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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (1206)	10/31/2003 7:29:25 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Inside Great Wall of China 01nov03 OPPORTUNITIES for hundreds of Australian companies to boost investors' fortunes are now emerging in China, the world's most populous nation. And investors with an eye on the potential for rising share prices have a wide field of entrants to choose from, leading analysts say. China, which is already Australia's fourth biggest trade partner, is forecast to overtake Japan, the US and the UK to become our biggest trade partner by 2009. The early winners will be those resource giants that have already established a presence to take advantage of a Chinese economy that has been growing at an average of 9.5 per cent a year since the early 1990s. Companies including BHP Billiton, Rio Tinto, Woodside and Shell are all now boosting their traditional export role in the iron ore, coal, gas and oil sectors with a series of giant new contracts. Primary products including iron ore, alumina, wool, barley, coal, copper ore and oil and gas products still comprise about two-thirds of Australian merchandise exports to China. BHP Billiton's chairman Don Argus says the group is confident of strong continuing commodity demand from China. "Chinese demand for commodities is likely to broaden beyond the very strong demand for iron ore and alumina," he adds. "It wouldn't be surprising if the Chinese demand for nickel and other stainless steel components increases beyond general expectations." BHP Steel Lysaght already has five plants and 30 offices throughout China and is well positioned to pick up significant work for the 2008 Olympic Games as is Leighton in construction. According to Austrade, there has also been an increase in recent years in Australian manufactured products such as electrical machinery, appliances and telecommunications. Paper group Amcor has been in China for many years while Australian automotive businesses including Futuris Corporation's Air Industries are also enjoying solid success as the Chinese car industry gears up for spectacular growth. Other major groups already in China include News Corporation with extensive business interests including Xing Kong Wei Shi, its Star TV Mandarin television entertainment channel, the NDS digital cable TV technology group and HarperCollins publishing interests. Burns Philp also has several major yeast and bakery ingredient production facilities throughout China. Both Foster's Group and Lion Nathan continue their bid to conquer the Chinese beer market despite losing millions of dollars in the attempt so far. Plans by Lion Nathan to expand come after pouring $200 million into China seven years ago and losing $100 million in that time. Lion Nathan chief executive Gordon Cairns said last month that the volume of beer the company sold in China would grow by 30 per cent this year. And the company hoped to turn a profit over the next seven years. Overall Australian investment in China last year was a massive $1.5 billion with building and construction, transport and distribution, food processing and information technology heading the list. However, there is a trade deficit with Chinese imports in 2002 totalling $13.8 billion, $5 billion more than Australia's exports to China. Macquarie Research Economics analyst Richard Gibbs says Australia's primary exports to China are the raw materials used in production. "China has become the world's biggest steel consumer and is almost solely responsible for the growth in world metals demand since 2000," he says. "Despite the current focus about a bilateral trade agreement with the US, for most domestic firms the real potential for increased trade lies with China." Austrade says China is currently Australia's third biggest import source, our main source of clothing and footwear and a significant source of textile, toy and sporting goods imports. "Altogether, textile, clothing and footwear imports from China were worth over $3.5 billion in 2002," Austrade says. Macquarie Research's figures show the top Australian exports to China in 2001-02 were coal ($13.4 billion) crude petroleum ($6 billion), iron ore ($5.2 billion) gold ($5.1 billion) and wheat ($4.5 billion). Mr Gibbs says China's high production which has also accelerated energy demand is providing Australia with the opportunity to become a dominant energy exporter as a supplier of coal and LNG to Chinese industry. Iron ore miner Portman has contracts with Chinese steel mills including the supply of 50,000 tonnes of iron ore to the Kunming Steel Mill with the potential of ongoing sales of up to 400,000 tonnes a year. Early successes by Queensland companies have seen clean diesel engine technology group Rotac Design sign its first commercial deal with a Chinese manufacturer. Rotac Design chairman Rob Borbidge says the technology transfer agreement is for fitting Rotac's FreedomAir technology to up to $US100 million worth of engines and generators in China in the first year. Brisbane manufacturing firm Heat and Control which won the 2003 Premier of Queensland's Export award also has plans to build a production unit in China for its custom-fitted food processing equipment. Brisbane-based seafood exporter Sam's Seafoods has also confirmed it plans to begin seafood exports to China by early next year thecouriermail.news.com.au