The most popular destination for these businesses is South East Asia, with Singapore, The Philipines, Malaysia and Indonesia topping the list, followed by East Asia and China, Japan and Mongolia. Asian markets are the main focus for Australian businesses, due to their proximity as well as their speed of growth.

“SE Asia is a natural choice for many Australian businesses looking to expand operations and break into new and emerging markets,” said William Willems, Regus Regional Vice President Australia, New Zealand and South East Asia. “The lower export, travel and freight costs are also key selling points. This is in comparison to Northern and Western Europe, where only 27% of firms plan to expand.”

Despite world economic outlook, only three percent of businesses said they were looking to downgrade their international operations, suggesting that 2012 will be a growth year for Australian businesses.

Some businesses were unsure about international growth, with 17 percent said that they were undecided as to whether they were going to expand or contract in 2012, with 42 percent of them saying that was due to focus on Australian growth. Willems suggests caution before heading overseas. “The strong intention of many Australian firms to expand in 2012 is an exciting trend. However, some firms may underestimate the costs and challenges of operating in a different market. It takes time to explore the economic, political and legal landscape of a new country, including the terms of trade, tax and the payments system. Having a strong understanding of the business culture is also important, in order to find new partners and identify new customers and partners,” he said.

Last year, the number of visitors from Brazil, Russia, India and China increased by 6.4%, 7.1%, 13.0% and 28.2%, respectively. Is the Australian Tourism Industry prepared for this?

Here are some thoughts on how to attract the new BRIC Tourist:

Follow the money!

In the next decade, the tourism market for Chinese visitors alone is forecasted to be worth A$6 billion to Australia, with almost one million Chinese visitors forecast to visit Australia in 2020. The Chinese tourist contributes twice as much value as the Japanese, with total inbound economic value (TIEV) having increased on average by 17.1% per year for the past ten years (a contribution to the Australian economy of A$7,287 per person).

Indian tourists also spend on average more each day than other nationalities. The total inbound economic value of an Indian tourist has increased by 14.9% per year for the past ten years. Indian tourists spend, on average, $73 per night and $4,607 per visit. For the next decade, the TIEV for Indian tourists is forecast to grow 6.7% year on year, moving the Indian tourist from Australia’s ninth to our fifth most valuable inbound market.

In 2010, Russians spent $26.5 billion abroad. As the BRIC country with the highest GDP per capita and the lowest levels of debt, the Russians have high purchasing ability and a relatively large luxury consumer market which is predicted to reach the size of Germany’s by the end of this decade.

Education policies requiring Brazilian students to study English are fostering outbound education tourism. Australia is a popular destination for young Brazilians due to our outdoor way of life, beaches and cultural similarities. In addition, Brazilians devote a large portion of their income to discretionary spending and choose to live for the present!

Casting a Wider Net

Unlike in the past, when the tourism industry has relied on above-the-line advertising and travel agents to attract business, the number one source of information for one-third of Chinese, Indian and Russian tourists is the Internet. Even more compelling is the knowledge that, unlike western travellers who usually plan and book their travel many months in advance, Chinese tourists booked their flights within one month of their date of travel.

The importance of reaching potential BRIC customers via online promotional material and marketing campaigns will be a necessary competitive edge for all travel companies in the future.

However, traditional methods of marketing and search engine optimisation are of little significance for BRIC tourists, in particular the Chinese. As an example, the Chinese population’s most popular search engine is Baidu, the Chinese equivalent of Google.  It is therefore very important for the tourist industry to establish a presence in local popular Chinese search engines to attract the lucrative mainland Chinese market.

Revamping the Product

With such alluring growth figures, it is going to become even more important for all tourism companies to develop products that have direct appeal to the BRIC tourist. The BRIC tourist differs quite significantly from their stressed out Western counterparts in that they want to cover as much of Australia in as short a time as possible! A typical day may include a photo stop at Bondi Beach in the morning, followed by a bus trip to the Blue Mountains in the afternoon and then an evening at the casino. This contrasts with Western tourists who typically enjoy sunbathing and relaxing on the beach. With over one fifth of outbound Chinese tourists being labelled as ‘Self Challengers’, Australia is a popular destination for those attracted to adventurous pursuits, being pushed outside their comfort zone and those who are attracted to some of Australia’s more remote areas.

Recruitment

There are approximately 150,000 Chinese students studying at universities in Australia, almost 70,000 Indian students, 18,000 Brazilian students and 1,500 Russians, but very few of them successfully find work in Australian companies after they graduate. These students not only have valuable cross cultural and language skills, but also Australian knowledge, experience and qualifications and possibly even high level connections in their home country. With the limited time available until their visa expires, many students are forced to return home if they cannot find suitable employment in the short period available, and this results in a loss of talent and valuable skill sets which could otherwise be retained in Australia – particularly in the tourism sector.

