Warning for exporters about low confidence and caution among Chinese buyers

Australia’s top food companies have been warned to be on alert for the lack of confidence plaguing China’s millions of consumers despite the Asian superpower’s economic reopening.

Australia’s top food companies have been warned to be on alert for the lack of confidence plaguing China’s millions of consumers, despite improving political ties between Beijing and Canberra and the Asian superpower’s economic reopening.

Exporters at The Australian’s Global Food Forum in Melbourne were keen to take advantage of emerging opportunities in China, as the communist country remains the largest single buyer of Australian agricultural products, a trade worth more than $13bn a year, despite political tensions.

The forum comes as Australian agricultural exporters are keenly awaiting news of the future of tariffs on exports of Australian barley and wine, the subject of complaints before the World Trade Organisation, with discussions under way between officials in Australia and China over barley.

“The China market was the largest single export market for Australian wine,” said Doug Rathbone, chairman of the Rathbone Wine Group. “Other markets are strong and growing, but they haven’t replaced the amount of (demand seen from) China.”

Wattle Hill Capital founder Albert Tse. Picture: Arsineh Houspian

The wine boss said it was impossible to think a country such as India, for example, would buy as much as the $1.2bn worth of wine sold to the China market before tariffs were imposed but he did not think the wine export trade would go back to the levels of the past if China did remove tariffs on our wine.

“If it reopens, it will be an important market. It might not be as big as it was previously, but it also serves (as) a very important model (of what can be done).”

Speakers had a note of caution about the state of the Chinese economy as it recovered from the long Covid shutdown.

“It has only been less than six months since Covid restrictions were lifted,” Wattle Hill Capital founder Albert Tse said. “I have been in three cities in China recently (and) at the moment people have a more cautious approach.

“There is a lack of consumer confidence I am picking up. Chinese consumer confidence, like Australia’s, is directly linked to real estate. When house prices are much higher, you feel more wealthy. At the moment real estate prices are subdued so it has impacted consumer confidence.”

 

The executive director for international markets at law firm Minter Ellison, Paris Zhang, said there had been some significant changes in the mindset of Chinese consumers over the past few years.

“Chinese consumers are gradually regaining confidence and the majority will resume a higher level of spending in certain categories such as tourism, restaurants and healthcare products,” she said. “Over 300 million people travelled during the Labour Day holiday week, which created about $13bn of consumption during the week.”

She said many Chinese consumers were still concerned about the economic outlook, “worried about the economy weakening and the outlook for employment”.

Ms Zhang also said there was continued interest by Chinese in buying into agriculture in Australia. “Chinese consumers really like Australian products,” she said.

“Our food products are seen as clean and green and environmentally friendly. Investors are continuously looking at opportunities in Australia in farming, including cattle and dairy farms, as well as cotton, fruit and nuts.”

Minter Ellison executive director for international markets Paris Zhang. Picture: Arsineh Houspian.

She said there were Chinese investors “waiting for the right time” to look at more investing here.

The chief executive of Alibaba Australia, Pier Smulders, said sales of Australian goods on Alibaba’s e-commerce platforms had continued strongly during Covid.

“We haven’t seen any lack of demand or interest in Australian products,” he said. “It has continued unabated and we have continued to see growth.”

He said reopening of the Chinese economy and the potential lifting of tariffs on Australian wine would create more opportunities and companies needed to be ready for the change.

“When the trade reopens, there are new ways of reaching customers by digital means.”

He urged Australian companies to think creatively when Chinese tourists returned, including promoting food and wine tourism to travellers.

The Alibaba chief also said Chinese tourists could be expected to start returning to Australia later in the year and they were powerful ambassadors for Australian products once they returned home.

Visy chairman Anthony Pratt said Australian exports to China had doubled over the past decade – playing a key role in the expansion of Australian agricultural exports over the period from $29bn in 2013 to $70bn today.

But while China would remain an important market for Australian agricultural products, he said Australia also needed to focus on other markets such as India. “There’s competition from other food-producing nations … Chile stepped up to supply wine to the Chinese market in our absence.”