CHINA AGRIBUSINESS INITIATIVE AND ACTION PLAN REALISING OPPORTUNITIES IN CHINA FOR FOOD, WINE AND CAPABILITY DEVELOPMENT
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1 CHINA AGRIBUSINESS INITIATIVE AND ACTION PLAN REALISING OPPORTUNITIES IN CHINA FOR FOOD, WINE AND CAPABILITY DEVELOPMENT 1
2 2 BACKGROUND The China Agribusiness Initiative aims to realise opportunities for premium South Australian food and wine in China. It will establish value chain relationships with Chinese companies wanting to promote the qualities, the authenticity and the product integrity of our food and wine to Chinese consumers. The agribusiness opportunity in China China is Australia s number one export market and trading partner ($126 billion trade in 2012) and the world s second-largest economy after the United States. GDP growth in China is moderating (in percentage terms) but expected to average between 7% and 8% over the period Increasing Chinese affluence is evident in rapidly rising incomes and spending on high quality food and wine products. There is a growing opportunity for South Australia to supply China with our premium food and wine. Food nutrition and safety is a significant issue in China. More consumers are demanding higher standards in food production, processing and logistics. This is putting the country s food distribution and logistics infrastructure under pressure, which in turn is compounding food safety and quality issues. Consumers are also keen to access nutritious food from pristine environments. South Australia s agribusinesses are recognised as innovative and reliable producers of safe and superior food, wine and fibre products, which match with China s demand for higher quality food and agricultural products, services and technology. This presents an opportunity for increased business-to-business relationships with Chinese companies. South Australian businesses are already having success, with China the fastest-growing market for our wine. Specific opportunities have been identified in sectors such as seafood, wine, meat, dairy and premium processed products. South Australia also has a long history of trading with Hong Kong, which is still a significant export destination for our wine and food particularly seafood as it becomes increasingly affluent. Hong Kong is a well-developed market for premium food and wine products and is also seen as a key influencer of trends in China. Hong Kong is an established service-driven economy with a focus on financial services, and Hong Kong-based businesses have significant connections in South Australia.
3 CHINA AGRIBUSINESS INITIATIVE AND ACTION PLAN 3 Current constraints South Australian agrifood industries must maintain their competitiveness, which requires a continued investment in innovation and a proactive approach to capital investment. The South Australian food industry is dominated by small to medium-sized enterprises (SMEs); multinational food companies have a minor presence. This reality, combined with the State s distance from export markets, provides different challenges in accessing markets to those of the eastern states of Australia. While there are emerging opportunities in the Asian region, our SMEs are often not positioned to capitalise on them because they lack information, expertise, experience or familiarity with different cultures and trading environments. The South Australian agribusiness sector requires access to more capital to enable continued development of the innovative practices required to drive productivity and access high-yielding markets in China. Cultural, business and regulatory environments in China pose special challenges for South Australian businesses. The China Agribusiness Initiative and Action Plan offers the opportunity to address key constraints facing SMEs in accessing China by providing information, facilitating meetings with potential trading partners and investors, developing business capability, and offering improved and coordinated market access. The partnerships already established with Chinese provincial governments (e.g. Shandong and Fujian) and Chinese businesses have the potential to improve trading conditions to enhance the development of market opportunities. The South Australian Government context The Australian and South Australian governments have implemented initiatives to enhance engagement with China. The Australia in the Asian Century White Paper is a comprehensive approach for Australia to increase its engagement with Asia and, in particular, China. In December 2012 the Government of South Australia s South Australia - China Engagement Strategy was released to further the State s engagement with China. To oversee the implementation of the engagement strategy the China Advisory Council was subsequently established. In February 2012, the Government of South Australia announced Premium Food and Wine from our Clean Environment and Growing Advanced Manufacturing as two of its seven key priorities. The Premium Food and Wine from our Clean Environment strategic priority aims to increase the value of the food industry and awareness of South Australia as a producer of premium food and wine products. Since 1986 South Australia has enjoyed a Sister State relationship with Shandong Province, which has recently received increased prominence following the inaugural Shandong and South Australia Cooperation and Development Forum held in Shandong in April The Fujian Department of Agriculture and the Department of Primary Industries and Regions South Australia (PIRSA) have signed a memorandum of understanding (MOU) to increase the levels of cooperation between the two agencies with the aim of: enhancing bilateral collaboration and investment in new agricultural technology promoting bilateral import and export of premium agricultural products collaborating in food safety research. The Government of South Australia s formal relationships with Shandong and Fujian complement other formal relationships at local government and business-to-business levels. In the 2013 State Budget PIRSA received $2.54m, over three years, to support the China Initiative.
