Case Studies of Australian Businesses in China
Heritage Seeds (draft)
Heritage Seeds, a Melbourne-based firm seed supply firm with extensive seed research and development capacities, entered the Chinese market in 1997. Its major business areas are seeds for amenity and erosion control, forage, cereals and other crops. Heritage Seeds sells its products to over 50 countries, with export income constituting roughly 20 per cent of total revenues.
Heritage Seeds initially entered through the Seeds Australia industry based joint venture program but has operated largely independently since then. While seeds for amenities, including parks, gardens and sports facilities initially were its largest market in China, it recently shifted more into agricultural and environmental seed markets. Its customer base therefore has evolved from predominantly municipal and provincial authorities to agricultural cooperative and individual customers. Government grants to farmers and cooperatives to undertake more productive and ecologically sustainable grazing and cropping has increased demand for Heritage Seeds' products. Authorities recognise such regeneration is crucial to overcoming ongoing environmental damage, particularly related to salinity, desertification and flood vulnerability.
China has proved an interesting if challenging market for Heritage Seeds. Persistence and relationship building have been the keys to success. Initial negotiations for a new contract can be arduous, but they have found that as market players increasingly recognise their experience in the market, business dealings have become more frequent and easier to handle. At times, customs officials can apply tariffs arbitrarily and remittance of funds back to Australia can be difficult. It also has found contracts written in English may not be recognised in China and so recommends preparing and signing Chinese translations. Despite these challenges, China is proving a strong market for Heritage Seeds; it now accounts for close to 25 per cent of overseas sales and Heritage Seeds expects ongoing liberalisation and restructuring will assist further expansion.
Source: Heritage Seeds, 2002.
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