The new BRIC brands - are you ready to compete with them?

You shouldn't by now need any convincing that the future growth of your business depends on your success in targeting new, dynamic and aspirational middle class consumers from the Big Rapidly Industrialising Countries of Brazil, Russia, India and China but, if you do, you must read the summary of the latest Trend Briefing from trendwatching.com which offers many examples of new products, brands and offerings which are being snapped up in places like China, India, Malaysia, Turkey, South Africa, Mexico and many others.

Seriously, if you don't read anything else in this (or any) issue of Insights, please take a moment to scroll through the vast array of new products, brands and innovations emerging from China, India, Brazil and other emerging countries. Many of these new names are already displacing long established players in many sectors (eg fashion, cosmetics, sportswear, automobiles etc.) and are successfully competing for the attention of consumers of all ages in emerging countries. Click here to be amazed!

It just goes to show that nobody is safe in the new global economy. As you can see, the most successful brands are those offered by the smaller innovators in fashion, food & beverage, automotive, personal & domestic care, consumer electronics, mobile telecoms, travel, and many more....not the big western brands and massive local corporations…

Why now?

• Both consumers and brands in emerging markets are rapidly getting wealthier, more sophisticated, more mobile, and more educated, resulting in an abundance of confidence, enthusiasm, creativity, and entrepreneurialism
• Many emerging markets (other than China) have younger populations, and will not be confronted with ageing populations for a long time to come, meaning an endless source of young entrepreneurs as well
• Brands from emerging markets are well positioned to cater to other booming emerging markets, while they may be perceived around the world as less arrogant, too. On top of that, they are less hindered by too many legacy systems and old world thinking
• Emerging markets will soon boast the biggest markets for everything, from cars and beers, to detergents and mobile internet: not a bad environment for innovation to flourish

It's really important for all entrepreneurs, businesses and innovators to take notice of these developments before its too late! You don't need me to tell you that it's an opportunity aswell as a threat.

Why not finish 2010 with a plan to start targeting these new consumers in 2011 and beyond? We are running two workshops in November on exactly this topic. Follow the links below for more information and to register:

16th November 2010 - Click here for more information

18th November 2010 - Click here for more information

I hope to see you at one of these sessions

The new BRIC consumer – are you ready to reach them?

There has been a lot of talk recently about the emergence of the new emerging middle class consumer, their substantial and increasing buying power and the explosion in the number of new internet and mobile phone subscribers from each of the four BRIC countries (Brazil, Russia, India and China). McKinsey have published a number of very interesting articles on this subject, and there is plenty of chatter on the internet and in the mainstream media about this new army of cashed up, aspirational shoppers.

Amongst the constant stream of mind boggling statistics, numbers and charts, here a few highlights worth dwelling on:

• There are more cars sold in China today than in America. Experts predict that there will be 50 million cars sold every year in China by 2030!!
• In India, over 240 million people will enter the workforce in the next 20 years, and over 24 million people (a number greater than the total population of Australia) will become “affluent” (ie those earning more than 1 million rupees per annum, the top 2% of the Indian population)
• Retail sales in Moscow now exceed Paris and London
• In Brazil, 32 million people have moved into the “middle” and “high” income bracket in the last 5 years, a figure that is expected to double in the next 5 years
• China and India together already have 500 million Internet users, and a further 700 million more will be added by 2015, generating revenues of more than $80 billion in Internet commerce.

An army of 2 billion middle class consumers have now emerged from the BRIC (and other emerging) countries, are currently spending US$6.9 trillion per annum and, according to McKinsey, this figure will rise to US$20 trillion in the next decade, a figure which represents about double the current consumption of the USA!

One particularly interesting development is the explosion in the number of mobile phone subscribers (which is a lower cost and therefore more accessible item, and is expected to rise to roughly 140 phones per 100 people even in very low per capita GDP countries) which is causing market players in media, telecommunications, consumer products and financial services to completely re-think their traditional business models. For example, mobile banking holds much greater potential than internet banking, with a high likelihood that it will leapfrog online financial activity in emerging markets. And value-add services, ranging from personalised weather reports to product and price information on-demand, are rapidly changing the way in which consumers source, compare, assess, reject and buy many different products via their mobile phones.

