Can Australia hold its ground in the Asian economy?

Doug Ferguson, Partner in Charge, Asia and International Markets
Doug Ferguson, Partner in Charge, Asia and International Markets

Australia is an exporting nation, consolidated by the use of an expanding network of free trade agreements that currently cover ten key markets.

Our economic fortunes are inextricably linked with Asia with eleven out of our fifteen largest trading partners from Asia, including four out of the top five and number one – China.

But there are fears in Australia of rising geopolitical tensions and economic volatility in the region. For those already grappling with opaque regulations and unique local cultures, these are outside of our control but provide an additional source of insecurity that can dissuade businesses from trying to establish or expand offshore operations. The “keep it in mind, do nothing” option is often the current book marker.

As the recipients of almost 60 percent of our goods and services exports, Asian consumers are fundamental to the Australian economy.

With 30 percent of the world’s GDP, half the world’s population and the highest growth rate of any region, the scale of the Asian consumer base can be hard to fathom. It’s not until you get into the region that you sense the ambition, the momentum of development and the hunger for higher standards of living. The transition of many countries from low wage, export-led economies to medium income, consumption-led economies has created new opportunities for Australian businesses to capitalise on changing spending patterns. What’s more, the emergence of a few dominant e-commerce platforms and development of new trade corridors is making these consumers much more accessible.

Yet despite these opportunities, Australia’s position as a leading economic participant through export and investment in Asia is precarious. Less than 20 percent of Australian companies are effectively using free trade agreements because of the complexity, overlap, lack of understanding even apathy and scepticism born out of the failures of others.

Businesses attempting to expand to Asia without assistance find the complexity of local markets and absence of information about them to be a significant barrier to entry.

The difficulties of finding the right market entry strategy, the right partners, to reduce risks and how to navigate through very the complex Australian FTAs, with over 26,000 product specific rules of origin can be daunting.

There are legitimate challenges and concerns. While travelling around this week talking to our clients as part of the launch of KPMG’s Access Asia trade solutions business, we have heard many stories: challenges in protecting IP, getting exported products through Asian ports, high turnover of local management, problems with local regulators, brand damage and ultimately financial stress. Most of these can be prepared for, some just need to be managed with experienced advice.

The impact of getting this wrong is not just brand and reputation damage, but also significant deterioration in export trade volumes as well as the deterioration of value that Australian businesses are deriving from their outbound trade and investment activities.

So how should Australia stay relevant as China and therefore much of Asia? I say this because we can’t take the current status quo for granted.

There are a number of things the Australian government can focus on. More practical outreach and assistance from Austrade, EFIC and others for Australian SMEs which need personal and practical help and advice with their trading activities in developing Asian markets is key. The completion of the Indonesia-Australia Comprehensive Economic Partnership Agreement and the Regional Comprehensive Economic Partnership should be a high priority. These agreements will benefit Australia and build our place as a participant in the South East Asian economic zone.

However, we need businesses to actively seize on agreements like these.

To best exploit our free trade agreements companies need to look at the Asian economy as a conglomerate comprised of many smaller markets, some as large as countries, some as small as cities. By isolating the target market, understanding the benefits of our FTA’s and accounting for changing consumer patterns, companies can profit from changes created by new trade corridors and new socio-economic trends.

Learn more about Asia business.

One thought on “Can Australia hold its ground in the Asian economy?

  1. Exceed if and only if Australia grasps the opportunity to (1) be the CO2 sink for the regions emitting Nations and industry (2) in so doing plan for Australia utilizing the regained soil soil-carbon are to become the food bowl. Clearly while PMs Howard and Abbot issues written instruction for such to begin under UNFCCC COP3 100year protocol the current government does not personally believe climate change. As mining manufacturing slows now was the opportunity to return to our cornerstone Food Fodder Forestry global exports and thereby eliminate global debt Without Prejudice Robert Vincin (a few credentials)
    *Vincin; Former Branch Secretary Hon John Howard 95/99 showing how to win Greens & PM-ship!
    *Wrote Direct Action for Tony Abbott (Adelaide Review June 96) he PM 2013-
    *UN USG invited me 96-99 to join the panel that prepared science Kyoto Protocol. Member Earth Council. Travelled the globe to meetings side toured to desert/poverty regions.
    *1995 Paper There was no River Murray Darling Workshop ANU Canberra Preserve water courses
    *1997-2000 KPMG consultant attending Global Offices sitting on Earth Council panel prepare COP3
    *2000 Paper tabled UNFCCC COP6 “The Missing Sink” detailed 2-4% of Earths vegetation was and must again be such sink CO2 (Condon/Vincin)

    *2005-Invited Foreign Expert PRC Central Government advising 7 Ministers, 9 Governors, teach Law, Science, Agriculture, Forestry at Peking et al Universities. Leading in field physical growing soil soil-carbon food fodder forestry funded by UNFCCC CO3 offset trading to UNFCCC 100year rule! PRC
    *2008 JV UNDP PRC Forestry Plant out C4 CO2 over 9 Provinces & by 2020 lower8Bn T CO2 pa.
    *Recipient Genghis Kahn Peace medal 2008 teaching growing soil roof of the world.
    *October 2016 Invited by Global Energy Award Foundation to submit to 2017 award!
    *Invited UNCCD 2017 Land for Life Award
    *2017 Global Energy Award Certificate Joining a distinguish list of global recipient’s
    *Invited UNFCCC Moment of Change Awards See Facebook Google Twitter https://www.youtube.com/watch?v=YbI8YZmBP8g

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