4 4 THE OBJECTIVES While China presents an immediate opportunity for some South Australian businesses, realistically it will take the majority of businesses three to five years to position themselves to take advantage of the growth in the Chinese market. To get up to speed in this timeframe the State must prepare the way now with the Government of South Australia playing a critical role in establishing frameworks and pathways that will promote South Australian goods and services in the marketplace. Second and third-tier markets in China provide the best long-term opportunity for South Australian businesses given the nature and scale of our industry. The China Agribusiness Initiative will concentrate on three key regions/cities: 1. Shandong: increase the focus on the South Australia-Shandong Sister State Relationship to realise the opportunities from this long-term investment South Australia has made. 2. Fujian: optimise collaboration with the Fujian Government with regards to its interests in food safety, nutrition and applied food science technology in order to improve the profile and position of South Australia s premium food and wine products. 3. Hong Kong: further develop our linkages with Hong Kong through positioning and profiling through our premium food and wine products. This Initiative acknowledges the opportunities in other Chinese regions, such as Shanghai and Guangdong, where many food and wine companies have a long-established presence. It aims to appropriately respond to such opportunities in order to support South Australian businesses that are active in these regions. The four objectives for the China Agribusiness Initiative 1. To increase food and wine exports by more South Australian food and wine businesses to second and third-tier cities in China. 2. To attract investment in South Australian agribusinesses that will support this growth opportunity and benefit related sectors, such as tourism. 3. To increase the export of research and development (R&D) services and capacity development in South Australia through joint projects with the Shandong and Fujian governments 4. To deepen government-to-government relationships. The ultimate aim is to get better terms of trade for South Australian agribusinesses. SPECIFIC OBJECTIVES IN SHANDONG The South Australia-China Engagement Strategy has resonated positively with key stakeholders in China. Government of Australia representatives in China have been highly complementary of the clear focus and direction articulated in the Strategy. The Shandong government specifically referenced the Strategy in framing their proposals for closer collaboration and cooperation between South Australia and Shandong. The MOU signed between the South Australian and Shandong governments at the inaugural South Australia-Shandong Cooperation and Development Forum represents a significant upgrade in bilateral relations with a focus on: Trade and investment Technical exchange Research collaboration People-to-people and cultural exchange.
5 CHINA AGRIBUSINESS INITIATIVE AND ACTION PLAN 5
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7 CHINA AGRIBUSINESS INITIATIVE AND ACTION PLAN 7 The following opportunities were identified for immediate collaboration: The development of a modern agribusiness industry in Shandong. The development of a modern services sector in Shandong. The increased application and development of environmental protection and clean technology in agriculture and fisheries. The supply of premium food, wine, tourism and education to match the growing appetite for quality of Shandong s emerging middle-class. In terms of South Australia leveraging Shandong s requirements, the Forum established a High Level Working Group. It includes an agribusiness subcommittee that will focus on: Linking investment in South Australia s agribusiness sector to new high-value markets, particularly in dairy, wine and aquaculture. Attracting greater numbers of inbound tourists to grow South Australia s tourism industries, especially when linked with food and wine experiences. Matching Shandong s desire for advances in research and development with South Australia s expertise in a broad range of industry sectors, including horticulture, fisheries, and food safety and traceability. SPECIFIC OBJECTIVES IN FUJIAN Under the MOU signed by PIRSA and the Fujian Department of Agriculture, both parties have agreed to: Build a communication platform to promote and support the long-term development and application of safe food-related technologies. Share opportunities that benefit both parties to leverage trade relations and channels, and enhance the trade of premium agriculture products. Several high-level visits have recently occurred that have highlighted immediate opportunities for: Technology transfer between South Australia and Fujian for meat and livestock, dairy, horticulture, marine products and wine. Improving general farming methods in Fujian. Growing business-to-business relationships between Fujian and South Australia to promote trade and investment activities. Improving Government to Government relations. SPECIFIC OBJECTIVES IN HONG KONG Following recent visits to Hong Kong by the South Australian Premier and the Minister for Agriculture, Food and Fisheries there are immediate opportunities to: Position and profile South Australian premium food and wine. Increase awareness of agribusiness investment opportunities in South Australia. Encourage and support research institutions and business in Fujian and South Australia with the aim of enhancing an understanding of agricultural production, food safety standards, and processing methods.