The good news for new market entrants is that all players in the BRIC countries (big and small) are having to develop an entirely new approach to serving the new emerging consumer, which levels the playing field and creates new opportunities for smart, innovative, savvy and brave new entrants who are willing to jump in and swim with the bigger fish! It means that the major brands of yesterday may not be the successful brands of tomorrow. Nobody is safe!

So what does this all mean for us in Australia? Is this an opportunity or a threat? Do we have a chance to compete with major brands from the US and Europe? And do we have the appetite for this?

Here are some of my thoughts:

• All Australian companies (big and small) need to develop a strategy to engage with these new emerging countries – you can’t sit back and allow this once-in-a-generation opportunity pass by without at least giving some thought as to how it could affect your business – as an opportunity or a threat (don’t forget that Chinese and Indian companies also have a vision to go global – and Australia is a country that interests them greatly!)
• Opportunities exist across the board for Australian companies, particularly in some of our more progressive and innovative industries (e.g. technology, design, high value manufacturing, cleantech, environmental protection etc.) and also some of our more traditional areas (eg education, tourism, finance and professional services). To remain relevant, we have to start participating now.
• Do your research. How could your business or ideas thrive in an emerging country like China (a country on our doorstep with whom we have enjoyed close ties and strong relationships for over 35 years) whose economy has grown by over 8.5% per annum for the last 30 years and, by the year 2025 or earlier, will overtake the US to become the largest economy in the world? Is there something that you do, or offer, or sell which would appeal to a small segment of a country with over 1.3 billion people? If so, start now to immerse yourself in the opportunity. Don’t let the grass grow under you!

You must start familiarising yourself with all of these countries now. Read a book, take a holiday, search the internet, join a delegation and saturate yourself in everything you can find about these new economic power-houses! Imagine living in the United States in the 1930s and witnessing all of the technological and economic advances that took place over the next 50 years. You now have the chance to do that all over again in China, India, Russia or Brazil. Get started now!

8 Reasons to Invest in India

It seems to me that, with all of the focus on China (extensive media coverage, World Expo, the resources boom, Government policy on foreign investment etc.) India is being largely ignored in Australia, both from a business and investment point of view. I believe this is a mistake because India deserves at least the same coverage as China, at least from an investment point of view, if not more.

Here are at least eight reasons why India is a compelling story for investors:

1. Size of India
India’s GDP is currently US$1.3 trillion, making it the 8th largest economy in the world. However, in PPP terms, which recognises India’s low cost base, the GDP notionally rises to three times this amount (US$3.8 trillion) which places it on a similar size to Japan and, by 2013, it will become the third largest economy in the world (after the USA and China) in PPP terms. However, despite representing 7.5% of Global GDP (on a PPP basis) in 2010, India attracts less than 0.5% of investment inflows. An anomaly which is unlikely to continue for much longer!

2. Economic growth
India’s economy is currently growing by 8.75% per annum (in 2010) and this GDP growth rate is expected to increase to 9% - 10% per annum for each of the next 10 years. India’s GDP will grow five times in the next 20 years, and GDP per capita will almost quadruple.

3. Diversity
The Indian economy offers investors exposure to a wide range of opportunities from consumer goods and pharmaceuticals to infrastructure, energy and agriculture. With its strong services sector (comprising 50% of India’s economy), particularly in knowledge-based services (IT, software and business services) India has proved that industrialisation and the export of commodities and resources is not the only path to rapid economic development.

4. Demographics
India is one of the youngest countries in the world, with an average age of 25 and likely to get younger. India’s working-age population will increase by 240 million over the next 20 years. With a population of 1.2 billion, a strong work ethic, high levels of education, democracy, English language skills and an entrepreneurial culture, India is poised to dominate the global economy in the next 20 years.

