CCI once again introduced WA companies to the opportunities presented by attending the China Import and Export Fair, linking businesses across the world.

Originally known as the Chinese Export Commodities Fair and also renowned as the Canton Fair, the event is held biannually in Guangzhou every April and October. The Canton Fair has been held for 106 sessions since 1957 and is the largest exhibition in China with a gross exhibition space of over 1,150,000 square metres and 55,620 stands.

Out of all the trade fairs in China, this one has the longest history, largest scale, most complete exhibit variety, biggest buyer attendance and greatest business turnover. It is the most important platform of trade exchange between China and the rest of the world.

Business turnover at the April session of the Canton Fair has been published at US$34.3 billion with attendance from overseas buyers of 203,996, an increase on numbers from 2009 which were down because of the global financial crisis (phase two attendance this year was down due to the transport interruptions from the Icelandic volcano eruptions),. The value of export contracts rose 12.6% from the autumn session in 2009 but this was still 10.3% lower than the corresponding session in 2008.

Each session of the Canton Fair is now split into three phases which can make it difficult to accommodate the needs of everyone on a mission to the event, as each session is spread over four weeks.

In April CCI visited the first phase which included products such as electronics, household electrical appliances, lighting equipment, vehicles and spare parts, machinery, hardware and tools, building materials, chemical products as well as the International Pavilion with over 200 exhibitors from other countries.

Prior to leaving for China each of the CCI delegate companies had received information in regards to the products they were interested in and were provided with maps and location details of the individual companies thought to be of most interest to them. With a fair of this magnitude it is easy to get lost or carried away with the enormous variety of products and therefore it is imperative to have a planned approach in order to get the best results from the visit.

CCI has been successfully leading delegations to China and the Canton Fair twice a year since 2005 and is well experienced to provide the assistance and guidance to delegates which ensure they achieve the best results possible in line with their business objectives.

CCI has been a VIP partner with the Canton Fair since 2005 which helps to ensure CCI mission delegates receive the best attention.

CCI’s next mission to China will be in October and will again visit the Canton Fair.

Anyone interested in participating should contact CCI’s Keith Seed
on (08) 9365 7637.

On 18 January CCI hosted a high level delegation from the China Import and Export Fair, also known as the Canton Fair.

The delegation, led by China Foreign Trade Centre director general and China Import and Export Fair president Wang Zhiping presented the benefits and highlighted the opportunities of attending the fair to a large audience of WA importers and exporters.

The Canton Fair is hosted by the Chinese Ministry of Commerce and People’s Government of Guangdong Province and organised by the China Foreign Trade Centre in Guangzhou, China every spring and autumn.

Since its establishment in 1957, the Canton Fair has kept its reputation of the longest history, the largest scale, the biggest buyer attendance, the broadest buyer distribution, the most complete exhibit variety and the best business turnover for 106 sessions.

At the last fair, 188,170 buyers from 212 countries and regions attended and the trade volume achieved at the fair reached US$30.47 billion

Chinese exhibitors at the Canton Fair are credible and highly competitive. About 20,000 domestic enterprises participate in each session, which are selected from hundreds of thousands of Chinese enterprises and represent the highest industry level.

The Canton Fair collects over 150,000 kinds of Chinese and overseas products. And in each session, the new products account for over 40% of the total.

The Chinese government makes efforts to balance the import and export products on show. The last six sessions, since the International Pavilion became a regular part of the Fair, have welcomed over 2,000 enterprises from more than 50 countries and regions.

Although the world economy has turned a corner, the full recovery still has lots of uncertainties. Against this backdrop, the upcoming 107th session of the Canton Fair will attract more attention from the world. It will be held in China Import and Export Fair Complex from 15 April to 5 May 2010.

About 55,900 standard stands will be accommodated and the Fair covers a gross exhibition area of over 1,100,000 square metres.

The International Pavilion will be set up from 15 to 19 April. Exhibits in the International Pavilion will cover nine categories including Machinery & Equipment, Small Vehicles & Spare Parts, Hardware & Tools, Building Materials & Kitchen, Sanitary Equipment, Electronics, IT Products & Household Electrical Appliances, Consumer Goods, Decorations & Gifts, Foodstuff & Agricultural and Raw Material.

