Economic diplomats focus on the good news to innovate China-Australia partnerships

By Mukund Narayanamurti, CEO, Asialink Business

It has been a busy period in Australia-China relations. Over the past few weeks we’ve had the release of the Australia-China Joint Economic Report, the G20 and B20 in China, research by the Australia China Business Council highlighting opportunities for our services sector, and the latest round of grants announced by the Australia–China Council. So there is a lot of “good news” despite the negativity and hysteria around foreign investment, tensions in the South China Sea, and the spat between the swimming teams from both countries at the Olympics.

That’s not to say Australia’s differences with China are mere hiccups. But much of the negative news in the foreground is taking place against a very positive backdrop of innovative ideas and constructive developments across the country.

Take the example of local governments leading on China engagement. Economic diplomacy has always been the domain of federal departments. More recently state departments have been active. While local governments can never replace the weight of state and federal governments, certainly in the small and medium sized business sector, which represents more than 99% of all businesses and 70% of all employment, they can play a critical role in the nation’s growth.

The City of Melbourne, the City of Sydney, Brisbane City Council, Warrnambool City Council, and the Toowoomba Surat Basin Enterprise are all driving significant business to business engagement with the Chinese market. In fact, Toowoomba Surat Basin Enterprise will soon take 200 local businesses to Shanghai in a bid to leverage opportunities in China in the areas of agriculture, health and aged care, tourism, education and manufacturing. In the age of cities, many local governments have strong leadership. Indeed, mayors are just as important as premiers and prime ministers.

Admirably, Prime Minister Malcom Turnbull has effectively given his imprimatur to the lead taken by local governments by repeatedly highlighting the importance of their role to the nation. Support for local government initiatives, in particular missions to China to support sister city relationships, trade, and cultural exchange is crucial.

Good news comes in many forms. There are great advantages for Australia to develop its e-commerce with China so that it serves as a platform for e-commerce with the world. A few weeks ago Alibaba, the Chinese e-commerce giant, launched its Australian office as part of its global go-to-market strategy targeting two billion businesses worldwide. It suggests that in the long term, Australian businesses should not consider Alibaba as merely part of their China strategy, but potentially part of their global strategy.

Alibaba has acquired a strategic stake in Paytm, the largest mobile e-commerce player in India, and in Lazada, the largest e-commerce player in South East Asia. With these global structures in place Alibaba could serve as a channel to the world for Australian businesses.

Beyond ‘business’?

In the resources sector as sales slowdown and companies like BHP take a hit, who is likely to emerge as the next “Big Australian”? Could it be an institution in another sector? Perhaps the University of Melbourne, or the University of Sydney. Or perhaps even an innovation driven university such as UNSW, which has attracted the first Torch Innovation Precinct outside of China with a potential $100 million commitment from Chinese industry and government.

If the label of “Big Australian” that we have always attached to BHP were to be reassigned to an institution of higher learning it has the potential to completely reframe how Australia is viewed by the region. It would certainly put to rest any idea that Australia is “rich white trash” as Singapore’s first Prime Minister Lee Kuan Yew once described us. Through top-class education and research, our universities have the potential to not just make us richer, but help us become a more strategically relevant nation to China and the wider region.

And what better way to create and nurture ‘China-ready’ Australian leaders than to have our best and brightest educated by China’s preeminent university? There are many millionaires in Australia who have attained wealth on the back of trade with China. What if we could persuade them to give back to our nation, and our relationship with China, by creating an endowment that would support scholars to undertake study at, say, Tsinghua University in China?

Stephen A. Schwarzman, a co-founder of Global Private Equity firm Blackstone has done something similar with his $100 million contribution to support US scholars to study at Tsinghua. An Australian Tsinghua focussed endowment could work in much the same way that the Rhodes Scholarship has enabled Australians to attend Oxford University.

Finally, while the corporate elites on Melbourne’s Collins Street and Sydney’s George Street have been speaking about China for a long time, actual trade with China has been happening out of the Pilbara (iron ore), Toowoomba (beef), the Barossa Valley (wine), Goulburn Valley (fruit), our universities (student recruitment), and through our airlines and airports (tourism).

But these regions and institutions have some work to do before they are truly ‘China-ready’. They must foster language and cultural competencies, and develop a more nuanced understanding of the role of government in China, and of the political, economic and regulatory system. Being China capable is not just a ‘nice-to-have’ but essential to organisational success.

These good news stories highlight that, ultimately, it is grass-roots engagement and the pockets of innovation across the country that will provide the ideas to fuel our long-term bilateral future with China.

Mukund Narayanamurti is the CEO of Asialink Business, Australia’s National Centre for Asia Capability.

This story was originally published in The Mandarin.