Business

Ready For Business

Helpful hints for building a successful business in Asia

How easy is it for Australians to start their own company in a country where the culture, attitudes and rules are vastly different from home? Despite plenty of government support, it’s a complex task to navigate.

Whether you’ve already got a successful business or you’re just starting out, there’s no doubt that setting up a business in Asia isn’t something for the faint hearted. But growing numbers of Australians are looking for ways to take advantage of the landmark China-Australia Free Trade Agreement, after the two countries signed a Declaration of Intent a couple of years ago.

The agreement gives Australian businesses unprecedented access to the world’s second largest economy. The Free Trade Agreement also greatly enhances Australia’s competitive position in key areas such as agriculture, manufacturing exports, services, investment, resources and energy.

The Free Trade Agreement follows trade deals with Korea and Japan, forming part of a powerful trifecta of agreements with Australia’s major trading partners in north Asia. Opportunity looks set to grow, with Austrade figures revealing that China’s annual online-retail sales are estimated to reach $610 billion by 2018, and that the Chinese government target is to connect 1.2 billion people to the internet by 2020, which is 85% of the Chinese population.

But unlocking these markets is another matter entirely. And as Austrade points out, while rich with opportunities, China, for one, is a complex and ever-changing market.

Business

Rules of engagement

Austrade advises those wanting to set up business in China to start by considering what their company’s objectives are. Next, they need to carefully research the target market before developing a formal business plan. It’s also worth discussing the business strategy with a local representative who understands the market and economic conditions.

Austrade explains that if a product or service is deemed suitable for the Chinese market, operators need to ensure they have the competitiveness, resources and stamina required to handle the demands of overseas communications, frequent travel, product delivery and after-sales service.

All foreign investments need to be registered with the appropriate local and state authorities, and this can be a slow and bureaucratic process. Exporters will also need to deal with Chinese tax, accountancy, employment law, transport infrastructure and the commercial legal system, Austrade’s comprehensive website points out.

It may be helpful to talk to other Australians with business experience in China, such as Australian Business Council members in Australia, China-Australia Chamber of Commerce members in China and Austrade’s network of trade advisers in both China and Australia. Austrade also provides a number of market research services across a wide variety of sectors.

Tremendous opportunities exist for Australian food and agribusiness companies to sell online. China’s demand for Australian food will continue as many goods once delivered locally are now regularly purchased online.

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Payment options

Be mindful of the different payment channels across Asia, too. A large proportion of Chinese businesses tend to trade in onshore Chinese Yuan Renminbi (CNY), or CNH, which is the offshore version of CNY and can only be maintained and freely exchanged outside of China. Alternatively, they rely on the US dollar. If you’re an importer, your supplier may ask you to pay in any one of these currencies. Make sure you pay the correct currency to the correct account to prevent delays.

You’ll also need to choose a foreign exchange company that offers all three currencies to allow you to trade with different businesses throughout the country. For example, Australian online money transfer service OFX, deals with 55 different currencies.

OFX corporate dealer Michael Judge says you need to know the full name and phone number of the main contact at the company you’re paying. “This is so Chinese banks can validate payments with the recipient,” Judge says. “In these situations, it’s best to add the contact as a reference when making the payment.”

Judge says Chinese banks heavily monitor payment references, so it’s important to assign a correct reference to your payment. “China is known to be very strict with account details,” he says. “If a space, comma or full stop is in the wrong place, the result may be a failed payment. Always double check all the details.”

Asian roadmap

Meanwhile, Asialink Business has released an app that supports Australian businesses in Asia. The Asialink Business’ Country Starter Pack includes a guide that empowers businesses of all sizes to get started or expand in Asia and unlocks opportunities in the fastest growing markets in our region.

Asialink Business CEO Mukund Narayanamurti says the pack provides a roadmap to navigate Asia’s diverse commercial markets and highlights opportunities in specific sectors, markets and economies. “Around Australia, businesses of all sizes told us they recognise the potential in Asia, and are optimistic about the doors opened by the China-Australia Free Trade Agreement and other Free Trade Agreements, but they want a practical tool to help translate these opportunities into reality,” Narayanamurti says.

 

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