Case Studies of Australian Businesses in China
Grain Pool of Western Australia
The Grain Pool of Western Australia, GPWA, is Western Australia's non-profit single desk exporter of barley, lupins and canola. GPWA recently formed an alliance with ABB Grain Limited, the South Australian headquartered, recently privatised single desk barley exporter, to market barley worldwide through a new organisation, Grain Australia. Grain Australia markets over 35 per cent of the world's traded malting barley and 10 per cent of feed barley.
China is the world's largest importer of malting barley. Grain Australia exports over 75 per cent of its malting barley to China; other major competitors are Canada and the European Union. While Australia's barley trade with China is longstanding, barley exports to China grew strongly in the 1990s following a rapid expansion in China's beer industry and stronger foreign brewing investment. Significant changes also occurred in the structure of the Chinese brewing industry, with the rise of specialist maltster organisations driving change in barley demand; more recently, major domestic brewers including Tsingtao and China Resources Enterprises purchased substantial domestic brewing capacity and expanded their imports of high quality barley.
GPWA notes that doing business in China can be challenging, sometimes requiring a different approach to that adopted for other markets. Market price changes between signing a contract and delivery can cause difficulties; GPWA understands attempts to enforce contract terms through the courts may not be successful, even if a case is won. As a result, GPWA tends to sell only on short term contracts. Differing standards of quarantine analysis between Australia and China also can pose challenges; developing good relationships with customs authorities and customers is important in such situations. Despite these difficulties, GPWA is confident China will continue to remain a vital and growing market for Australian barley producers.
Source: GPWA, 2002.
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