Exporters warned of agribusiness rivals in China market

Australian agricultural exporters have been warned of increased competition for the Chinese market from other nations.

Laura Mattiazzi, NAB’s senior agribusiness manager for Asia, is a speaker at The Australian’s Global Food Forum. Picture: Stuart McEvoy

Australian agricultural exporters need to be aware of increased competition for the Chinese market from other countries, warns Laura Mattiazzi, National Australia Bank’s senior agribusiness manager for Asia.

“Australia agricultural exports to China have gone up, but our market share in China has gone backward,” she told The Australian in an interview ahead of today’s Global Food Forum in Melbourne. “The Chinese have opened their boxed beef market to Brazil. Brazil exported to China in six months what Australia did in a whole year,” she said.

“Australia is not the only supplier to China. Everyone else wants to be a supplier as well. We need to be looking outside.

“China is pushing ahead with its ‘One Belt, One Road’ strategy and trying to connect its trade with Europe and Southeast Asia. Countries in these ­regions are very competitive.

“Not everyone has a free-trade agreement with China like us. But we need to be mindful of what else we are up against.”

Ms Mattiazzi, who was born in Dalian in northeastern China and came to Australia as a student in 1997, will be speaking at the forum today on where the funds are coming to invest in agri­culture in Australia. She said ­Australian ­exporters needed to be more aware of the regulatory changes in China affecting imports, but they should not be afraid of the changes.

She said the tighter regulations on the standards around imports of baby food and other food products should be regarded as a “positive in the long term”.

“For the Chinese government to start regulating the industry can only be a good thing for exporters like those from Australia whose products are clean and green,” Ms Mattiazzi said.

“It could mean short-term pain but there will be a long-term gain.

“We want to be able to deal with a system which is predictable and well regulated. We don’t want problems with food security or biosecurity coming back at us.”

She said companies like Blackmores and Murray Goulburn understood the Chinese market and the impact of recent changes.

The changes in the admin­istration of tax on goods imported into China via e-commerce were actually closing down loopholes in the law. There had always been a tax on imports of goods into China, she said, but it had been waived in cases of small parcels for personal use.

But regulators were now moving to close the loophole because of the big increase in goods such as baby foods and natural health products being imported under the guise of being for personal use. “The new initiative is to close some loopholes and regulate a sector which has experienced phenomenal growth within a short period of time,” she said.

“Chinese consumers recognise Australia’s prized status for safety and security of its food. The changes under the new tax system are unlikely to dent the long-term growth prospects for Australian exporters.”

Ms Mattiazzi said e-commerce was only one channel to sell goods into the China market. “The potential for this channel still exists but other options such as exploring the traditional trade channels, onshore e-commerce channels, streamlined supply chains and working with local partners in China also deserve attention,” she said. “China was the ‘world’s factory’ for the past 30 years and is in the process of transiting to becoming ‘the world’s shopping mall’. It will continue to deliver some promising export opportunities for Australia.”

But she said the transition would take time. “Chinese ­authorities need to get it right at tax, custom clearance, bio­security, supply chain, food safety and finance levels to make the ­e-commerce industry more sus­tainable,” she said.

Australian exporters of several food products were now enjoying lower tariffs in their sales to China under the free trade agreement.

Ms Mattiazzi said there was increased interest in investing in Australian agriculture in recent years.

“The industry, both pre or post the farm gate, is experiencing a high level of outbound trade opportunities which is creating increased interest in inbound capital investment,” she said.

“At the same time, the industry is very capital hungry. There is an estimated $1 trillion in investment needed. It is a significant amount of money we need to invest to get the industry gearing up for the next century.”

Ms Mattiazzi said there had been increasing domestic investment through a series of recent listings for companies such as ­Bellamy’s Organic Food and Webster. She said wealthy individuals such as Fortescue Metals chairman Andrew Forrest, Hancock Prospecting chair Gina Rinehart, Seven Network executive chairman Kerry Stokes and Harvey Norman chairman Gerry Harvey were also investing in the agricultural industry.

“They have all made their money investing in other businesses but the fact they have expanded into agriculture, and it is an increasing trend, gives a lot of confidence to other domestic investors in the industry,” she said.

There was also a record level of money in farm management deposits, which meant that some farmers were cashed up and able to make new investments.