International Business Relations between Australia and China - Case Study Example

? International Business: Individual trade project The age of 21st century is the era of tremendous development that has been brought forward by the speedy diffusion of the trends of globalization in various corners of the world. It is important to state that the globalization trends have been dispersed all over the world, by the usage of highly developed networking and communication technology. The faster development of internet powered connectivity in various corners of the world, accompanied by the process of emergence of highly sophisticated technical gadgets has helped in the process of faster diffusion of the globalization trends in regions all over the world. The spreading of globalization has also played a major role in the creation of demand for new kinds of products and services. This in return has played a role in the process of development of new markets by the opening of various previously closed economies. Talking on this note, it can be said that the availability of information and new age communication technology has helped in a great way in the process of development of new markets in international locations. As a result of emergence of new markets, there has been significant amount of development in regards to business and trade policies of various developed as well as developing economies located in various continents around the world. As a result, business organizations with diverse range of product and service offering which can delivered through the physical as well as the online mode are looking forward to exploit the significant business opportunities by significantly entering into international and new markets through the process of engaging into exports and import business. For the purpose of this project, it is important to highlight that the selected country from where the export process will be initiated is Australia. Also, the target or destination country where the products of export will be delivered is China. It is also important to mention that for this project, the product which is supposed to be exported from Australia to China is the processed foods. Business Trade environment in China Industry Developments: In the recent times, the economy of China is supposed to grow at the rate of around 8.1 percent as compared to the previous year’s growth rate of over 7.5 percent. However, there is a certain amount of caution existing in regards to the macro economic developments, because of the fact there are significant amount of chances of slowing down of the economy because of possible rise in inflation (Economic Times- a, 2013). Talking about the industry development of China, it can be said that the processed food sector of China is supposed to grow at the rate of around 10% on a year on year basis for the period of 2011 to 2016. Political environment While discussing the political environment, it can be said that the Constitution of China describes the country political infrastructure as a socialist kind. It also highlights that the country is under democratic dictatorship of the people and is currently controlled by China’s Communist Party (fogel, 2010). However, it is important to highlight the fact that the political environment faces challenges in regards to the widespread corruption that currently exists within the ruling party’s hierarchy (Economic Times-b, 2013). Government Regulation and Trade Restrictions Talking about government regulation and trade restrictions that currently exists in China, it can be said that the introduction and steady rise of Republic of China has resulted in a tremendous impact in the regulations, restrictions and trade laws of the country. The country has developed a highly exhaustive list of various commodities, which can be traded with other commodities. The country has also designed a highly well developed taxation system, which implements duty of customs as well as VAT related taxes on the imports of the country (PWC, 2008, p.77). I P Rights and Commercial Law While discussing the issues of Intellectual property rights, it can be said that the country strictly follows the PRC Regulations on Customs Protection of Intellectual Properties that has been enforced in the year 2003. The Republic of China also has a well distinguished framework to protect the business interest of the concerned parties in case of any possible infringement issues, that might emerge in the course of conduction of trade engagements with international clients and customers (PWC, 2008, p. 91 ). Talking about the commercial law that exists in China, it can be said that the exchange of processed goods of diverse kinds happens mostly in regards to the processing trade arrangements that has been developed by the country. Transportation infrastructure Talking about the transportation infrastructure that exists in China, it can be said that the country has a highly well developed water based inland transportation systems for the purpose of movement of goods within the country. For the purpose of making foreign goods enter the country, China has developed special economic zone (SEZ) which are well integrated with various sea routes, airports and land transports (PWC, 2008, p. 86). Reason for Strong export potential for Australia in regards to China It is relevant to highlight that during the recent times Australia is engaged in developing a free trade agreement proposal with the Republic of China (Department of Foreign Trade Affairs-a, 