5. High Savings
With a savings rate of 37% of GDP, India’s domestic savings fuels most of its investment requirements, and only 20% of India’s total public debt is sourced from foreign borrowing. With significant investment to be made in upgrading India’s poor infrastructure in the next 10 years (estimated to be US$1.7 trillion) India’s Government is taking various steps to further encourage private and foreign investments.

6. Domestic economy
India’s domestic consumption, generally led by the private sector, has played a significant role in India’s growth and is expected to remain firm as more people enter the workforce and the emerging middle classes. India’s wealthiest consumers (those earning US$1m or more in PPP terms) will increase by 40 million in the next 10 years! Every sector within India’s consumer market is booming, making India far less vulnerable to external shocks and pressures than other emerging markets.

7. A Robust financial sector
India has a robust, diversified and well regulated financial system which has allowed it to weather the global financial crisis without any major difficulties and present an image of quality, resilience and transparency. India’s banking sector is strong, with top quality balance sheets, high levels of competition (there are around 80 banks in India) and strong corporate governance.


8. Quality of Investment Markets
The Bombay Stock Exchange is the second oldest in the world (165 years) and offers investors a low cost, highly efficient and well governed environment in which to prosper from India’s extraordinary economic growth. The Indian stockmarket has generated investment returns of over 15% per annum over the last 10 years and experts expect this to increase in the next decade. More significantly perhaps, Indian investors have doubled their money over the last 3 years at a time when many have lost money in almost every other market
Don’t take my word for it…talk to investment professionals and advisers who can offer you objective and independent advice. But don’t wait another 10 years to find that India offered a compelling investment opportunity.

I am grateful to Bharat Shah and my friends at ASK Investment Managers for their assistance with some of the points made above, and hope that ASK and other Indian specialists will continue to promote Indian investment opportunities in Australia

Farewell Kevin Rudd - we'll miss you!

I have to admit (and I know it won’t surprise you to hear this) that I’m really going to miss Kevin Rudd.

Yes, I know he had to go for all kinds of domestic, parochial, poll-driven, factional and political reasons (actually I don’t really understand any of this, but no doubt someone will explain it to me one day!) but, for a brief shining moment, Australia stood tall on the world stage, with our Mandarin-speaking Prime Minister rubbing shoulders with leaders of countries of far greater significance than our own and, for the first time in a long time, Australians (or perhaps it was only me?) had reason to believe that we really were making a difference in defining the new world order of the 21^st century.

Who will forget that defining moment at APEC 2007 in Sydney when Kevin Rudd, then leader of the opposition, dared to trump John Howard in his crowning moment, and addressed the Chinese delegation in Mandarin. The delighted look on the face of Hu Jintao and his aides said it all, John Howard squirmed, Alexander Downer gritted his teeth and the Howard Government knew that it was all over for them. You can re-live that moment by clicking here

And later, in his early days as prime minister, at a meeting of the G8 in which the “shadow nations” (now all members of the G20) were invited to participate, Kevin Rudd found himself introducing President Hu Jintao of China to Prime Minister Manmohan Singh of India and acting as translator. This informal but poignant moment was perfectly captured on camera (see photo above) and reported in the Canberra Times:

"As Prime Minister Kevin Rudd lingered with his Indian counterpart Manhohan Singh in what leaders jokingly referred to as the G8 "holding pen" on Wednesday, another of the eight invited guests wandered up to join the conversation. China's President Hu Jintao normally has an interpreter at his elbow and apparently was unaware that on this occasion, he had momentarily given his linguistic aide the slip. As Hu proceeded with rapid-fire small talk and Singh looked blank, the Mandarin-speaking Australian leader's conduit moment arrived. For the minute or two before the panic-stricken interpreter rushed over, Rudd did the translation. He was doubtless quite chuffed that little old Australia had made such a practical contribution."

