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Trade mission key to Chinese investment

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Shandong mission plays crucial role in attracting Chinese investment to South Australia

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Sending a delegation of South Australian business leaders to China in a bid to boost exports is playing a key role in attracting Chinese investment back into the state.

South Australian Premier Jay Weatherill will lead a 160-strong delegation of government leaders and representatives of more than 100 local companies to Shandong from April 5-9.

The business mission will coincide with the 30th anniversary of South Australia’s sister state relationship with Shandong.

Weatherill said furthering South Australia’s trade and investment links to help more companies “get their foot in the door” would be the key focus of the trip.

“We will be meeting with high ranking officials including the Shandong Party Secretary,” he said.

“We are also hoping to further drive our tourism and international student links, as well as cultural and artistic engagement with Shandong.”

China is Australia’s and also South Australia’s largest and most significant two-way trading partner, accounting for nearly a 20 per cent of the state’s total exports.

However, South Australian Minister for Investment and Trade Martin Hamilton-Smith said Chinese investment in Australia represented less than 3 per cent of overall overseas investment stock as at December 2014.

“It’s a fraction of US and UK investment into Australia, less than half of Japan’s investment in Australia– even the Belgians have more investment here,” he said.

“While investment from China into Australia is increasing, in relative terms Chinese investment is still a very small proportion of Australia’s overall foreign investment stock and that’s a bit of a concern because it’s such an important trading market for us.”

Hamilton-Smith said establishing consistent and successful trade relationships were an ideal precursor to quality, constructive investment.

“A model where investment flows from established trade relationships is a really good one and it’s a logical one for us to pursue as part of the evolution of our growing bilateral relationship with Shandong.

“The foreign investment that follows from a successful trade relationship is informed, it’s fully committed and generally focused around driving growth in the local business because there’s a track record of successful export.”

Economically, Shandong is China’s third largest province with a population of almost 100 million and an annual GDP approaching USD $1trillion.

Last year, South Australia and Shandong signed a Friendly Co-operation Action Plan 2015-2018 – committing both sides to significantly increased trade, investment and cultural ties.

The plan includes a commitment from Shandong to support 20 new exporters a year over three years from South Australia to Shandong.

“If you consider the scale of the Shandong market, the size of their economy, the size of the population there, there’s more than enough opportunity for us to work towards – and it’s a place where we’ve worked very hard in recent years to flesh out the real, medium to long term opportunities for bilateral trade. We are building on a long and rich history of government, institutional and cultural exchange and that positions our businesses to advantage in a very competitive market place,” Hamilton-Smith said.

“With China’s 13th five-year plan having such a strong focus on innovation and the growth of the services economy, I think we can expect to see significant interest in investment around health, tourism and education over the coming years. I think we’re also going to see interest in investment in property and infrastructure as well as agribusiness, resources and energy as confidence grows in the sustained future our long term trading relationship.”

Adelaide-based wastewater management company Micromet was part of a similar business delegation to Shandong last year. This month, the company signed a Memorandum of Understanding with Chinese industrial group Dadongwu, which is directly investing $2 million to help Micromet set up a manufacturing plant in South Australia.

“This mission is a great example of how Adelaide-based businesses can access trade and investment opportunities in international markets through the Adelaide City Council’s network of sister city relationships,” said Patrick Robinson, Investment Advisor for Invest Adelaide.

The Adelaide City Council’s long-standing relationship with Qingdao, a major city in eastern Shandong Province with a population of more than nine million, was upgraded to a formal Sister City relationship in 2014.

This relationship was further strengthened when the Chinese Government opened a Chinese Consulate-General office in Adelaide in January.

Hamilton-Smith said the consulate was recognition by the Chinese Government of the increasing number of Chinese companies and individuals that were engaged in South Australia.

“It’s recognition of not only the growth to date but the clearly recognized further growth that’s on the very near horizon,” he said.

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