From southern China to the Southern Cross

Your new market? Southern China. The area has long links with Australia, and they are being rekindled in modern times – for good reason.

During the gold rush in Australia in the 1850s – when the Southern Cross “rebel” flag was erected during the Eureka rebellion in Ballarat – many Chinese immigrants had also come to try their luck in the gold fields.

According to the celebrated Australian historian Geoffrey Blainey, most of the Chinese immigrants that came to Australia at the time of the gold rush came from southern China – particularly from the provinces of Guangdong and nearby Fujian.

In fact, Blainey looked at immigration throughout south east Asia and found that most Chinese settlers in the region were from the south, partly because they could labour in the hot and humid conditions that were similar to what they had grown up with back home.

As a result, the pattern of Chinese immigration to Australia before 1989 has been focused on the south and Hong Kong, but has come from the rest of China since.

This probably explains why Cantonese has been more commonly spoken among the Chinese community in Australia – particularly in the Chinatowns in Melbourne, Sydney and Brisbane – with Mandarin only recently making gains in the language stakes in Australia.

However, the historical links between Australia and southern China have endured the test of time. On a recent visit to Guangzhou, where I spoke at a seminar with my colleague Saul Eslake, ANZ’s chief economist, I noticed a strong Australian presence in the region.

Alan Morrell, Australia’s senior trade commissioner in Guangzhou, introduced me to a number of major Australian players in business and education circles in Guangzhou, such as ANZ, Monash College (part of Monash University) as well as a thriving Australian Chamber of Commerce in southern China spearheaded by Alfred Leong.

According to Morrell: “Guangzhou is a gateway to what is termed ‘the glorious south’, the place is humming along economically with plenty of Australian investment in infrastructure, building and construction, and we have developed strong people ties with the region through education links and immigration.

“Southern China accounts for over one-fifth of China’s GDP and over 36% of China’s exports, so it’s a big player economically as well as holding a massive population of 254 million with growing consumer spending power,” Morrell says.

In fact, southern China could be considered a key economic player for Australia in its own right. According to Sean Kelly, Australia’s Consul-General for southern China (which covers Hunan, Guangxi, Hainan as well as the Guangdong and Fujian provinces) in 2006: “Southern China accounted for 22% of Australia’s total goods export to China, which taken separately is Australia’s ninth largest export market. Southern China also accounts for a quarter of Chinese visitors to Australia, some 55,000 in 2006-07 and a quarter of Chinese students, or some 17,500 students in the same period.”

Morrell agrees. “You can see economic engagement with Australia everywhere you go, and it goes both ways as more and more China companies are looking to Australia in terms of trade and investment opportunities. Southern China is an important source of investment capital and has a strong proportion of privately owned companies looking to invest in Australia as well as some major state-owned enterprises.”

One company with a major interest in Australia is GDH – Guangzhou Malting Barley – which is the 7^th largest international malt producer in the world and a major customer for Australian barley. GDH’s balance sheets are booming as beer consumption rises in China and in emerging markets around the world.

The deputy general manager Raymann Zhang, a Guangzhou a long-term visitor and observer of Australia, believes Australians are doing well in Guangzhou. “We’ve seen our population expand from three million to over 10 million here during my working life time, and Australians can almost smell the opportunities here,” he says. “I find Australia an easy place in which to work, but in my business, naturally we watch the drought situation carefully. Our business is counter-seasonal and therefore we find it easier to do business with Australia than the Ukraine or Argentina. Your geography goes in our favour too.”

Beer consumption is growing in China with increased affluence and Zhang hopes that his company can move from number seven in the world to number five by 2010. “We’re on the right track, but when it comes to building a global malting business, we can’t do it without reliable and efficient supply from Australia, along with their skills and know-how in malting and brewing.”

So in conclusion, from the gold rushes to the resources boom of the early 21^st century, southern China has had a lot to do with Australia. However, on present trends, today’s boom in commodities – particularly in LNG, coal, iron ore and barley – will make the 19^th century boom look like pretty small beer.

*Tim Harcourt is the chief economist of the Australian Trade Commission and the author of BEYOND OUR SHORES: www.austrade.gov.au/economistscorner

Thanks are due to Sean Kelly, Cher Jones, Saul Eslake, Alan Morrell, Raymann Zhang, Yuling Zhang, Angela Xu and Alfred Leong for their assistance with my visit to Guangzhou.