I also remember those heady days in early 2008 when I visited China several times and basked in the glory of living in a country whose Prime Minister was recognised and admired by the average man in the street. The only leader of any western nation to ever address the Chinese in their own language. A real game changer if ever there was one.

“Where are you from?” asked the taxi driver in almost perfect English as I jumped into the back seat, “Australia” I said proudly. “Ah…” he said, with a wide toothless smile, “your Prime Minister…Lu Kuwen….he speak very good Mandarin!” That doesn’t happen every day!

Please don’t get me wrong. I have nothing against Julia Gillard. In fact, I’m sure she’ll be a very good prime minister, and will take care of all those things that matter the most to average Australians. But I thought she was already doing a great job has his deputy! While Kevin Rudd was strutting the world stage, signing Kyoto, attending the G20, staying up all hours at Copenhagen and re-defining Australia’s role in the Asia Pacific, Julia Gillard was at home doing a fabulous job as acting prime minister. The perfect combination for Australia and now significantly depleted by the rather sudden dumping of Kevin Rudd.

I hope he will return as Foreign Minister, or as Ambassador to the United Nations or in some other significant role, because Kevin Rudd did a great job for Australia, much more than perhaps anyone realises, and placed us firmly on the map alongside important countries around the world. He will be badly missed, not only by me, but I hope that we haven’t seen the last of him. I’m sure we haven’t….

Don't write off Russia!

There’s far too much negative commentary, perceptions and ignorance out there about Russia.

Back in the dark days of the GFC, the doomsdayers were predicting an “Armageddon scenario” in eastern Europe, with escalating debt, banking collapses and corporate failures likely to wipe Russia and some of its neighbours off the economic map for at least a decade or two! Some even suggested that the “R” should be removed from “BRIC” as Russia wasn’t worthy of its place amongst the new economic super-powers of the future.

Well, as it turns out, it was Western Europe that we should have all been worried about! The Russians are fast recovering from the global downturn, with predictions of a very respectable GDP Growth rate of over 5.5% this year, and not one Bank failure, corporate collapse or sovereign debt default to justify any of the doomsayers. Furthermore, with rising disposable income and low personal debt, Russia’s rapidly growing middle class are doing their bit for the global economy judging by retail sales in Moscow (which now exceed those in London and Paris!) and the 7 million mobile phones purchased in the first quarter of 2010 alone!

Even more encouraging are the moves being made by President Medvedev to seriously address two of Russia’s most widely reported long term problems:

An Ageing Population
The Government is introducing a number of programs designed to improve Russia’s demographic profile by supporting foster families, improving pre-school education and offering financial incentives payments for second births

An Over-Reliance on Oil and Gas Exports
President Medevedev’s new 2008 blueprint “Strategy 2020” includes an ambitious plan to attract foreign capital to an “innovation city” in the Moscow suburb of Skolkovo designed to “revive the greatness of a nation once known for scientific and technological achievement”. His vision is for the technology sector to make up 15% of exports by 2020, attracting billions of investment into innovative projects and driving out corruption, abuse and theft (which is one of Russia's greatest problems). I heard last week that Medvedev had sacked 14,000 policemen! I am sure there’s still a long way to go but that must be a good start!

Russia’s economic fundamentals are already the envy of most of Europe, their GDP per capita is the highest of all the BRICs (currently US$9,750 rising to US$15,500 by 2014 according to the IMF) and, according to our friends at East Capital:
* Russian corporate earnings are expected to be the highest in the world in 2010 (43% higher than in 2009)
* The Russian stockmarket is trading at a 26% discount to the other global emerging markets and is very cheap (at a PE ratio of 6.4 based on 2010 earnings)

Russia is currently the 6th largest economy in the world, will be one of the top performing stockmarkets of 2010, and their fast growing economy offers significant potential to exporters and investors. Don’t believe everything you read in the press!

Best wishes

David Thomas

Brazil's bright future

Of all of the four BRIC economies (Brazil, Russia, India and China), Brazil is the country which, in my view, is the closest to Australia from a cultural and social perspective. Brazilians share many of the same passions as Australians - the beach, sport, football, the great outdoors and a warm and sunny climate – and this provides a great start for those looking to engage with a country of 180 million people which is rapidly growing in confidence as an emerging economic power.

