Agri exporters fear job losses as fight drags on

Australian agribusiness companies doing business with China are worried about significant job losses.

Australia-China trade relations hit new lows. Picture: Greg Wood / AFP)

Australian agribusiness companies doing business with China are worried about significant job losses as a result of the deteriorating export market as relations between Australia and China hit new lows, according to a new survey released on Tuesday by the Australian Chamber of Commerce in Beijing.

The survey of Australian agribusinesses operating in China or exporting to China — particularly those in the wine industry — showed a significant fall in business confidence over the past few months in the wake of moves by Chinese officials to restrict the import of Australian products.

The survey also showed that more than 40 per cent of the respondents were strongly critical of moves in Australia by the Foreign Investment Review Board (FIRB) to block Chinese companies looking to buy assets in Australia.

“Our members are fearful of significant job losses to come, particularly those in the wine industry, as Chinese imports from Australia are curtailed,” the chief executive of AustCham China, Nick Coyle, said, releasing the report.

He said the majority of Australian agribusinesses operating in China or exporting to China had reported a “significant decrease in business confidence” over the past few month “as bilateral relations have plummeted with China.”

The downbeat survey follows moves by Chinese officials to impose tariffs of more than 200 per cent on significant players in the once booming Australian wine export market to China.

The higher tariffs and concerns by Chinese buyers have dealt a serious blow to the export business which last year was worth more than $1.3bn when Australia was biggest foreign supplier of wine to China.

The AustCham survey says Australian companies in the agribusiness which are operating or exporting to China are now concerned that China is moving to diversify their imports away from Australian products, shifting to source agricultural and wine products from other countries including the US.

The Australian barley market in China was all but wiped out this year after China imposed tariffs of more than 80 per cent on imports from Australia while several major Australian abattoirs have been blocked from sending beef to China in recent months.

The AustCham survey also highlighted an increasing concern among Australian companies about Chinese companies being blocked from buying companies in Australia.

China’s Mengniu Dairy company recently dropped its $600m bid for Lion’s Australian food and drinks business from its Japanese owners after the Treasurer Josh Frydenberg made it clear it would not be approved.

Others potential deals involving Chinese bidders are also believed to have been either blocked or quietly discouraged this year as FIRB has been reviewing all foreign bids for Australian assets.

This has seen new Chinese investment in Australia significantly drop off in recent years.

The survey shows that Australian agribusiness companies doing business with China now fear the tightening foreign investment policy in Australia could cause more problems for them in the China market.

“AustCham members have become more negative with respect to policy changes for Chinese inbound investment to Australia,” AustCham said.

Some 44 per cent “actively disagreed” with the federal government’s tightening of restrictions on Chinese inbound investments into Australia, fearing a blow back on Australian companies in China.

“There are knock-on effects from the FIRB decisions,” Tom Luckock, vice chair of AustCham’s food and agribusiness forum said commenting on the report.

“As FIRB tightens and the relationship deteriorates, more roadblocks will be thrown up for Australian companies investing and trading in China,” he said.

The survey of Australian agribusiness companies showed a majority of respondents reported a fall in business confidence over the past year about the outlook for the China market for their products.

It says that respondents in the wine industry were the most concerned compared with other agricultural sectors given the anti dumping investigation by China’s Ministry of Commerce which led to the announcement of high tariffs on many Australian wine companies selling into China.

“More than half of survey respondents, particularly those in the wine industry, believe there will be job losses if exports to China are reduced,” it said.

The survey received almost 50 responses from agribusiness companies and associations in China and Australia with major sectors including wine, grains and livestock.

It showed that despite their concerns about the future of markets in China, some 46 per cent of respondents believed it would be difficult to diversify their operations to other countries, particularly those in the wine industry.