INB20012: International Business Blog on Australia-China Trade

This blog post analyzes an article discussing the Australia-China trade relationship, focusing on strategies for Australian businesses to succeed in the Chinese market. The blog highlights the importance of the free trade agreement between the two nations and its impact on market opportunities. It emphasizes the need for Australian SMEs to adopt a long-term strategic perspective, considering the Chinese government's five-year plan, creating partnerships, and engaging with local business advisors. The post also explores the relevance of the article to international and Asia-Pacific business perspectives, socio-political issues in Australia, emerging trends in international trade, and the implications for Australian businesses. The blog concludes by discussing the policy issues that need to be addressed to improve the success rate of Australian companies in international markets and provides references to support the analysis.

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Reviewed Article: NAB: Top tips for Australian businesses to succeed in China by RIA
Oreanda-News
Over the years, China has emerged as a key trading partner for Australia. China is the
largest market for Australia’s exports, with reports indicating that China accounted for one-third
of Australia’s total exports. Recently, the two nations signed a landmark Free trade Agreement
which further cemented the longstanding trade ties between the two countries. Consequently, the
new trade deal creates exciting business opportunities for both Australian and Chinese
companies. However, despite the promise for an expanded market, Australian companies will
need to be both patient and strategic if they are to exploit these new opportunities. The
companies will need to adopt a long-term strategy regarding the Chinese market.
So, how will Australian SMEs achieve success in the Chinese market? First, as NAB
China’s General manager, Danny Armstrong, advises, they need to review the Chinese
Federation’s five-year plan. In this way, they can identify potential opportunities and incentive
areas provided by these government policies. Secondly, the SMEs will need to adopt a longterm
and strategic perspective of the Chinese market. Thirdly, the SMEs should consider creating both
offshore and onshore partnerships with Chinese companies. The Australian education sector has
reaped considerable benefits from such a strategy, and therefore, the SMEs could also benefit
from the same. Another tip is that the SMEs should consider making an entry in China’s second-
tier cities. The observation is that these cities are experiencing significant growth and could
provide the perfect platform for product testing. Lastly, and most importantly, the SMEs should
engage Chinese business advisors. These advisors possess critical market knowledge and thus,
will help the SMEs navigate the market.

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Article’s relevance to International Business and Asia pacific Business Perspectives
This article well articulates a key feature of international business which is trade
agreements between economies. In this instance, the article reports on a free trade bilateral
agreement between China and Australia. The trade deal abolishes tariffs and trade barriers
between the two nations, thus enabling businesses to trade in the two countries easily.
Also, the two nations are vital members of the Asia Pacific region and the APEC.
Preferential trade agreements have been a key trend across the Asia Pacific region (Aggarwal &
Urata, 2013). As the Economic and Social Commission for Asia and the Pacific. (2016) Points,
by 2016, there were about 169 preferential trade agreements carried out within and across the
Asia Pacific region. Therefore, it can be noted free trade bilateral agreement between China and
Australia mirrors this trend. Thus, the two Asia Pacific members are working together to create
more market opportunities amongst themselves.
Additionally, the article illustrates the importance of international business. International
business offers an expanded market for firms and nations for their products (Djajadikerta &
Zhang, 2015). In this instance, Australian companies have a unique opportunity of increasing
their ventures to China and exploiting the growing Chinese market. Consequently, the revenue of
the businesses will grow and most importantly, more employment opportunities will be created.
Socio-political issues
A key sociopolitical issue in current Australia is the slowed economic growth. As Letts
(2019) points, economic growth in Australia has hit a decade-low, expanding by only 1.4%.
Consequently, household income has reduced due to weak wages, thus leading to a vulnerable

