The Chinese stock market may have sent jitters through the region after its shaky start in 2016, but the bigger picture is that Asia remains one of the main growth drivers of the world economy.
According to the World Bank, it is on-track to clock 6.5 percent growth for 2016, accounting for nearly two-fifths of global economic growth.
Among the broad range of economic opportunities available to Australian businesses in Asia, the export of high-quality, high-value goods is one of the most potentially lucrative.
With Australia’s recent free trade agreements in North Asia, and ongoing negotiations with other key regional partners, tumbling trade barriers continue to give Australian exporters a competitive advantage in Asia’s emerging and established markets.
The entry into force in 2015 of the China-Australia Free Trade Agreement (ChAFTA), for example, removed Chinese tariffs on a vast range of Australian products, such as beef, horticulture products and processed foods.
This will become particularly important as China transitions to a more consumption-driven economy – as latest figures from the National Bureau of Statistics of China show, total sales of consumer goods were up 11.1% year-on-year (nominal growth rate) to December 2015.
As trade restrictions in China and other Asian markets are eased, Australian businesses must continue to look to the region as a leading export destination.
Knowledge of the different import demands of these Asian countries is therefore critical to success. As gaps in the market appear, Australian businesses have the opportunity to fill them with high-quality goods, which are increasingly popular among
Asia’s growing consumer classes, and which can contribute lucrative links in global value chains.
The two maps (supplied by Asialink Business) below highlight the global flow of goods to Asia, and Australia’s key exports to the region.
ASIA'S MAJOR GOODS IMPORTS
Figure 1 shows the major goods imports across each Asian market.
Natural resource imports unsurprisingly dominate Asia, with recent regional development spurring booming demand for raw and refined commodities across middle-income and developing nations.
Higher up the value chain in markets like Singapore and Hong Kong, vast opportunities exist for the import of goods involved in technological and advanced industries. Hong Kong, for example, imported $71.5 billion in electronic integrated circuits in 2014, which are critical components of finished consumer electronics.
AUSTRALIA'S MAJOR GOODS EXPORTS TO ASIA
Figure 2 shows Australia's major goods exports to these markets and suggests the ample opportunity that exists to diversify further these trading relationships.
In addition to the great opportunities in Asia for the services sector, which is flagged to add a million Australian jobs by 2030, Australian businesses have a wealth of high quality goods exports that can fill gaps in regional demand.
Australia's agriculture sector, which exported $9 billion of products to China in 2014, is well-placed to take advantage of forecasts that China will account for 43 per cent of global growth in demand for agricultural products to 2050.
Driven by changing consumer tastes and expanding distribution channels, opportunities for the agrifood sector are also expanding in markets as diverse as Indonesia, Korea and Japan, given its reputation for high-quality safe food products.
Identifying strong market demand in Asia for Australia’s raw and value-added products, by carefully analysing and understanding Asia’s diverse markets and consumers, holds an important key to local businesses gaining a foothold in these markets in future years as they continue to grow.
For more in-depth information on the major Asian markets and insights into the abundant opportunities, download Asialink Business’ Country Starter Packs.