2011). The key focus of the free trade agreement between the two countries will comprise of issues like the reduction of the tariffs that might hinder bilateral trade between the countries. The other issue that will be largely highlighted in the free trade agreement is the development of a platform that will help in the boosting of foreign investment that will help in the building of a healthy economic relationship between the two countries (Department of Foreign Trade Affairs-b, 2011). It is important to highlight in this case, that the free trade agreement can be seen as the effort of the Australian government to boost business productivity and manufacturing output within the country by creating the market in China for exporting and smooth delivery of Australian produced goods and services. Taking into account the latest information that is available in regards to transaction relation of exports and imports that exists between the two countries, it can be said that the China is one of the major partners in terms of bilateral trade in the recent times (Department of Foreign Trade Affairs-c, 2011). Talking in regards to the prospects of exports in regards to processed foods, it can be said that the Chinese market for processed foods has been valued at around 14.4 billion USD as of the year 2011. It has also been predicted that the market of Republic of China in regards to processed food market is supposed to grow at the rate of around over 10% in the period ranging from 2011 to 2016 (Maine International Trade Center, 2012, p. 10 ). Hence, it can be said that this provides a significant amount of opportunity for developing of export relations for Australia with the Republic of China. 2. It is of considerable importance to state that Australia has developed a highly symbiotic business and trade relationship with China by the smooth conduction of export and import of various products and services (Uren, 2007). It is important to state that the organic food processing sector of Australia which also comprises of meat based offerings has ranked among the country’s top 25 exports of goods and services in the recent times (Dfat.gov.au, 2011). Talking about promoting the prospects of the country’s processed meat offerings in the markets of China, it can be said that the process of value communication is a very important step to help increasing the awareness of the Australian processed meat products. Talking in these lines, it can be said that the increase and rise in awareness of processed meat products of the Australian region, will help in the creation of demand pull. The demand pull will automatically help in the generation of better prospects of business for the processed meat manufacturers and suppliers located in the Australian region. For the purpose of promoting the Australia made product, the government agencies who are responsible for promoting trade and development in the international markets of China, should try to focus on promoting the positive points of the products. For the purpose of successful value communication of the Australian manufactured processed meat products in the Chinese markets, it is important for the Australian Trade Commission to promote the fact that the country, which is known for its kangaroos and surfing sports promotes a highly ethical approach and healthy image towards the food industry. Talking on this note, it is important to state that the Australian Trade Commission should also provide significant light on the process of promoting the fact that the Australian food industry focuses on developing high quality food products for its consumers, who are probably located in various domestic as well as international markets. While addressing the consumers located in the Chinese market for the purpose of value communication, the government based agency of Australia should try to draw attention towards the fact that the overall atmosphere of Australia is highly healthy and clean in nature. The government based agency should also take note of portraying the fact that the Australian foods sector focuses on using the latest technology in regards to food processing so that it can maintain the high quality of its outputs on a regular and sustained basis. Also, while engaging in the process of value communication, it is important for the Australian Trade Commission to highlight the fact that the food industry in Australia regularly focuses on the process of development of innovative technology and techniques in regards to food processing as well as packaging of processed food products (Austrade, 2010). 3. The food industry of Australia is considered as one of the highly critical component of the entire national economy. Talking in a little broad manner about the food industry’ contribution to the economy of Australia, it can be said that the national economy is highly benefitted by this particular industry in regards to the areas of business development, individual employment as well as considerable amount of service opportunities (Department of Industry Innovation, 2010). It is important to highlight the fact that the gross value of the Australian food processing industry is estimated at around 23.6 billion USD as of the year 2010 -11. It is important to highlight the fact that the estimate comprised of estimates of the beverage and tobacco sector as well. The value of Australian food exports increased to around 27.1 billion USD in the year 2010 -11 (Australian Food Statistics, 2011, p. 15). Given below is the detailed composition of