A NEW report showing expanding potential for trade with China has reaffirmed burgeoning sister city links with south-west Victoria.
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The Australia-China Trade Report showed dairy exports increased by 40 per cent in 2013, beef exports rose fourfold and other meat exports doubled.
Trade links are being developed between Warrnambool City Council and its links with Changchun while Hamilton City has links with Gaoyou City. Delegation exchanges in the past two years have opened up potential opportunities for industry and exports.
The report, commissioned by the Australia China Business Council and sponsored by National Australia Bank, found China was the largest market for Australian agricultural and food products.
It said there had been big increases in Chinese companies seeking trade and investment partners in food processing, particularly beef, sheep, dairying and wine.
The report noted that fierce international competition for Warrnambool Cheese and Butter in 2013 demonstrated high interest in the scarcity of premium food processing assets.
“Small food processors such as local dairies and fruit and vegetable producers could benefit from equity injections to modernise their operations,” the report said.
“However, it is unlikely that Chinese businesses would want to invest in very small operations, seeking instead to attain critical mass and improved efficiency of operations.
“It is expected that Chinese investment will eventually seek to follow the lead set by Bright Foods and move into the food company subsector where profit margins are attractive and stable.”
The report said an alternative was for Chinese investors to seek new food processing sites.
“Investing in greenfield processing capacity could be an ideal vehicle for dairy in particular,” it said.
Australia’s beef processing and cold storage facilities with Chinese accreditation were seen as enjoying a good reputation for food safety which provided marketing advantage.
“One future possibility is for early-stage processing to occur in Australia with preparation of individual cuts done in a new processing facility within the Shanghai Free Trade Zone,” the report said.
“Australia’s road and rail transport systems need upgrading and airport infrastructure may need expanding if large quantities of fresh and chilled produce are to be freighted to China.”