The Canton Fair spares no efforts in establishing tailored business and commercial services such as an Overseas VIP Lounge.

It can all sound very imposing at first, but CCI can help make it easier.

Delegates attending the CCI Sourcing Mission to the Fair will be guided through the maze of exhibitors to ensure their business objectives are achieved. With over 55,000 exhibitors it can be quite daunting and therefore it is important that delegates have details from CCI on where to go and who to see.

While in Guangzhou, CCI will arrange briefings for delegates on the China market from Austrade as well as an information session from SGS who specialise in cargo inspection prior to shipment. Having visited the Canton Fair on numerous occasions, CCI representatives can also provide introductions to reliable people who can assist in sourcing your particular needs, negotiate best prices and organise your shipments back to Australia.

The CCI Sourcing Mission to the Canton Fair departs Perth on 14 April returning on 19 April. For further details contact CCI’s Keith Seed on (08) 9365 7637 or email keith.seed@cciwa.com.

By Keith Seed
CCI International Trade Services Manager

On 18 January CCI hosted a high level delegation from the China Import and Export Fair, also known as the Canton Fair.

The delegation, led by China Foreign Trade Centre director general and China Import and Export Fair president Wang Zhiping presented the benefits and highlighted the opportunities of attending the fair to a large audience of WA importers and exporters.

The Canton Fair is hosted by the Chinese Ministry of Commerce and People’s Government of Guangdong Province and organised by the China Foreign Trade Centre in Guangzhou, China every spring and autumn.

Since its establishment in 1957, the Canton Fair has kept its reputation of the longest history, the largest scale, the biggest buyer attendance, the broadest buyer distribution, the most complete exhibit variety and the best business turnover for 106 sessions.

At the last fair, 188,170 buyers from 212 countries and regions attended and the trade volume achieved at the fair reached US$30.47 billion

Chinese exhibitors at the Canton Fair are credible and highly competitive. About 20,000 domestic enterprises participate in each session, which are selected from hundreds of thousands of Chinese enterprises and represent the highest industry level.

The Canton Fair collects over 150,000 kinds of Chinese and overseas products. And in each session, the new products account for over 40% of the total.

The Chinese government makes efforts to balance the import and export products on show. The last six sessions, since the International Pavilion became a regular part of the Fair, have welcomed over 2,000 enterprises from more than 50 countries and regions.

Although the world economy has turned a corner, the full recovery still has lots of uncertainties. Against this backdrop, the upcoming 107th session of the Canton Fair will attract more attention from the world. It will be held in China Import and Export Fair Complex from 15 April to 5 May 2010.

About 55,900 standard stands will be accommodated and the Fair covers a gross exhibition area of over 1,100,000 square metres.

The International Pavilion will be set up from 15 to 19 April. Exhibits in the International Pavilion will cover nine categories including Machinery & Equipment, Small Vehicles & Spare Parts, Hardware & Tools, Building Materials & Kitchen, Sanitary Equipment, Electronics, IT Products & Household Electrical Appliances, Consumer Goods, Decorations &
Gifts, Foodstuff & Agricultural and
Raw Material.

The Canton Fair spares no efforts in establishing tailored business and commercial services such as an Overseas VIP Lounge.

It can all sound very imposing at first, but CCI can help make it easier.

Delegates attending the CCI Sourcing Mission to the Fair will be guided through the maze of exhibitors to ensure their business objectives are achieved. With over 55,000 exhibitors it can be quite daunting and therefore it is important that delegates have details from CCI on where to go and who to see.

While in Guangzhou, CCI will arrange briefings for delegates on the China market from Austrade as well as an information session from SGS who specialise in cargo inspection prior to shipment. Having visited the Canton Fair on numerous occasions, CCI representatives can also provide introductions to reliable people who can assist in sourcing your particular needs, negotiate best prices and organise your shipments back to Australia.

The CCI Sourcing Mission to the Canton Fair departs Perth on 14 April returning on 19 April. For further details contact CCI’s Keith Seed on (08) 9365 7637 or email keith.seed@cciwa.com.