A good place for Australian tourist companies to start in developing a strategy to attract new BRIC tourists is to review their recruitment policies to attract international students who, after a short period of training and on the job experience, will significantly enhance their ability to tackle the BRIC market.

Business Tourism

The market for business tourism is largely untapped, but with 87% of business travellers staying longer than the ordinary tourist, both before and/or after their business engagements, the business tourism market presents numerous opportunities for the tourist sector. In 2010, business travel from Brazil increased by 59% due to the rapid growth of Australia’s energy and resources sector and the desire amongst Brazilian companies to learn from Australia’s success.

Why not tailor a tourism package that incorporates business meetings, site visits or even networking events for the more entrepreneurial and business-minded BRIC tourist? With numerous delegations coming to Australia from Mainland China every week, is this a niche opportunity for local tourist companies to start tapping into?

Seasonal Differences

While a seemingly obvious point, it is important not to underestimate the power of seasonal differences, particularly to attract Chinese and Russian tourists. The peak months for Chinese tourist arrivals to Australia are in January and February which, amongst other things, is caused by their desire to avoid the harsh winter climate and travel over the Chinese New Year Season. For Russian tourists, December and January are the peak months for tourist arrivals as they seek to escape the harsh Russian winter.

Tourism companies should focus their marketing and promotional activities to attract Chinese and Russian visitors during our warm summer months.

Cultural Differences

Whilst there are distinct cultural differences between Australia and the BRIC countries, Australia is uniquely placed and well positioned to take advantage of our exclusive position as the only western country within the BRIC region.

With over 1 million Chinese Australians (either born in China or of Chinese ancestry), large numbers of business migrants arriving each year from all of the BRICs, our growing number of international students and our strong cultural and historical ties throughout the region, Australia is a truly multi-national, multi-lingual and multi-cultural society which has so much to offer the BRIC Tourist.

“Speak with one Voice”

In the words of Geoff Dixon, Chairman of Tourism Australia, Australia’s tourism industry needs to “speak with one voice” when marketing overseas. Unlike other sectors, The tourist industry is highly fragmented in Australia which means that collaboration, rather than competition, to attract the BRIC tourist will result in everyone having the chance to share in a much bigger pie.

As an example of this, in 2010, Italy, France and Spain signed an agreement to work jointly to attract BRIC tourists, a partnership which would have been unthinkable a decade ago.

Also, in Pattaya, Thailand, high end luxury resorts have been collaborating to attract the Russian Tourist, a innovative strategy which has met with almost immediate success. By introducing Russian street signs, Russian restaurants and developing training courses for hotel staff and waiters to learn Russian language and cultural differences, Pattaya is now attracting large numbers of big spending Russians.

The BRIC tourist presents an unprecedented growth opportunity for the Tourism Industry….what is your BRIC strategy?

This is a summary of a presentation I gave earlier this month to the Australian Tourism Export Council Meeting Place 2011 in Sydney.

According to Garry Edwards, member for Swansea, ultralight aircraft manufacturer Airborne Australia have seen a growth in sales because of government assistance from NSW which has helped the company to break into China.

“With strategic advice and assistance and some financial support from the NSW Government, Airborne Australia’s marketing in China has resulted in increased sales,” Edwards said.

Government assistance was given through NSW Trade & Investment’s Global Growth program which provides one-on-one export support to companies from experienced export advisers who will then work with them to implement their export plans.

Ron Hibberd, Airborne Australia’s marketing director, said that the support has helped the company grow its exports despite difficult global business conditions and the strong Australian dollar.

“Through the Global Growth program, NSW Trade & Investment has helped us with our export strategy, market research, focused information and other advice that we can apply across markets,” Hibberd said.

The assistance has also been used to form a social media strategy for the manufacturer to increase advertising.

“China has become Airborne’s largest foreign market and we believe there is considerable potential for our sales to grow even more,” Hibberd said.

“The sport of microlighting, hang gliding and paragliding is growing in China and with Chinese airspace opening up to recreational flying, it will give many more people the chance to experience the thrill of flying.”

According to Australian entrepreneur and facilitator David Thomas, China is leading the way into the future by financially delinking themselves from troubled developed economies.

“It’s going to be imperative for the Chinese to take over the technological leadership, they’re already doing that,” Thomas said.

The accumulating debt of developed countries is resulting in China becoming the leader of foreign investment.

“What they do have which the west doesn’t have is the abundance of land, people and capital. The western world doesn’t have capital now, in fact has a lot of debt,” Thomas said.

According to Thomas this change in global leadership is a step in the right direction for Australia in continuing to survive the global financial crisis.

