Thursday, June 2, 2016

Breaking in to lucrative China market - a hard road for Aust business

The rapid rise of China's expanding middle class is a potentially lucrative opportunity for Australian businesses.

But as many are finding out, it's not as simple as just arriving and setting up shop in the world's second biggest economy.

Listen to my special report broadcast on The World Today

Businesses have to deal with cultural differences, negotiate with a myriad of Chinese regulators and navigate harsh restrictions on the Internet - better known as the Great Firewall of China.

That's opened up an opportunity for Sinorbis, a specialist digital business which is helping Australian entrepreneurs exploit the burgeoning demand from China.

Chief executive Nicolas Chu says China's private consumption is rapidly expanding and there is massive demand for high quality goods and services from countries like Australia.

"Chinese consumers are increasingly looking internationally for premium goods and services and Australia is high on their radar, demonstrated by strong year-on-year increases in search volumes for Australian products," said Mr Chu said.

"This is a pivotal time for international businesses to position themselves to meet growing demand from China's new generation of upper-middle class consumers. Many businesses baulk at doing business in China, but with the right knowledge and local expertise it can be as easy as doing business in Australia."

Sinorbis co-founders Nicolas Chu (left) and Allan Wu with a client in Sydney

A big opportunity - but one fraught with cultural and regulatory issues - is the recent relaxation of the one child policy in China.

The prospect of middle aged Chinese couples racing to conceive a second child before it's too late is a major challenge for fertility specialist Dr Raewyn Teirney and he Sydney-based company "ConceivePlease".

"It's a great opportunity for my product to get into China and giving people advice and a one stop kit that will help them conceive naturally," Dr Teirney said.

Dr Teirney is using Sinorbis to develop a culturally sensitive Chinese name for her product and to use focus groups to develop the most sensitive way to market it.

But Dr Teirney should brace for big cultural and regulatory hurdles, warns tech entrepreneur Leo Coates who made his first attempt to set up shop in China four years ago.

"It blew me away. I had all the text book study and all the understanding you could have in the world thinking that business in China should be fairly straight forward," Mr Coates said.

"However I found myself sitting down eating McDonalds on the trade room floor thinking how on earth am I going to do this.

"From the authorities, the complications with the language and the culture to the pricing structure, I was in an absolute twirl."

Sinorbis has just released a white paper titled "Stoking the Dragon: Unlocking China's New Generation of Digital Consumers".

It says China's private consumption is rising rapidly through rapid urbanisation and ecommerce, and will grow by another 50 percent to A$8.6 trillion by 2020.

Monday, May 30, 2016

"There goes the neighbourhood" - climate change warning on coastal real estate

Property owners in Australian coastal areas face significant and increasing losses the from impact of climate change, according to a report out today.

Research by the Climate Institute warns the potential damage bill from coastal erosion is conservatively estimated at $88 billion excluding the value of land.

Listen to my report on "There Goes The Neighbourhood" from The Climate Institute

With growing evidence of changing weather patterns, the Institute says governments, insurers and especially major banks need to provide better information to investors.

Climate Institute chief executive John Connor says more than two percent of all houses are already exposed to moderate to extreme risks of flooding.

Read the Climate Institute report here

"Growing climate impacts means the costs of these and other hazards exacerbated by climate change will have worsening repercussions for households, the financial sector and ultimately the economy itself," Mr Connor said.

"There has been insufficient action from government, insurers and most notably the banks, perhaps surprisingly as they are mortgage lenders."

The claims are contained in the Climate Institute's report "There goes the neighborhood" which examines the climate change risks to Australian housing and the overall financial sector.

The warning is critical given that the economy directly or indirectly drives a third of the economy and accounts for 60 percent of the assets of the big four banks.

"People continue to buy homes that continue to be built and sold in areas that may be at more risk than they realise," Mr Connor said.

But Mr Connor says that while the  climate risks "most banks have so far done relatively little to try and address this complex problem."

The research comes as the insurance industry continues to lobby local governments for more accurate flood mapping data to better address risks.

Mr Connor has called for great action from the finance sector and governments.

"It's not a political football. It's not ideology, it's real and we've got to get on with integrating climate change like other risks".

Climate Institute chief executive John Connor at Maroubra Beach    Picture: Peter Ryan