At the height of the global financial crisis, a worrying trend emerged among governments at home and abroad, with responses to the problem focusing on greater intervention and regulation.

Facing the worst global downturn since the Great Depression, there was a tendency for key decision makers to overlook the unprecedented benefits that the free enterprise system has delivered over the past three decades. Some policymakers have gone so far as to say that the system has failed and that the only way forward is for government to play a greater role in the economy.

CCI is an organisation with a long standing, rich and proud history of supporting free enterprise. As we move to recovery, CCI believes that now is the time to reinforce the benefits of a market based system, through its soon to be released discussion paper, In Support of Free Enterprise. This discussion paper reaffirms the gains that can be achieved from a free enterprise economy and sets out the reform agenda of wider and deeper economic liberalisation.

A free enterprise system is based upon secure property rights, freedom of contract, and a sound and enforceable legal framework. Clearly, those countries which have embraced these underlying principles have recorded the highest rates of economic growth and human development and generally have better access to education, healthcare and food. Free enterprise is the only economic system which has delivered unprecedented economic growth and prosperity, lifted millions out of poverty and delivered improved living standards for more people worldwide than at any other time in human history.

The economic downturn arising from the global financial crisis in no way diminishes these substantial gains which free enterprise has delivered around the world.

This does not mean that there is no role for government in a free enterprise economy. There is a clear need for government to support the underlying framework of the system, by shaping a fair and secure environment, protecting private property rights and the value of money, enforcing contracts and promoting competition.

However, there is no role for government to increase wealth and living standards by directing economic activity.

These outcomes can only be achieved by the private sector. Free enterprise provides incentives for those who work hard and take risks and encourages entrepreneurship, innovation and consumer choice. This ensures that scarce resources are continually employed in a manner which most effectively matches the changing needs and wants of society and in turn generates wealth and leads to higher standards of living.

In responding to the economic downturn, it is important that governments understand the key causes of the global financial crisis, to ensure that any policy changes will address the underlying problem.

In Australia, the push for greater government involvement in the economy cannot be justified on the basis that a lack of intervention and regulation contributed to the global financial crisis. Australia’s banking sector has largely avoided the toxic assets which have seen the failure of financial institutions worldwide, while the economy has remained relatively resilient in the face of the worst downturn since the Great Depression.

With no evidence of a widespread market failure, the Government should instead continue on an agenda of free market reform, to ensure transparency and improve the economy’s productivity and flexibility.

At an international level, reform to trade barriers will deliver significant benefits by allowing economies to use their resources more effectively and encouraging competition and improved productivity.

Governments around the world must also ensure that market based measures are adopted to address climate change. Given that climate change is a global problem which must be addressed at all levels of government, and by the international community, a global, market-based system would be the most efficient way to reduce carbon emissions, without penalising any specific industry or country.

Nationally, the Government needs to maintain appropriate broad economic settings, particularly in fiscal and monetary policy, which do not stifle enterprise, investment and growth.

There is also considerable scope to strengthen and streamline the national and state taxation regimes, to promote an economic environment that creates employment, income and wealth. However, this will require assessing the Commonwealth and State taxation system as one regime, as the ability to reform the most inefficient state taxes is limited by the imbalance in taxing powers between the Commonwealth and the States. 

The Australian industrial relations regime should also be reformed, to support workplaces to effectively deal with constantly changing national and global economy circumstances. Industrial relations reform is essential in promoting economic prosperity and driving productivity in the private sector and should encourage changes in the structure of industries to capitalise on opportunities created by new markets, processes and technologies.

The Government should also continue an agenda of microeconomic reform, to further improve the efficiency and productivity of the Australian economy. The free market reforms which were undertaken over the past three decades have provided the impetus for sustained economic growth as well as historically low unemployment and have been critical to the Australian economy’s ability to respond to changing economic conditions.

In particular, the microeconomic reform agenda should focus on:

•  improving competition, by implementing the National Reform Agenda, and introducing further reform in the areas of transport, energy, infrastructure regulation and planning;

•  regulatory reform, to reduce the burden on business and improve government and economic performance;

•  improving the efficiency and operation of the public sector, to ensure expenditure growth is maintained, service delivery is enhanced and public finances are protected; and

•  supporting the development of human capital, through education and training.

