Frank Tudor reflects on the Australia-China relationship as he prepares to step down from his position as National President and Chairman of the Australia China Business Council.

I have been privileged to represent the ACBC over the past five years, and to have had the opportunity to build on the solid foundations set down by my predecessors, including most recently, Kevin Hobgood‐Brown and Warwick Smith. In particular, I am proud that the ACBC is widely regarded as a thought leader on matters affecting Australia’s commercial relationship with China, and that it has excellent relationships with the highest levels of governments in both countries.

Only recently, I met China’s new Ambassador to Australia, Ma Zhaoxu. Though it was our first meeting we spoke as old friends, and in the knowledge that the goodwill built between China and the ACBC since 1972 had been passed on and enhanced through successive Ambassadors including most recently Fu Ying, Zhang Junsai and Chen Yuming, and successive representatives of the ACBC.

It is the strength of these long-standing relationships that has enabled the ACBC to be a highly regarded leader, organiser and partner in key bilateral events which have assisted in growing Australia’s business reach, relevance and reputation in China (and vice versa). I am also pleased the ACBC now operates with a contemporary constitution (agreed in 2011) that provides strong governance and greatly contributes in putting members’ capacity and capability to effective work in the bilateral relationship.

The ACBC’s processes, and subcommittee structure including ‘Thought Leadership’, ‘China’, ‘Finance’, ‘Audit and Risk’ and ‘Marketing, Membership and Sponsorship,’ have allowed us to leverage capability to deepen and broaden our activity set in Australia and China in a structured way. This has seen the publication of the Australia China Quarterly Journal, considered broad-based submissions to government initiatives (e.g. Australia in the Asian Century) and partnering with the Department of Foreign Affairs and Austrade as a foundation member to host functions at the Shanghai Australian Pavilion World Expo in 2011.

Over the last five years bilateral trade has risen fivefold to over US$130 million per annum. During that time the ACBC has significantly increased participation, activities and profile commensurate with this increase in trade. This has only been made possible by the support of our national sponsors.

The benefits to Australian households of trade with China report, which has grown in prominence over the past three years, is worthy of mention – the report has been quoted by Australian prime ministers, Chinese presidents and the three past Chinese ambassadors. It was particularly pleasing that the outgoing Ambassador to China, Mr Chen Yuming referenced the report in his valedictory speech. The role that the ACBC has played in educating Australians of the benefits of ongoing relationships with China cannot be underestimated.

The planned next evolution of this report, encapsulating a comprehensive profile of all trade and investment, is exciting. In the past three years, the ACBC has been the official organiser of the flagship Australia China Economic and Trade Forums which have collectively been attended by two Australian prime ministers, federal ministers, the Chinese President, Vice‐President, Premier and Vice‐ Premier, and by more than 1500 company executives on both sides of the bilateral relationship. Two of those forums and numerous other events (including round‐table discussions involving federal and state ministers and prominent business leaders) have been held in China. This has been made possible by the hard work of our in‐country Director, Paul Glasson, and our good relationship with the Australian Chambers of Commerce in China.

* Pictured from left to right: Frank Tudor, ACBC National CEO Martine Letts, His Excellency Ambassador Ma Zhaoxu, Embassy of the People’s Republic of China and Rengang Huang, Minister Counsellor (Economic and Commercial), Embassy of the People’s Republic of China.

The ACBC continues to aspire to the introduction of a bilateral Free Trade Agreement, which we estimate would deliver US$150 billion in value over a 20-year period to each country.

Furthermore, it is our belief that the symbolism of friendly nations compromising and navigating sensitivities to deliver such an agreement would in itself be as powerful a message as the economic outcome. For my part, I will remain on the ACBC National Board as Immediate Past President and would like to acknowledge the contribution of our ex-officio Board Members Francis Adamson and Bruce Gosper, and my fellow Board Members: Duncan Calder, Ian McCubbin, Paul Glasson, Derek Baines, Jason Chang/Richard Alston, Jim Harrowell, Kevin Hobgood‐Brown, Michele Robinson, Sean Keenihan, Darryl Guppy, Tim Hogan‐Doran, Maree Arnason, Adam Handley and previous CEO Laurie Pearcy together with the Branch Executive Australia‐wide during my tenure. I look forward to supporting our recently appointed CEO Martine Letts and the new Chairman following the AGM.

As I look forward, I see the challenges and opportunities of the Asian century, and China in particular, are progressing through three overlapping phases as China urbanises and income levels grow. The first phase began with the increase in demand for natural resources including minerals and more recently high‐end agricultural products. The second began with the demand for services – initially those delivered domestically, e.g. education and tourism, and then those delivered from within China e.g. financial and health. The third phase began with cooperation in research and will hopefully lead to the commercialisation of higher value‐added goods, high‐end technologies and sustainable industrial clusters.

These phases span the breadth of sectors that form the possible business relationship with China. It is also important to observe that as each phase matures (i.e. relationships develop and confidence builds) it deepens. For example, discretionary spot trade with little country specific risk is followed by long‐term trade arrangements underpinned by country specific domestic investments and finally followed by bilateral in‐country specific investments, which in the extreme are subject to sovereign risk on both sides.

Australia is well positioned to make the most of these extraordinary opportunities with an abundant endowment of natural resources. These include its geographical proximity, natural beauty as a tourist destination and natural resources such as iron ore, coal, gas, nickel, copper and mineral sands. In addition, a long standing developed capability – extracting value from minerals extraction, delivering services, operating network industries and managing sustainability across a dry continent. The key to success in the opinion of the Boston Consulting Group is to recognise that “Asian customers value local specialisation in concert with regional advantage – the ability to specialise a product or service to meet local preferences whiles offering regional capability,” and set up arrangements accordingly.

*For more information about the Australia China Business Council, visit: www.acbc.com.au