“We are China’s number one source of outbound investment with 36 billion dollars or so committed from China to Australia,” Thomas said.

“The biggest opportunity right now, in this part of world, down in Australia, is the opportunity to attract and source and investment from China.”

Chinese investment into Australia will be discussed at the 2012 Asian Financial Forum.

Watch the video interview with David Thomas, courtesy of HKTDC here.

The rise contributed to this year’s record trade surplus of $20.9 billion and was significantly higher than the growth in imports of goods and services, also up more than seven percent. According to a Department of Foreign Affairs and Trade (DFAT) publication, Composition of Trade 2010-11, this growth in exports was largely led by the mineral sector which recorded a growth of more than 48 percent. A 21.7 increase in fuel exports also contributed to the record year.

According to the report, China came out as Australia’s strongest two-way trade partner, followed by Japan and the United States. The report also shows that Australia’s top three exports were iron ore and concentrates, coal and education-related travel services.

The release of this document marks a new era in DFAT reporting, with an accompanying range of tables allowing users easy access to trade time series data. More information and the accompanying tables can be found on the DFAT website.

While Jim had already gained recognition and widespread respect for his previous work as an economist and currency analyst, he acknowledges that his career has now been shaped in large part by this simple term. While many eyebrows were raised at the time by some of his more dramatic predictions, notably the one that China would overtake the US to become the largest economy in the world within 30 years, the BRIC concept is now almost a household term, widely recognised within the media, academia, business circles and certainly by the investment community.  At the end of 2009, Jim’s BRIC research was widely acclaimed as the “Call of the Decade”.

With the benefit of 10 years since he first invented the BRIC acronym, it is worth pausing to reflect on how much the world has changed since 2001. As Jim wrote this week in an article in the UK Telegraph in which he reflects on the progress of the BRICs over the last decade:

“All four of the BRIC countries have exceeded the expectations I had of them back in 2001. Looking back, those earliest predictions, shocking to some at the time, now seem rather conservative.

The aggregate GDP of the BRIC countries has close to quadrupled since 2001, from around $3 trillion to between $11 – $12 trillion.

The world economy has doubled in size since 2001, and a third of that growth has come from the BRICs. Their combined GDP increase was more than twice that of the United States and it was equivalent to the creation of another new Japan plus one Germany, or five United Kingdoms, in the space of a single decade.

Some observers say the effect of the BRICs on the world economy has been exaggerated because their growth was primarily driven by exports to the developed markets, as well as the rise in commodity prices.

Exports certainly played a major role for China, but since the 2008 credit crisis and the consequent fall in demand in the US and elsewhere, that is no longer the case.

For India, domestic demand has been the driver throughout the last decade, and increasingly it is the domestic consumer as well as an increase in infrastructure spending that is fuelling growth in the BRIC economies.

The credit-fuelled growth in US demand certainly played its part in their ascent, but even since 2008, and despite the ongoing US struggles, the BRIC economies have continued to power ahead.

However you choose to interpret the data, the importance of the BRICs in global economic growth is beyond dispute. Personal consumption in the BRIC countries has skyrocketed. In China, between 2001 and 2010, domestic spending increased by $1.5 trillion, or roughly the size of the UK economy.

The increase in the other three was about the same, perhaps slightly more. BRICs now account for probably close to 20 percent of world trade compared with less than 10 percent in 2001.”

Whilst the BRIC idea was first dreamt up as an investment idea or theme, designed to challenge the thinking of investors and their professional advisors, even Jim has been surprised by how quickly the BRIC countries themselves have started collaborating via their annual BRIC (now “BRICS” to include South Africa), Leaders Summit which has met every year since 2009 to discuss opportunities for political, economic and even trade collaboration.

The recent BRICS Leaders Meeting in China in April 2011 laid the tracks for greater ‘intra-BRIC’ trade and investment co-operation in the years ahead.  This is vital to the global economy and should be occupying the minds of all forward thinking business leaders, investors and entrepreneurs.

‘Intra-BRIC trade’, or trade among the BRIC members, has grown at the rate of 30 percent per annum since 1999 and now accounts for 8 percent of global trade. During the last 10 years, intra-BRIC trade increased nine-fold, compared to global trade which only doubled over the same period.

In recent years, Intra-BRIC trade has been mainly characterised by Russia and Brazil supplying natural resources to satisfy the industrial and infrastructural needs of India and China. However, this is likely to change. Watch out for more investment and trade deals between the BRICs as they create their own trading bloc and invest in each other’s capabilities.

10 years later, it is time to acknowledge Jim O’Neill’s vision, foresight and thought leadership. But as he reminds me from time to time, the BRIC idea has a long way to run yet!