There are certainly lessons to be learned from the global financial crisis and undoubtedly this will not be the last crisis facing the global economy. However, the answer is not a bigger role for government. In fact, it is the opposite. The free enterprise system allows economies to adapt, respond and innovate in response to such events. It is important that we do not lose sight of this.

Australia's largest free trade agreement – the ASEAN-Australia-New Zealand Free Trade Agreemen(AANZFTA) came into force on 1 January 2010.

The historic agreement will ultimately span 12 economies with over 600 million people and a combined GDP of A$3.1 trillion. Parties to the agreement are Australia and New Zealand and the 10 members of the Association of South East Asian Nations (ASEAN); Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam.

While the agreement has entered into force, the following countries have notified other Parties of their ratification and are therefore Parties to AANZFTA from that date: Australia, Brunei, Burma (Myanmar), Malaysia, New Zealand, Philippines, Singapore and Vietnam.

The remaining ASEAN countries (Cambodia, Indonesia, Laos and Thailand) are working to ratify AANZFTA at the earliest possible opportunity in 2010. The Agreement will enter into force for these Parties 60 days after the dates of their respective notifications.

Federal Minister for Trade Simon Crean said the commencement of the agreement was a major milestone and opened up significant opportunities for Australian businesses in one of the fastest growing regions in the world.

The Agreement covers around 70% of Australia’s trade with ASEAN countries with which we do not have bilateral FTAs.

AANZFTA provides for extensive commitments on the reduction and elimination of tariffs. Tariffs will be eliminated on a high percentage of tariff lines in all AANZFTA Parties. Most tariffs will be progressively phased down until they are eliminated.

The agreement includes the following examples of immediate, direct benefits to Australian exporters:

•  The immediate elimination of a 10% tariff on $9.6 million of Australian processed cheese exports (in 2008) to Malaysia.

•  The immediate elimination of a 5% tariff on $7.2 million of exports of fresh grapes to Malaysia.

•  The immediate elimination of a 3% tariff on $22 million of wheat exports to the Philippines.

•  The immediate elimination of a 5% tariff on $3 million of sheep meat exports to the Philippines.

•  An immediate expansion from
seven to 36 subject areas that Australian education providers can deliver in Vietnam.

Mr Crean said by 2020 the deal would eliminate tariffs on 96% of Australia’s current exports to ASEAN nations.

Australian importers also benefit from immediate elimination of duty on a wide range of goods of ASEAN origin.

AANZFTA is Australia's first multi-country free trade agreement and the most comprehensive FTA ever concluded by ASEAN.

AANZFTA will apply in parallel with Australia’s existing bilateral free trade agreements with three of the countries that are also signatories to AANZFTA (New Zealand (ANZCERTA), Singapore (SAFTA) and Thailand (TAFTA)). The three FTAs have their own tariff commitments, which apply to goods meeting the relevant ROO provisions under each of the agreements. Exporters and importers will be free to decide whether to make use of AANZFTA or the bilateral FTA when trading with these countries, but need to remember that the tariff commitments contained in each agreement are only applicable to goods that meet the relevant rules of origin in that agreement.

Under AANZFTA, a process has been established through which exporters must obtain a Certificate of Origin (CO) that officially attests to the eligibility for preferential treatment of the product they intend to export to another AANZFTA market.

In Western Australia, exporters who have determined that their goods are eligible for preferential treatment may apply to CCI for an AANZFTA CO by first completing and returning the AANZFTA Exporter Registration Form CO4A.

For further information contact CCI’s Ian Whitaker on (08) 9365 7684 or email ian.whitaker@cciwa.com.

A Memorandum of Understanding (MoU) is a frequently used tool in commercial dealings which sets out principles and strategies to deal with common issues but is generally not a legally binding agreement.

MoUs are “a formal mutually agreed upon diplomatic document, usually issued at the conclusion of a high level meeting between state leaders…on matters of common interest” as described in Butterworths Australian Legal Dictionary.

CCI legal counsel Johnny Brits said it was not uncommon for some terms of a MoU to be binding while others were non-binding.

“If two or more organisations form an ‘alliance’ with a common goal and it is too early to define the exact commercial terms and obligations, they may enter into a MoU,” he said.

