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Meeting the China challenge

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The size and breadth of the Premier’s delegation to China will ensure that next week’s trade and investment mission will make its mark in Shandong province, according to Sino specialist Chris Schacht.

A former minister in the Hawke Government and now chairman of trade and investment consultancy, the Australia China Development Company, Schacht says the 255 strong delegation which leaves SA tomorrow has already attracted attention.

“The Premier’s delegation is going to have a big impact in Shandong in particular because it has well over 100 business people plus local and state government people involved,” Schacht told Business Insight.

“I know the mission is being treated very seriously by the Shandong Government and the city of Qingdao as a very significant delegation because of its size and its breadth.

“The fact that the Premier and three other ministers are on the delegation shows that we are really serious.”

Schacht, who will be on the delegation, has made more than 50 visits to China since 1987. Under a recently signed memorandum of understanding (MOU) between Business SA and Australia China Development Company, he briefed a number of Business SA members last week on what to expect in China.

“What we emphasise is that operating in China is not like doing business in Australia,” Schacht said.

“China is a one party system, it’s culturally one party, and it has a completely different attitude about how you do business.

“The Government and the Party absolutely are at the table doing business with anyone coming in from overseas.”

Schacht said he gives clients “fair warning that negotiating with the Chinese at any level commercially is a very tough business”.

“You might have very friendly banquet with the Chinese one night but next day across the table negotiating a price, it will be very tough. But it can be done, and it is being done,” he said.

Schacht said his consulting company has good contacts within government, the Communist Party and in the business community in Shandong, a province in which Australia China Development Company has specialised.

Asked to respond to the perception that China is too big and intimidating for small and medium enterprises to consider, Schacht replied: “You should be intimidated, therefore you should not try to tackle all of China”.

“We have specialised in one city in one province because Shandong’s capital, Qingdao, is a city of 10 million people, bigger than NSW and Victoria combined.

“It’s a big international trading port and it has a whole range of industries from electronics to textiles and clothing and services.”

Schacht said Australia China Development Company prepared plans on potential contacts and managed all the introductions for clients “so they don’t wander around lost in this gigantic country”.

If a client succeeded in securing a contract, Schacht said the consultants also helped assess a company’s preparedness to meet the volumes of product to be supplied while still maintaining the required quality control.

Business SA chief executive, Nigel McBride, and more than 50 Business SA members, are represented on the trade mission, which includes 158 delegates from the State’s private sector, cultural and education institutions.

The second Shandong-South Australia Cooperation and Development Forum on 25 May will be a key event on the mission’s program and there will be significant time devoted to business-to-business meetings and discussions with industry representative bodies.

McBride told Business Insight that local businesses “should take a collaborative approach in pursuing trade and investment opportunities because China is a very big country and there is more than enough business to go around”.

“We encourage individual businesses to share their experiences and knowledge because the more we all know about this complex market place, the more successful we will be both individually and collectively as a State,” McBride said.

“The relationship we have recently established with Australia China Development Company builds on our current in-house advice and support for potential exporters, and dovetails with the Export Growth China initiative by the chamber movement,” he said.

“I’m particularly looking forward to the opening of the Export Growth China showroom in Shanghai on 28 May, after the Shandong mission, where South Australian businesses will be able to showcase their products and services to a large number of Chinese wholesalers.”

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