invest in local Health companies
Potential to expand Health connections for inbound and outbound trade
Wine importers
Food product via distribution channels into Chinese supermarkets.
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
2.
The economic outcomes from the Business Mission are yet to be quantified, but will be
determined by local business, the contracts they sign and the number of jobs subsequently
created.
Engagement with Chinese Businesses and Government
Council developed detailed promotional material and translated our investment attraction
document Invest in the West into Mandarin, which proved useful to local businesses.
Council also made excellent contacts with Chinese Government officials especially in the
Local Government Forum, where 14 SA Councils engaged with 17 Prefectures from
Shandong including Jinan and Yantai.
Immediate Actions Arising from the Business Mission
Council is following up on all leads and business contacts made in Shandong.
Businesses that successfully complete the China Ready program are offered a 50%
contribution to membership of Australia China Business Council or the Hong Kong – Australia
Business Association. Full membership fees are approximately $400 per annum. These
businesses are also being given a China Ready award from the Mayor (see appendix B).
In particular, Council is seeking to establish an Innovation and Export Network. The purpose
of the network is to create a Western region wide networking group that focuses on
reaching out to SME’s through pitch sessions and informal presentations. The focus of the
group will be to bring new ideas and practical examples of how to export products.
The Review of the SA China Engagement Strategy Two Years On
The SA China Engagement Strategy is seeking submissions on the Strategy by the 31st of July.
It has sought submissions on four key areas:
Key Action 1 Consolidate and promote SA’s capability as a partner in China’s
social, cultural and economic development.
Key Action 2: Coordinate and leverage Government activity to build a trade and
investment framework for business.
Key Action 3: Build and support China ready South Australian businesses.
Key Action 4: Refocus Government resources to support the Strategy.
Key Action 1 Consolidate and promote SA’s capability as a partner in China’s social, cultural
and economic development
The primary focus of our China Engagement Strategy is on SME engagement. Nevertheless,
there is a significant Chinese population in Western Adelaide representing nearly 4% of the
population. It is desirable that the Government focus on how we can harness this valuable
resource for the State.
Table 2 Chinese Heritage in Western Adelaide
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
3.
Western Adelaide
2011
#
% of pop.
Speaks Mandarin at home
4379
1.61%
Speaks Cantonese at home
2913
1.07%
Was born in Mainland China
4653
1.71%
Was born in Hong Kong
576
2.10%
Has Chinese ancestry*
10441
3.83%
* Ancestry goes back three generations
Greater Adelaide
% of pop.
1.3
0.7
1.3
0.2
2.9
To improve trade between China and South Australia it is desirable that high schools
students gain a greater understanding of Chinese history and culture. This is especially
important as Western Adelaide has a very strong local Chinese community. As such it is
desirable that Chinese language studies are taught in our schools. It is proposed that the
State Government work with the Education Department to promote Chinese language and
studies in our schools.
Key Action 2: Coordinate and leverage Government activity to build a trade and investment
framework for business
The Shandong and SME focus of the Strategy are good initial targets for engagement with
China. Specifically the State Government’s China Strategy (2012) suggests a role for Local
Government to:
“2.2.4 Collaborate with local government to establish and nurture
government-to government and city-to-city relationships in second and thirdtier markets”
The Strategy then states that:
“Local government has a vital role to play in establishing and nurturing government-to
government relationships in second and third-tier Chinese cities and providing an important
business engagement framework for South Australia’s small and medium enterprises (SMEs).
These links are critical to broadening the State’s engagement with China where the scale and
scope of demand is better matched by the capacity and capabilities of our local and regional
economies. Local government and second and third-tier Chinese city relationships can
complement state-to-province relationships. Together, they can significantly and
strategically deepen business engagement for South Australian SMEs. The State Government
will collaborate with local government to nurture these strategic city relationships”.iii
This SME focus is mirrored in the Western Adelaide China Business Engagement Strategy.