“If used in a commercial sense, the general principles of contract law will need to be applied to determine if the MoU, or certain terms of the MoU, are binding or non-binding.”

He said apart from certain exceptions, pursuant to contract law, an agreement is binding if there is:

•  an offer

•  acceptance

•  an intention to be legally bound

•  consideration

“As the venture is still at an early stage, the MoU could be drafted whereby the ‘commercial terms’ are non binding,” Mr Brits said.

“It should be noted however that it may not be sufficient to simply state ‘subject to contract’ and then think that the MoU is now not enforceable. It may very well be. It will depend on the terms.”

From a risk management perspective, organisations are well advised to clearly describe the terms and conditions and clearly state which terms of the MoU will be legally binding and enforceable and which ones will not be.

“Even if the exact commercial terms are uncertain, there is no reason why terms in relation to confidentiality, intellectual property, governing law, the duty to arrange insurance and not to poach each other’s staff, should not be legally binding terms,” Mr Brits said.

It is best to seek legal advice before entering into a MoU.

Doing business in a new country can be a daunting experience, with new laws, regulations and culture to learn. China is one such intimidating environment. The rewards for doing business there can be great, but success requires knowledge and experience to gain the most from the relationship.

Much of China’s ethical system is derived from Confucianism, which teaches respect for superiors, duty to family, loyalty to friends, humility, sincerity and courtesy. In work and business, age brings with it increased respect and status, and older businesspeople are likely to be treated more seriously than younger ones.

Chinese put more emphasis on groups than on individuals. One person, preferably your group’s senior member, should be designated as your spokesperson.

Business relationships are personal relationships in China. To establish a good business relationship, build a personal relationship that demonstrates your respect and trustworthiness. Written contracts are secondary in China to personal commitments between associates.

Be aware of all favours done for you and gifts given and find a way to reciprocate in kind.

Do not insult or harshly criticise someone in front of others and do not make fun of someone, even as a playful joke.

Humility is valued highly in Confucianism. Chinese are often so polite and humble they appear to be self-effacing.

Punctuality is respected. Be on time for all meetings and appointments.

Business cards are important in initial contact. At first meetings, handshakes are followed by a formal exchange of cards, ideally with Chinese text on one side.

Business dealings are made easier by having a Chinese adviser who speaks English, has expertise in your area of business, has experience in doing business in China and is well regarded by their associates.

After making a good impression, it is then crucial to understand the way government works

China is an enormous bureaucracy. Local bosses and bureaucrats have great power. Getting to know influential local officials as friends can be very advantageous.

When it comes to the crunch of negotiation, be prepared for the tough negotiation skills of the Chinese. Their tactics can be both subtle and aggressive. Often they will wine and dine potential associates, particularly at night, as a way of gaining an advantage.

Negotiating tactics include getting angry as a means of intimidation, flattery to get you off guard, and prolonging negotiations to wear you down. A common tactic is delaying major negotiations until you are about to leave the country, then making unreasonable demands.

Chinese sometimes negotiate with several competing companies at the same time and let it be known they are doing so as a way of applying pressure.

Be prepared to walk away. You will gain more from making it clear that you would rather have no deal at all than a bad deal.

Many Chinese tend to take a long-term view, regarding an agreement as a single element of a bigger, ongoing relationship that is, ultimately, more important than any one venture.

The best way to fully understand the way business is done in China is with first hand experience.

The upcoming CCI Business Mission to China will provide participants with a comprehensive insight into the Chinese market. The mission has a reputation for presenting tour delegates with effective opportunities to develop relationships with key contacts and understand the business opportunities available in China.

For more information phone Keith Seed on (08) 9365 7637.

By Ian Whitaker
CCI Senior Trade Adviser

Recent initiatives announced by the Federal Government will channel prospective skilled migrants to rural and regional areas of Australia.

Some of the changes will institute more stringent settlement criteria to the skilled migration program and come amidst rising demand for migration to Australia.

Commencing 14 April, prospective skilled migrants seeking permanent residence under the skilled independent category are required to meet a higher pass mark (120 points) for permanent entry to Australia.

