Doing business in China
With ever-deepening connections between Australia and China - including the recent MOU between Avalon Airport and China’s Hainan Airlines - more and more Australians are seeking to do business in China, the fastest-growing economy in the world.
Dr Jane Menzies, a senior lecturer in Deakin’s Graduate School of Business, estimates there are approximately 1000 Australian businesses ‘doing business in China’, and around 4000-5000 Australian companies exporting to China, with many more seeking to ‘crack the market.’
Dr Menzies is currently the lead researcher on a project funded by the Australia China Council at the Department of Foreign Affairs and Trade, which is investigating “Australian Innovative Small to Medium Enterprises (SMEs) in China.”
She is undertaking the research with her colleagues Professor Stuart Orr and Sajeewa ‘Pat’ Muddamage, also from Deakin’s Graduate School of Business, and Professor Alan Au from the Open University of Hong Kong.
The project has involved exploring the role that innovation has played in Australian business performance in China - particularly in light of last year’s “Australia in the Asian Century White Paper”, which suggested that traditional manufacturing and resources opportunities may have passed their peak.
“Australian businesses need to be smart about what they’re doing, in terms of the products and services they offer and the international markets they serve,” Dr Menzies said. “So we’re looking at Australian enterprises in China with a focus on innovation and engagement. We want to know whether innovation is important in the Chinese marketplace.”
With the help of their Hong Kong research partner, the Deakin researchers have interviewed around 40 SMEs (from one to 200 employees), exploring not only the products and services they offer, but also funding, government support, capabilities, intellectual property, legal, cultural, marketing and human resource issues.
“Interestingly, we’re finding that innovation isn’t as important as we thought it would be, but other factors - such as understanding the legal context for doing business in China, or cultural expectations and relationships - are very important,” she said.
Dr Menzies added that one of the issues for Australian companies is that the products or services offered – from an Australian perspective and standard - might not easily “translate” into the Chinese environment.
“This is either because of the differences in culture or the differences in standards because China is still a developing economy. The marketplace may not yet be ready - or understand - some of the innovations, or want to pay for them,” she said.
“For instance, consumers may not want to pay for homes with a seven star environmental rating.”
Strong growth areas in China that could provide opportunities in Australia include e-tailing, which is very advanced in China – with people buying products through online outlets such as QQ or weisheng, or making on-line purchases at vending machines - and Australian wine, which has an excellent reputation in China and where cost is linked to "face" and status.
- Read more about this project.