The work of the Department of State Development (DSD) with Tradestart and Austrade is
also to be commended. However, Tradestart requires more funds to support SME’s
engagement and to assist them into the China market.
The State Government will celebrate a 30 year Sister State relationship with Shandong
Province in 2016. Adelaide City Council (ACC) has recently signed a Sister City Agreement
with Qingdao. While, Onkaparinga signed a Memorandum of Understanding with Jinan in
May 2015.
Government and Business in China are strongly connected. To ensure that trade is facilitated
there is often a requirement of a high level sign off. As such the State Government Sister
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
4.
State relationship has been a bedrock to make the business to business relations work. It is
understood that 13 major Memorandums of Understanding have been signed as an
immediate result of the May 2015 Business Mission.
The role of Mayors in China is both highly symbolic and influential. Chinese officials and
businesses actively seek Mayoral endorsement for projects in China and expect that this
would be similar in Australia. The development of a formal Sister City relationship in
Qingdao may give Adelaide City businesses some advantages in that City. But it will not
necessarily exclude Western Adelaide Business from working with them or stop links to the
Qingdao High Tech Zone or Bio Innovation’s Sino SA House (Qingdao, Business incubator
funded by Bio Innovation SA).
The concept of guānxi or connections is also often raised in Chinese business, such that
companies that are connected to the Government are given preference. Likewise companies
that are linked to the SA Government may get preference in Shandong over companies from
USA, NZ or even Victoria and New South Wales. It was noted that Martin Haese, Lord Mayor
of ACC was being highly sought after by Chinese businesses in Qingdao.
As such City to City relationships need to be better defined e.g. should SA Councils focus on
Friendly City relations; Trade Based MoU’s; or Sister City relations. In particular, what is the
preferred model for Councils’ to engage in both business and cultural exchanges?
While this is being clarified by the LGA and the State Government the City of Charles Sturt is
seeking to maintain its momentum built up in the May 2015 Shandong Business Mission and
is seeking to expand its business to business exchanges to expand business opportunities for
Western Adelaide Businesses through a Memorandum of Understanding with Yantai. This
proposed MoU is based on an economic analysis of mutual trade benefit between the City of
Charles Sturt and Yantai.
A Sector Analysis of Major Cities in Shandong (Appendix C) was completed earlier this year
primarily by an Adelaide University intern, Mendy Ellis who is fluent in Chinese. The
document analysed the industry sectors of the four larger cities in Shandong: Jinan, Qingdao,
Yantai and Zibo. Table 3 below gives a quick summary of those Cities. The report found that
there are:
“Opportunities for Western Adelaide businesses in Shandong’s healthcare, aged
care, tourism and value-added manufacturing sectors. It also identifies that,
given the implementation of the Yellow Delta Development Plan and the
Shandong Regional Development Plan, Yantai and Jinan may become the new
poles of Shandong’s economic development, replacing Qingdao in the next
decade.”
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
5.
Table 3: Shandong Four Major City Comparison (The China Knowledge)
2013
Population
(million)
GDP
(RMB
billion)
Export (USD
million)
Import (USD
million)
Jinan
Qingdao
Yantai
Zibo
Shandong
7
8.96
6.5
4.24
96
523.02
800.66
561.39
380.12
5468.4
5,480
41,986
29,475
5,250
95500
4,090
35,926
19,838
3,760
96600
The Local Government Association is currently undertaking a Local Government China
Engagement Strategy which will seek to address issues of the role of Local Government and
the nature of international City to City relationships.
Key Action 3: Build and Support China Ready South Australian Businesses
It is recommended that the State Government focus its resources through regional Local
Government areas to assist SME’s become China Ready. The China Ready program already
adopted and rolled out by Charles Sturt in 2015 is an example of what could be
implemented across the State. However, this need to be resourced to ensure quality advice
is provided to SME’s. An example of the China Ready program that is proposed to be rolled
out in early 2016 in Western Adelaide is below:
China Ready program 2016
Council in 2015 ran a successful China Ready program for SME’s with over 100 businesses
engaged in the program in the first half of 2015.It is proposed to engage at least 250
businesses in the program in the first half of 2016. Council has developed a five step China
Ready program with its partners to enable local businesses to seek investment from and
engage in two-way trade with China.