Predominantly, those applicants who are successful in passing the new threshold will be aged 30 years or less, university degree or trade qualified and will have worked in their chosen field for three of the past four years.

Applicants older than 35 are likely to face considerable difficulty in reaching the new threshold.

While the pass mark has been increased for the skilled migration program, a lower pass mark will apply to those who commit to settling in regional Australia.

In the absence of further details, information gleaned from government media statements indicate that suitably qualified individuals intending to migrate to Australia will obtain a three-year temporary residence visa if they commit to living and working in regional Australia.

After two years these skilled individuals will then be able to apply for permanent residency. The timing gap between the media announcement of the new rules from 1 July and the changes to existing rules from 14 April is highly questionable and has created some uncertainty. It is likely to lead to considerable concern for many prospective applicants.

In a further initiative to encourage migration to the regions, it is understood that self-funded retirees from overseas will be given four-year residential visas if they agree to live in rural Australia and invest at least $500,000 in state or territory bonds.

The ultimate impact on rural and regional population development centres of these changes is unknown and will not be measurable for many years - if at all.

These changes also do not address, to any substantial extent, the skills gap arising from the disparity in the skills being attracted to regional Australia and the type of skills that may be required by employers in specific regional areas.

CCI is concerned that the development policies for rural and regional Australia are conflicting with the Federal Government’s skilled migration policy objectives.

The outcome of specific initiatives, particularly in relation to employment and skill shortages, could be more effectively achieved through other means and closer consultation with industry.

For more information contact Ivan Hoe at CCI Migration Services on 9365 7555 or e-mail: visas@cciwa.com

There are a number of avenues for entry to Australia depending on the length of time people intend to remain in the country.

Short-term stay

The business (short stay) visa
This visa may be issued for single or multiple entry. Holders of a multiple entry visa may make any number of journeys to Australia for up to three months on each occasion.

Multiple entry visas may be valid for up to five years, or the life of the passport (to a maximum of 10 years). Applicants must apply for this visa outside Australia.

The Electronic Travel Authority
The ETA allows tourists and business visitors to obtain visas for Australia at the time they make their travel arrangements. The ETA system is accessible through travel agencies and airlines in the United States, Japan, Singapore, Malaysia, Korea, United Kingdom and many other Asian and European countries.

The APEC Business Travel Card
This card provides business people with simplified entry to a number of economies of the Asia-Pacific Economic Co-operation (APEC) forum. Holders must be passport-holders of one of the participating countries, currently Australia, Chile, Chinese Taipei, Hong Kong SAR, Korea, Malaysia, New Zealand and the Philippines.

Brunei, Darussalam, China, Indonesia, Peru and Thailand have also joined the scheme and will commence issuing cards in the near future.

Cardholders enjoy express immigration clearance and pre-cleared entry to participating economies.

Long-term stay

Longer terms are available for business people allowing up to four years temporary residence in Australia. A number of visas facilitate the entry of a long- term visitor to Australia.

Labour agreements
A labour agreement is a formal arrangement negotiated between the Commonwealth Government, represented by the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA) and the Department of Employment and Workplace Relations (DEWR), and an employer or industry association.

Labour agreements enable Australian employers to recruit a specified number of workers from overseas in response to identified or emerging skill shortages in the Australian labour market. Agreements are normally negotiated for a period of two to three years.

Regional Headquarters Agreements
RHQs are a form of labour agreement negotiated between the Department of Industry, Tourism and Resources (Invest Australia), DIMIA and an employer who wishes to locate their regional headquarters in Australia. These agreements offer both permanent and temporary entry to key executive and specialist personnel who are essential to the establishment and management of the Australian-based regional operations.

Immigration arrangements for those entering Australia under an RHO are streamlined and given priority processing over standard labour agreements.

Business Temporary Entry visa
These arrangements cater for employers wishing to sponsor the temporary entry of highly skilled personnel to Australia. Under the current arrangements employers are able to sponsor a range of occupations including professionals, para-professionals and skilled trades people who have employment in Australia.

CCI Migration Services is available to provide advice and guidance to employers seeking to sponsor an employee from offshore.

For more information contact CCI Migration Services on 9365 7618 or e-mail: visas@cciwa.com