Doing Business with China
Recent media coverage has drawn attention to specific actions by the Government of China that appear to demonstrate hostility toward Australia and encompass decisions that create impediments for exports to China. It should be noted, when considering the current media coverage, that vested interests are working to make issues and problems seem to be particularly severe. In reality, they are not. Indeed, many of China’s actions are a response to what they see as unfair treatment and constant rule changing for investments in Australia.
Four key facts should be kept in mind when trying to put media coverage into perspective:
- Overall, there is still substantial, unimpeded trade and investment between Australia and China.
- It is not unusual for disagreements and problems to occur that affect exports/imports and overseas investment (in either direction) between specific countries, even when a Free Trade Agreement is in place. Similar problems have occurred over many years with the USA, the UK and Europe.
- The inter-dependence between the economies of China and Australia is still robust.
- China’s actions arise from a situation of “muscle flexing” as it claims the position of the world’s strongest economy. Over time, those actions will be moderated to ensure the continued strength of their economy. In fact, interdependence between China’s economy and the economies of other countries within the Asia-Pacific region is a cornerstone of China’s planning for economic growth for the next 20 years.
China is ahead and will move much further ahead
Just 20 years ago, the USA had the world’s largest economy, three times the size of China’s which, in turn, was only marginally larger than that of Japan.
Currently, China has the world’s largest economy (GDP), about 30% larger than that of the USA, more than double the size of India’s and almost five times the size of Japan’s.
It is projected that in 20 years, China’s economy will have grown by almost 50% and will be 1.4 times as large as the economy of the USA. India’s economy will have grown to about 50% the size of China’s and the economies of Japan and Indonesia will be about 15% the size of China’s.
China is aware of the opportunities and threats that will emerge over the next 20 years and is seeking to prepare for the inevitable. China knows that its strong economy will be threatened by such things as:
- Rising labour costs.
- Lack of investment in innovation.
- Significant dishonesty in research institutions.
- A poor success rate for previous investments to support economic growth.
- An ageing population.
- Competition from other emerging economies such as India.
The mixed signals from China are a response to a variety of internal and external pressures. Putting aside political posturing, trade and business opportunities between Australia and China are massive and are continuing to grow.
Support for trade and investment
Roberts Gray Lawyers has been at the forefront of supporting Australian and Chinese businesses looking for export/import, investment and partnership opportunities. Working with a team of selected partners in China – law firms, investment advisers, accountants and political liaison specialists – we can turn opportunities into profitable reality … and we have.
One of the recurring problems that we have effectively addressed, is assisting businesses to acknowledge and act within the rules. Free Trade Agreements are complex and are regularly amended. Too often, with a flimsy understanding of the details of these Agreements, entrepreneurs tackle new business initiatives without adequate planning and guidance. That’s where we come in – we have solved a lot of problems arising from misguided actions. We are also quite good at assisting businesses to plan for and achieve success.
One of the significant impediments to taking business dialogue to a successful conclusion is that many Chinese entrepreneurs do not speak English or do so in a way that is quite suitable for conversation but inadequate for the complexities of negotiating business arrangements and contracts. This problem is easily addressed by providing the right support.
Roberts Gray Lawyers has an experienced team that manages legal, language, political and cultural issues to assist entrepreneurs to achieve great business outcomes. There are several lawyers in Australia who can handle contractual matters for China-Australia trade and investment but our cross-border law firm collaboration does far more than that. We solve problems before the legal contracts are drawn up: we lay the foundations for success.
When there are issues regarding the implementation or interpretation of contracts, and other matters threatening the viability of a business venture, Roberts Gray Lawyers takes the lead with appropriate dispute resolution processes which need to be managed within the established protocols of the relevant legal jurisdictions. Where necessary, we use our bi-lateral legal partnerships to achieve success with arbitration or litigation, after making the most of negotiation and mediation options. We take measured, appropriate actions and we get results.