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retail sector. (Letts, 2019). Another impact of the slow economic growth has been the reduction
in taxes, thus leading to budget deficits.
As Kent (2015) states, there is, therefore, a need for crucial economic reforms as a way of
boosting the sluggish economy. There is a consensus that while most sectors in Australia, such as
mining and housing, have declined, the nation’s exports sector has enjoyed significant success
over the years (Kent, 2015). Therefore, one of the ways through which Australia can improve its
economy is by boosting the already lucrative export sector. The bilateral agreement between
Australia and China discussed in the article offers a significant boost to the nation’s exports.
Through the deal, Australian companies can now easily access the vast Chinese market, thus
creating a substantial growth opportunity.
Emerging Trends
A key trend highlighted by the Australian Trade and Investment Commission (2019) is
that the nation’s international trade is growing rapidly. Reports show that the nation’s two-way
trade experienced growth by 11% in the year 2017. The Asia Pacific region was key to this
growth, accounting for 71% of Australia’s bilateral trade. Notably, China was one of the key
markets where trade volumes increased because there was a strong demand for Australian
products.
Another key trend is that more Australian companies are keen on expanding overseas.
Featherstone (2017) points out that this trend has emerged out of necessity whereby the local
Australian market is saturated. Therefore, the overseas market provides a unique growth
opportunity for Australian companies. Featherstone (2017), however, points that despite the

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additional economic opportunities abroad, Australian companies are struggling on the
international market. Out of five companies that venture overseas, only one experiences success.
Possible Implications Identified in the Article
It is worth noting that a significant contributor to the increasing International trade
volumes for Australia is policy actions such as the one discussed in the article. The article
discusses the bilateral agreement between China and Australia. Such bilateral agreements
substantially improve international trade by removing the existing trade barriers. As earlier
pointed, China was one of the markets where export volumes significantly increased (Australian
Trade and Investment Commission, 2019). Thus, this indicates the positive impact that the free
trade deal discussed in the article had on Australia’s exports to China.
Additionally, the article also offers advice to Australia’s SMEs on how they can attain
success in the Chinese market. This is in line with the trend that more Australian companies are
failing in their attempts to expand overseas. However, expanding overseas has emerged as a vital
necessity for Australian firms due to the saturation of the local market. Thus, Australian
companies need to ensure that they attain competency in conducting global business. This will be
key if they are to survive in the highly competitive global business sector.
Emerging Policy Issue
The Australian government needs to address the issue of the poor success rate of
Australian companies on the International front. Reports indicate that most Australian companies
who venture overseas struggle to succeed in international markets. A majority of these
companies are SMEs. As OECD (2017) points, SMEs face unique challenges in the global
market landscape, thus affecting their success. Therefore, the Australian government needs to

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create policies that promote the success of Australian companies in international markets. These
policies should focus on creating a favourable environment for SMEs and also building their
capacities. In this way, Australian companies can experience more international success.

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References
Aggarwal, V. and Urata, S. 2013. Bilateral trade agreements in the Asia-Pacific: Origins,
Evolution, and Implications. New York: Routledge.
Australian Trade and Investment Commission 2019. Australia’s two-way trade with the world
was up 11% to $763 billion in 2017. [online] Austrade.gov.au. Available at:
https://www.austrade.gov.au/news/economic-analysis/australias-two-way-trade-with-the-
world-was-up-11-to-763-billion-in-2017 [Accessed 15 Sep. 2019].
Djajadikerta, H. and Zhang, Z. 2015. A New Paradigm for International Business: Proceedings
of the Conference on Free Trade Agreements and Regional Integration in East Asia.
Springer.
Economic and Social Commission for Asia and the Pacific. (2016). Asia-Pacific Trade and
Investment Report 2016. United Nations.
Featherstone, T. 2017. Australian companies expanding their wings offshore. [online] Australian
Financial Review. Available at: https://www.afr.com/wealth/investing/australian-
companies-expanding-their-wings-offshore-20170809-gxs9jp [Accessed 15 Sep. 2019].
Kent, C. 2015. Australian Economic Growth – The How, What and Where | Speeches. [online]
Reserve Bank of Australia. Available at: https://www.rba.gov.au/speeches/2015/sp-ag-
2015-03-11.html [Accessed 15 Sep. 2019].
Letts, S. 2019. The economy may be struggling but the federal budget might already be back in
the black. [online] ABC News. Available at:

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https://www.abc.net.au/news/2019-09-04/gdp-q2-2019/11474470 [Accessed 15 Sep.
2019].
OECD (2017). Enhancing the Contributions of SMEs in a Global and Digitalised Economy.
[ebook] OECD. Available at: https://www.oecd.org/mcm/documents/C-MIN-2017-8-
EN.pdf [Accessed 15 Sep. 2019].