the Australian food exports. Source: Australian Food Statistics, 2011, p. 15 It needs to be highlighted that the industry catering to processed foods for the economy of Australia is highly vulnerable to threats arising as a result of natural disaster or other possible macro threat. Talking about the food supply chain that currently prevails within the country it can be said that the food supply chain is comprised of a wide variety of stakeholders, which comprises a more or less exhaustive list of producers, suppliers, manufacturers, processors and retailers. Talking in relation to that, it can be discussed that though the economy of Australia is a major exporter when it comes to food products, yet it is a very true fact that the country is also a considerable amount of importer for various kinds of food. A strong supply chain of global standards is very important for the sustenance and growth of the food sector existing in the Australian market. Talking on this note, it can be said that the level of independence in the case of formation of a global supply chain for the food sector has grown consistently over the years. Hence, it can be very naturally said that the Australian foods sector also faces significant amount of threat in the supply chain front because of its high level of dependence (Australian food statistics, 2011, p. 51-52). For the purpose of providing protection to the export market for the food industry of Australia, it can be said that the Australian government has implemented various pest and disease control programs to prevent any harmful impact on the agricultural output of the country, as it acts as a primary source of input for various raw materials for the food processing industry which provides a significant amount of contribution to the global economy. Also, it is of significant importance to state that the government of Australia has taken significant amount of commitment and initiatives for the purpose of conducting exhaustive amount of research for the food industry of the country. It can be said that the government has formed significant collaboration with the Commonwealth Scientific Industrial Research Organization, Australian centres for international agriculture based research, and even various food research organizations around the world (Hall Chadwick, n.d). 4. Global Trade Value for Meat without beef (As of the year 2011): 2258 Million USD (Trade at a glance, 2011, p. 24) Expected growth rate for China’s processed food market between the year 2011 - 2016 = 10% Since, it is known that China is one of the major partners for trade for the country of Australia; it has been assumed that 60% of the global trade for meat products conducted in the year 2011 was done with China. So the assumed global trade value for meat product without beef in the year 2011 is assumed to be approximately around 1355 million USD. It has been already stated that the market is expected to be growing at the rate of 10% for the 5 year period ending 2016. Hence, the estimated total trade value in the next 5 years is 2032.5 million USD. Estimating a pound of meat costs around 5 USD, it has been assumed that the total trade volume will be around 406 million pounds in the next 5 years. References Economic Times- a (2013). China set for tepid recovery in 2013, inflation to pick up: Poll. Retrieved from: http://economictimes.indiatimes.com/news/international-business/china-set-for-tepid-recovery-in-2013-inflation-to-pick-up-poll/articleshow/18146735.cms Economic Times-b. (2013). Education Revolution: China doubles its no of universities & will produce 195 million college graduates by 2020. Retrieved from: http://articles.economictimes.indiatimes.com/2013-01-17/news/36394048_1_china-doubles-chinese-economy-wang-huiyao PWC,(2008) Doing Business and Investing In China. Retrieved from: http://download.pwc.com/ie/pubs/PwC-Doing-Business-and-Investing-in-China.pdf Hall Chadwick, n.d. the Australian food industry. Retrieved from: www.hallchadwick.com.au/LiteratureRetrieve.aspx?ID=1641 Austrade. (2010) Food and Beverage Overview. Retrieved from: http://www.austrade.gov.au/Food-and-beverage/default.aspx Department of Foreign Trade Affairs-a. (2011) trade at a glance. Retrieved from: http://www.dfat.gov.au/publications/trade/trade-at-a-glance-2011.html Department of Industry, Innovation. (2010) Australian Food Processing Industry Fact Sheet. Retrieved From: http://www.innovation.gov.au/Industry/FoodProcessingIndustry/Pages/AustraliasFoodProcessingIndustryFactSheet.aspx ‘ Dfat.gov.au (2011). Australia’s Top 25 Exports, Goods and Services. Retrieved from: http://www.dfat.gov.au/publications/tgs/FY2011_goods_services_%20top_25_exports.pdf Department of Agriculture, Fisheries and Forestry. (2012) Australian Food Statistics 2010-11. Australian Government. Department of Foreign Trade Affairs-b. ( 2011) Australia China Free Trade Neogtiations. Retrieved from: http://www.dfat.gov.au/fta/acfta/ Department of Foreign Trade Affairs-c (2011) Australia's top 10 two-way trading partners and Australia’s top 10 exports, goods & services. Retrieved from: http://www.dfat.gov.au/trade/focus/081201_top10_twoway_exports.html Uren, D. (2007) China emerges as our biggest trade partner. Retrieved from: http://www.theaustralian.com.au/news/nation/china-emerges-as-our-biggest-trade-partner/story-e6frg6nf-1111113474544 Maine International Trade Center. (2012) China and Hong Kong: Food Opportunities for Maine. Retrieved From: http://www.mitc.com/trade/FoodIndustryReportChina.pdf.pdf Read More