Elders aims to triple exports to China
exports of livestock and grains China in the course of the next
three years.
The group's China general manager, Joseph Lo, told XFN-Asia that the company was hoping to ride a wave of continued economic development as well as benefiting from the increasingly liberal trading environment.
The company says it is aiming to reach AUD 1 billion (€600m) worth of exports to the country by the year 2007, compared to around AUD 360 million in 2003. This year alone the company estimates that exports will hit AUD 470 million on the back of strong demand for grains.
However, as China races to keep up with demands to feed its 1.3 billion population, it is also benefiting from a vastly increased trade in food brought about by a more liberal trading environment.
The freeing up of trade in China has been bought about by the country's 2001 entry into the World Trade Organisation. At the time of its entry, the China government agreed to drop all trade sanctions that limited foreign businesses. This means that by the beginning of the year the trading environment will, in theory, be as free as any other member of the WTO.
In line with this, Elders was given a big break earlier this year, when it was granted a business license from the Chinese government, allowing it to establish a wholly-owned Shanghai-based trading company.
As well as dairy cattle and barley, the company also exports fruit, wine and wool - the latter accounting for 60 per cent of exports. However, the company says it has big hopes for its barley exports in particular. It was only granted a license to export barley to China last month, but with China's beer manufacturers currently struggling to source enough of the ingredient, its barley exports are expected to be particularly successful.
Looking at the broader picture, sustained economic development will be vital to Elders plans in China. Currently GDP is continuing to grow at alarming rates - in excess of 9 per cent - and many analysts believe that this could spell trouble for the future. The China government is implementing measures aimed at taking the economy off the boil, including the first interest rates rise in 9 years and limitations on bank loans, but whether or not these measures are too little too late, only time will tell.
And it will be the success of these measures that will undoubtedly impact the ambitions of companies such as Elders in the medium-term.
