Apr 29 2019

Surveys Reveal Australian Businesses Still Rely on China Despite new Indonesia Trade Deal | Whale Logistics Australia

Australian businesses are simultaneously becoming more dependent on China and traditional Anglo markets just when the country’s foreign policy thrust is to diversify links to major emerging nations such as India and Indonesia.

port of brisbane

Source: The Interpreter

This at a time a new survey of business attitudes to trade also shows continued uncertainty and take-up of new bilateral trade agreements, despite the Coalition government claiming these as major political achievement and mounting an outreach program to promote them.

The Australian Chamber of Commerce and Industry (ACCI) survey poses an interesting challenge to the Asia versus New Zealand choice paradigm, which is commonly used in discussion about whether business is sufficiently engaged with Asia. It shows that 61% of respondents trade with China (which is a significant increase on 2016) followed by 49% with New Zealand and 47% with the US. This amounts to increased dependence on China when its economy is slowing and there are persistent cases of apparent political interference with Australian trade amid political tensions.

top 3 countries importing australia

Source: Australian Chamber of Commerce and Industry

But after that, business is more dependent on older advanced countries despite the better growth outlook in large emerging countries such as Indonesia and India, which were more popular in previous ACCI surveys.

Fortunately, given the ACCI findings on growing China dependence, a separate survey of Australian businesses in China released this week revealed mixed but continued overall confidence about the China business outlook despite the bilateral diplomatic tensions and the US-China trade row.

ACCI argues for more government action to increase awareness of non-China high growth markets even though that has been a recent focus of both federal and state government trade promotion.

australia business engagement with international trade

Source: Australian Chamber of Commerce and Industry

The rising dependence on China is reinforced by a finding that the bilateral trade agreement with it is the most used of Australia’s trade agreements followed by the US agreement and the Australia/New Zealand agreement with ASEAN nations.

But despite the education program which has followed the recent trade deals, the survey suggests lack of awareness of various agreements has risen over the past two years. This raises questions about how much of a political success these deals are as an election looms and whether more attention should be paid to broader World Trade Organisation or regional agreements to declutter the landscape.

What does this mean for current Australian importers?

Australian businesses looking to strengthen their supply chain should look to spread the risk to any major changes or effects on their trade lane due to economic outlooks. China remains the largest manufacturer in the world, however with their GDP growth at a strong 6.8% year on year, it will become more and more expensive to manufacture in China.

Importers should look to diversify, if possible, to other markets in the ASEAN level as Australia currently holds a free trade agreement with countries in this region. Besides that, being able to lower transport costs for the China-Australia trade lane will make a big difference to the bottom line.

Whale Logistics Australia is an award-winning freight forwarder and logistics solution provider, who is part of a network of over 180 offices all over the world with strong ties with China and ASEAN countries. We work directly with shipping lines and airlines to pass the benefits to our clients, and provide unparalleled customer service that delivers value time and time again.

If you wish to contact us and discuss about your current trading position, and how you may be able to create savings and boost your supply chain certainty, get in touch with our Customer Success Managers.

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