Case Studies of Australian Businesses in China
AWB Limited, formerly the Australian Wheat Board, Australia's major national grain marketing organisation and one of the world's largest wheat management and marketing companies, has a major presence in the Middle East and Asia, including in China. Throughout the 1990s, AWB's wheat exports to China were highly variable, determined mainly by Chinese harvests and grain self sufficiency policies. In the early and mid 1990s, China imported substantial amounts of Australian wheat. However, Chinese wheat imports were minimal between 1997 and 2001, following changes in government grain reserve management policies and improved yields and good seasons. During this period, AWB acquired a small equity stake in a flour and feed mill operation in Shenzhen and participated in a consortium developing grain handling and storage infrastructure in Guangxi.
AWB Limited believes China's recent entry to the WTO will increase opportunities for wheat exports, particularly through newly-introduced tariff rate quotas. However, the new access arrangements may not instantly increase foreign grains exports as some Chinese grain prices are close to international levels and authorities levy a value added tax on imported grains. However, the Chinese consumer increasingly demands higher quality foodstuffs and the domestic production of higher quality wheat cannot meet this demand. Moreover, WTO entry should boost freedom for private enterprise to source their inputs from the lowest cost providers of quality grains. The AWB believes these are encouraging medium term trends, although Australian grains exporters will face strong competition from Canada and the United States as the Chinese market opens further.
Source: AWB Limited, 2002.
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