Five-step China Ready Program:
1.
2.
3.
4.
5.
Cultural Training – via a structured dinner (ACBC)
Preparing your business case & China Business Conditions
Develop your Business Pitch – (Expert Panel)
Business Matching identify potential businesses – (Supported by DSD)
Export Advice - (Austrade) via TradeStart and Gateway programs
Council’s primary role is to identify and facilitate local businesses to be ready for business
engagement in China. However, we do not have the expertise in China and therefore need
to engage outside persons particularly for one on one advice. This advice was an essential
element in getting so many businesses from Western Adelaide to participate in the
Shandong Business Mission.
Due to the success of the Business Mission it estimated that Council will have double the
number of businesses in the program and therefore need to employ a professional China
Business Expert for a longer period. Council has a policy position that it will not provide
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
6.
business advice to individual businesses as such the engagement of a quality impartial
expert is essential to deliver a credible program.
Table 4 China Ready program for Western Adelaide in 2016 and cost
Step
Action and Cost
1.
Cultural Training
ACBC dinner $80 per person – 150 –
175 people
2.
Preparing your business case & China China Business Expert
Business Conditions
2 sessions $1,000 each
3.
Develop your Business Pitch
China Business Expert & Expert Panel
of 4. Four sessions $2,000 each
4.
Business Matching
DSD
5.
Export Advice
(Austrade) via TradeStart and
Gateway programs
Council is actively seeking assistance from the State Government for two initiatives to assist
with the implementation of the Western Adelaide China Business Engagement Strategy:
•
•
A Western Adelaide Innovation and Export Network; &
China Ready program in Western Adelaide.
The estimated total cost of these two programs is $20,000.
Key Action 4: Refocus Government Resources to Support the Strategy
The Business Mission worked within the State Government’s existing Sister State
relationship with Shandong province, while the City of Charles Sturt focused on business to
business relations.
The International Division of Department of State Development (DSD) was clearly under
resourced in Shandong – but did an excellent job. There is a clear case to provide that
Division of DSD with more resources.
This could be achieved through the consolidation of resources in DSD to strengthen the
International Trade and China Engagement Divisions.
Summary of Council’s proposed China Ready effort in 2015/16
A key economic outcome of the Shandong Business Mission is that local businesses were
highly engaged and made numerous contacts with Chinese business and agencies. Several
local businesses expressed their support of the Council and State Government initiative.
Council has assisted to open up the door to Shandong and China through its collaboration
with the State Government and development of a business platform to expand and deepen
the business relations with Shandong and China.
The State Government has proposed to regularise business delegations with inbound
delegations from Shandong to Adelaide in September 2015 and an outbound Mission from
SA to Shandong in May 2016. The City of Charles Sturt and the businesses in this region are
in a good position to take advantage of these events and generate meaningful business
cooperation outcomes.
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
7.
Council in 2015/16 will assist up to 20 businesses to become members of Australia China
Business Council or the Hong Kong – Australia Business Association, which is estimated to
cost $4,000. Council may also expend $5,000 on the September inbound 2015 Mission and
additional funds if it goes on the May 2016 outbound Mission to Shandong. As such Council
is seeking some support from the State Government for its substantial effort which has:
•
•
•
Focused all of Local Government in SA on SME engagement in China;
Provided a credible China Ready program; and
Promoted the Shandong Business Mission to SME’s in Western Adelaide, which
represents approximately 25% of the metropolitan area.
City of Charles Sturt will continue to help Western Adelaide business with information
regarding engagement with China. Western Adelaide covers approximately 25% of the
metropolitan area and therefore there is a strong case for direct support from the State
Government to the City of Charles Sturt for the China Ready program and the Innovation and
Export Network.
SA China Engagement Strategy Two Years On– Submission from City of Charles Sturt 2015
8.