According to James Hudson, chief executive of the Australia China Business Council NSW, the Gemtree Vineyards strategy has not been widely emulated, though not for lack of trying. Most firms have instead had to steer a more precarious course, slowly establishing and developing relationships and a distribution network for their products.
Hudson told SmartCompany firms that manage to succeed in China often have a long-term strategic outlook and are persistent in pursuing this market. Hudson also noted that successful firms usually have an existing link or a staff member that has ties to or a cultural understanding of China. Personality also helps, with outgoing individuals who are able to network and build relationships at an advantage.
Yongqiang Li, a research fellow at Victoria University, echoing the sentiments of Gemtree’s managing director, told SmartCompany, “it is always difficult to find the right business partner”.
Dr Jane Menzies, senior lecturer of International Business at Deakin University, told SmartCompany smaller firms contemplating entering the China market needed to do their research and join local industry associations.
In her research project, Australian SMEs in China, Menzies found successful companies often had a local Chinese connection or partner and that they adopted strong marketing techniques to buttress their reputation.
An in-depth study published by the Australian Business Forum in 2009 highlighted the need for firms to be flexible and able to adapt to changing circumstances. The paper, Engaging China – the realities for Australian business, also found it was vital that companies focused on a specific region, specialisation or niche business offering in order to “avoid being caught in the headlights of the Chinese market’s diversity and huge potential”.
Burton Taylor’s meat export business and Gemtree Vineyards are good examples of how small and nimble Australian businesses have the potential to flourish in China and turn themselves into small global enterprises.
Over recent years, Australian governments at all levels have been trying to encourage precisely these kinds of small, lean, technologically adept and flexible firms to seek opportunities internationally and particularly in China.
By riding the wave of a growing consumer class, these companies can help to diversify Australia’s exports to China. Currently about 80% of the value of Australia’s exports to China, which were worth approximately $140 billion in 2013, were mineral exports, mainly iron ore and coal.
Next month, Tony Abbott will lead one of the largest Australian trade delegations to ever visit a foreign country. Representatives from around 500 companies are expected to take part in the Australia in China Week activities that have been organised to coincide with the PM’s visit.
Michael Clifton, senior trade commissioner with Austrade’s Shanghai office, told SmartCompany that the majority of the companies accompanying the PM and all of the state premiers to Beijing will be small- and medium-sized companies.
This mirrors the situation in relation to the recent high-profile ‘super trade missions’ to China organised by the Victorian government. Paul Stagg, manager of trade for North Asia with the Victorian government’s Department of State Development, Business and Innovation told SmartCompany about 80% of the companies that took part in those missions were either small- or medium-sized companies.
When asked which industries offer potential to Australian firms, Austrade’s chief representative in Shanghai reported that exports of beef, wine and dairy products have grown significantly in recent years with about $6 billion worth of agribusiness products going to China from Australia.
According to Clifton, beef exports to China increased by more than 250% last year. The value of Australian wine exports to China has also grown on average by 20% a year over the past five years, according to data from Wine Australia. However, there is no data available to indicate just what proportion of the export came from SMEs.
Despite the huge growth potential, Clifton is quick to acknowledge that the Chinese market is not for the faint-hearted.
“Companies have been burnt and continue to get burnt.”
The trade official encourages firms that are thinking of expanding to China to do their homework and be aware of how to manage risk.
