As the global economic downturn deepens, Australian businesses should look for opportunities that lie beyond China’s largest coastal cities writes Laurie Smith.

Union Trust and Investment (UTI) and thus a partner with Australia’s NAB which took a 20 percent stake in UTI in 2007. For inland provinces, the biggest immediate impact of the economic slowdown has been the return of migrant workers in late 2008 – millions of whom currently have no jobs to return to. But the central government’s stimulus package – focusing on both hard and soft infrastructure – will provide a cushion against this shock and should help underpin continued growth during the next 12 months.

EARTHQUAKE RECONSTRUCTION - CHINA STYLE

China’s response to the May 2008 Wenchuan earthquake in Sichuan province was widely praised for its speed and scale. Since then, huge sums have been committed to earthquake reconstruction, estimated to cost RMB1,000 billion (A$200 billion) over three years.

The way China has managed the task of physical reconstruction is also notable. Each of China’s more affluent provinces and cities, was paired with a local district in the earthquake hit region and instructed to partially underwrite and lead the implementation of reconstruction. So, Shanghai, for example, has led the reconstruction of Dujiangyan while Guangdong was assigned Wenchuan country, location of the epicentre.

While the Australian Government and public companies such as BlueScope, Rio Tinto and ANZ have made donations to the reconstruction effort, opportunities for direct involvement by Australian businesses based in China have been limited. Opportunities should emerge as normality returns – for example, tourism figures heavily in recovery plans for several districts, which should provide new opportunities for Australian training providers and other suppliers to the industry.

There have been Australian business casualties in regional China as a result of the GFC – one business software company withdrew from its base in Chengdu, a major software centre, in late 2008. However others have seen opportunity at a time when competitors are in retreat. In March 2009, ANZ CEO Mike Smith announced the establishment of a rural banking service in Chonqing to supplement its aggressive expansion plans in major growth centres along the eastern seaboard.

Australia’s profile in central and western China is strong and has been on the rise in recent years. The 2000 Olympics added a more modern take to the prevalent images of the ‘70s and ‘80s – wheat, wool, koalas and kangaroos. This has been reinforced by increased migration and student flows, countless visits by officials and the take off in tourism to Australia in the last decade.

Positive impressions of Australia, and an eagerness on the part of officials, businesspeople and citizens in central and western China to build stronger ties, provide an opportunity for Australia and Australian business. Over the next few years, both Australian businesses based in China and newcomers to the market should give more weight to China’s hinterland in their market entry and development plans. ■

* Laurie Smith is the Australian Trade Commission’s Regional Director, North East Asia, and is based in Shanghai.

** Austrade has 15 offices spread across China.

For more information visit: www.austrade.gov.au/China