11 May 2007 
 
Retail, construction and services are the hot industries for Australian exports to China, delegates at the Institute of Chartered Accountants annual Business Forum in Adelaide were advised by David Powell FCA, Partner, Ernst and Young, President Australia China Business Council (ACBC) and Chris Rees, State Manager, Austrade, ACBC Committee.  
 
Ranked the fourth largest economy in the world, in terms of nominal GDP (Gross Domestic Product), and with a population of over 1.3 billion with increasingly disposable incomes, China presents a valuable opportunity for Australian businesses to expand into the global market.  
 
‘A lot of sectors that Australia is very strong in, such as mining and construction, are coming into great demand in China,’ Chris Rees advised attendees at the forum. ‘Indeed, China overtook USA to become Australia’s number two export market, growing by 28 per cent in the financial year 2006-07’.  
 
However, several key risks to doing business in China were identified, most notably, the copying of intellectual property introduced into China. 
 
Regarding the risks associated with the Chinese market, David Powell advised delegates to: ‘Double your time and halve your expectations’ when entering into business negotiations. 
 
Subsequently, the Institute of Chartered Accountants in Australia has compiled the following advice for those looking to enter into the Chinese market: 

• Not only does the economy and culture vary by Province, so too does China’s complicated labour laws (and tax laws)
• Language is a consideration when planning a business expansion, as the language of law in China is Mandarin, not English and Mandarin language overrules an English definition. Some Mandarin has no direct translation into English. You therefore need to be very careful when entering into contracts in China - they may not say what you think they do
• Significant cultural differences must be addressed - in China business etiquette can make or break a deal. Punctuality is considered of utmost importance, as is ensuring the highest ranked person in a meeting sits at the head of the table. It is considered an offence to write on someone else’s business card and the giving of gifts is essential at business meetings 
  
• Lengthy delays to set up in China are not unusual, nor are unsophisticated distribution systems, both of which need to be factored into any business expansion plan 
  
• China does have laws protecting intellectual property but in practice these may not give you the level of protection you would have in Australia
• It is worth noting that in-market contacts are invaluable in setting up a business in China. Choosing a trustworthy partner is vital in establishing contacts and networks and achieving Guanxi, or mutual trust in business