8 8 DELIVERABLES The deliverables give a clear focus and direction for project delivery to ensure the desired outcomes of the China Agribusiness Initiative are achieved. 1. More South Australian companies exporting more to China 1.1. Advocate for greater transparency in market access for South Australian agribusiness products Encourage the establishment and further development of trading platforms that facilitate sustainable markets for South Australian agribusiness products, and consolidate and leverage our safe and premium food and wine proposition to support greater trade of high-value South Australian agribusiness products with China Strategic support for inbound and outbound missions to build relationships between South Australian companies and their counterparts in China Encourage and collaborate with Chinese companies to set up appropriate logistics and quality assurance (QA) systems to maintain the quality and integrity of South Australian food and wine exported to China Educate South Australian companies and support capability-building activities to increase their skills for doing business with China Encourage the establishment of clusters of companies to overcome issues of scale associated with accessing the Chinese market. 2. More Chinese investment in South Australian agribusinesses to help scale up and modernise companies 2.1. Establish sector teasers to highlight South Australian agribusiness investment advantages Emphasise and enhance Government of South Australia support to investors in South Australia s agribusiness sector Educate industry on structural readiness for investment and encourage the establishment of commercial propositions for investment that enhance the productivity of the agribusiness sector Create an investment information centre Partner with industry to promote investment opportunities through a variety of agencies, including Austrade and Invest in SA.
9 9 3. Increased agribusiness research collaboration and technical exchange with China 3.1. Encourage Chinese investment in research projects and technical exchange programs Establish initiatives to encourage the export of research and technical services to China Develop linkages between the education, R&D, government and commercial sectors to create a point of difference around South Australia s economic engagement with China. 4. Strategic relationships with Chinese governments to establish and enhance platforms for business engagement 4.1. Develop and refine relationships with stakeholders in Fujian Develop and refine relationships with stakeholders in Shandong Provide support to South Australian local government councils to form and grow partnerships with their equivalents in China.
10 10 PROJECT PARTNERS Project partner China Advisory Council Role Provide expertise for successful engagement with China High Level Working Group Agribusiness Subcommittee Platform for engagement with Shandong on the China Agribusiness Initiative Primary Industries and Regions South Australia (PIRSA) Lead agency Coordinate and manage Initiative Administer funding Report to Premium Food and Wine from our Clean Environment Task Force Facilitate trade and investment opportunities between South Australian businesses and China Organise delegation visits Manage PIRSA representative in China Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) Government of South Australia representative in Shandong Assist PIRSA with shaping the Initiative Assist with delegation visits (including Tradestart program) Coordinate and manage Shandong component of the Initiative Food and wine industry groups Collaborate with PIRSA to implement the Initiative Attract South Australian businesses interested in trade and investment opportunities with China Assist with delegations visits Assist in setting up the trading platform South Australian Research and Development Institute (SARDI), universities, private providers Assist and advise on technology and research-exchange opportunities Identify potential research collaboration projects China-Australian Entrepreneurs Association Ambassador for implementation of the MOU with Fujian Attract Chinese businesses Organise delegation visits Develop Safe Food Centres Fujian Department of Agriculture Key partner in MOU with Fujian Identify opportunities for collaboration in safe food trade and production
11 CHINA AGRIBUSINESS INITIATIVE AND ACTION PLAN 11 Project partner Shandong Government Role Key partner in sister-city relationship with South Australia Facilitate trade, investment and technology exchange Australia-China Business Council Agribusiness Sub-Committee Assist PIRSA with shaping the Initiative Attract businesses interested in trade and investment opportunities with China Federal Government trade agencies: Department of Agriculture; Department of Foreign Affairs and Trade; Austrade Assist with delegation visits to China Assist with trade issues Regional Development Australia Support South Australian businesses interested in trade and investment opportunities with China Partner with delegation visits Local government councils Attract businesses interested in trade and investment opportunities with China Partner with delegation visits Invest in SA Investment attraction
12 12 Primary Industries and Regions South Australia (PIRSA) GPO Box 1671, Adelaide South Australia 5001 T F E agribusiness@sa.gov.au Front Cover: Photo reproduced courtesy Wine Australia
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