The key word is qualifying. Conduct due diligence on your Chinese manufacturing partners/suppliers before you sign the contract.

Here are some factors you must include in your due diligence on Chinese manufacturers / suppliers:

• Is the business a genuine business? Obtain a copy of their business licence and, if possible, check with the local Commerce and Industry Administration Bureau on the legitimacy of the Chinese business.
• Is the business a manufacturer? Smart Chinese middlemen understand you would like to cut down costs and go directly to the manufacturers. Hence they may work on a manufacturing site picture, put it on their websites and claim they are manufacturing what you need. Again obtain the copy of their business licence to check their business scope and/or investigate  with local government agencies/industry bodies directly or through a Chinese business consultant.
• Does the Chinese manufacturer have surplus manufacturing capacity and capabilities to meet your current and potentially growing demand? Check with the staff of the company on their manufacturing capabilities. If you are placing big orders and/or look at working with a long-term manufacturing partner, it is worth visiting the Chinese manufacturers to better assess their manufacturing capabilities.
• Does the Chinese manufacturer have quality control systems in place? Do they have an international quality accreditation? Obtain a copy and check with the appropriate authorisation organisation.
• Is the Chinese manufacturer a reputable business in the industry and protect clients’ intellectual property? Check with industry bodies, their clients and suppliers and conduct secondary research to find information on the company’s reputation.
• Is the Chinese manufacturer committed to work with you? If your business is not vital to them, you are at the very bottom of the list when they prioritise orders and hence may delay the production or delivery for your order during peak time.

For assistance with due diligence on Chinese companies or further information on doing business with China, contact Sara Cheng, Manager-Greater China Region, Australian Business Consulting Solutions, Email: sara.cheng@australianbusiness.com.au or call 1800 505 529

According to the report, titled The APEC Region – Trade and Investment, 2011, produced by The Department of Foreign Affairs and Trade, Australia’s exports to the region grew in 2010 by 17 percent. Imports, in comparison, grew six percent to $182 billion.

APEC accounted for 46 percent of the world’s total exports in 2010 and 56 percent of world GDP, demonstrating the importance of the Asia-Pacific region to the world’s economies. This is further demonstrated by the APEC region increasing exports to the world by 26 percent to US$8.7 trillion in 2010.

The region’s importance to Australia was also highlighted in the report, showing APEC accounted for more than two-thirds of Australia’s exports and imports.

The US was the largest exporter in APEC in 2010, with world exports of $1.8 trillion, closely followed by China with exports of US$1.7 trillion and Japan with exports of US$911 billion. Most of APEC’s trade is among other members, with 68 percent of exports and 65 percent of imports coming from within the region.

The complete publication and analysis is available through DFAT.

In a speech titled ‘40 years: The Australia China Relationship’, Rudd spoke about the continuing economic growth in both countries, and how the relationship between the two will continue to develop as, “Australia and China depend on each other.”

“We have both experienced strong growth over the past two decades,” Rudd said. “China’s growth has been phenomenal. But Australia, too, has had 19 years of uninterrupted growth. The rise of China and Australia simultaneously is no coincidence.”

With total trade between the two nations now reaching over $100 billion a year, Rudd spoke about Australian exports to China growing faster than imports. In particular, he mentioned wine exports to China, which have risen from just over $60 million in 2007-8 to $178 million in 2010-11. “There’s a growing Chinese thirst for Australian wine,” Rudd said.

In the wake of global financial turmoil, it is unsurprising that Rudd places more importance on the relationship between China and Australia over relationships with other nations, particularly the turbulent economies in Europe.

“We have more at stake in China — and China has more at stake in Australia — than either country has with many other partners, “ said Rudd. “Not New Zealand, not Canada, nor any European state. Our trade relationship with China is considerably larger than with the 27 countries of the European Union combined.”

With Rudd emphasising the co-dependence the two nations have on each other, he also highlighted the importance of working on mutual understanding. “Both of us have come to depend on the relationship, which makes it important that we keep asking ourselves hard questions about where it can be improved, and how we can work through stumbling blocks,” Rudd said. “We are critical to each other — and have a lot to gain by working more closely together. China is our most important economic partner. And Australia is more important to China’s economy than any other. Australia has become an integral engine for China’s growth — just as China has become a dynamo driving our prosperity.”

The Australia-China Forum, aimed at opening up discussion between the two nations on topics including politics, economics, and furthering the diplomatic relations between each country, included delegates such as the chairman of the foreign affairs committee of the National People’s Congress, Li Zhaoxing.

The representatives in the Beijing office will also build relationships with Chinese government agencies and private entites.

Ivan Roberts will head up the office, drawing on his extensive experience as a senior economist in the Asian Economies Research Unit and other roles within the RBA.