Brazil’s traditional strengths are in mining and agri-business and in some ways resembles Australia as a leading exporter of commodities (notably orange juice, coffee, soy, beef, chicken) and resources. Whilst we compete in some areas (e.g. exports of iron ore to China) our opportunities to engage with Brazil, a country that will during this century dominate the global economy, far outweigh any competitive threats. And with Brazil hosting the FIFA World Cup in 2014 and the Olympic Games in 2016, Brazil should be high on the list of countries to visit in the coming years

Domestic Consumption
As with all of the BRIC countries, future economic growth in Brazil depends on strong local domestic consumption, as opposed to exports to the cash-strapped developed world, and the Brazilian Government has introduced measures to boost domestic spending via lower interest rates, an easing of capital requirements to Brazil’s banking system (designed to stimulate housing and car loans) and reducing unemployment via a range of spending initiatives.

Brazil’s aspirational population of over 180 million is:
* the 6th largest in the world (and the largest in Latin America) growing at approx. 1.3% per year.
* relatively young, with 42% under the age of 20, with a strong appetite for western style consumer goods, brands, fashion labels, technology and gourmet foods.
* 80% Urban - approximately 30% live in the ten principal metropolitan areas, including São Paulo and Rio de Janeiro which have populations of around 19 million and 12 million respectively. Some 14 other metropolitan areas have populations of more than 1 million. This makes it relatively easy to access the retail markets due to the high levels of concentration in urban centres.
* experiencing a rapid rise in the “middle classes” which is growing by over 8% per annum and becoming increasingly affluent and upwardly mobile
* keen to spend rather than save, as evidenced by the large numbers of new shopping malls, outlets, hypermarkets, supermarkets and convenience stores offering the usual wide range of services (restaurants, coffee shops, fitness centres, beauty parlours, shoe repairs, post offices, bank services and dry-cleaners) and providing entertainment with cinemas, cyber-cafés and play areas for children.

Being one of the world’s “Big Rapidly Industrialising Countries”, Brazil’s growing and increasingly affluent middle class presents opportunities across the board for all retailers, from food and beverage, cosmetics and clothing to some of our more premium products, notably gourmet food and wine.


Resources, Agriculture and Infrastructure
With Brazil’s primary strength as a resource and agricultural based economy, similar to ours, leading Australian companies offering high value adding services to the agri and resource sectors (including technology, software, engineering and consulting services) are highly sought after by Brazilian producers looking for greater efficiency, increased production and improving yields from their existing activities. With Brazil’s vast land mass, much greater than ours, much of its arable land available for farming activities and new sites under exploration for mining, Australia has much to offer Brazil as it seeks to modernise and upgrade its land economy.

In addition, whilst Brazil's construction industry was hit by the global economic slowdown, the Government's Growth Acceleration Program (launched in 2007) is committed to supporting investment in infrastructure projects. With Brazil's large fiscal stimulus package (US$254bn, representing a significant 19% of GDP) there is widespread activity across many infrastructure projects including road, rail, power and the construction of low income housing. In addition, housing, commercial and tourism construction is also set to get a sizeable boost from the preparations for the 2014 FIFA World Cup, which is estimated to inject a further US$43bn into the infrastructure sector, and the 2016 Olympic Games in Rio. With Australia’s Olympic experience in designing, constructing and fitting out sporting venues, opportunities exist in many areas for Australian architects, builders and landscapers.


Alternative Energy
Brazil has, for many decades been leading the world in the development of alternative energy sources, notably ethanol and other biofuels, and 45% of Brazil's energy is already drawn from renewable sources, according to the National Bank for Economic and Social Development, compared to only 6% from developed countries. In 2008, ethanol made from homegrown sugarcane outsold gasoline and 90% of new Brazilian cars and light trucks can run on biofuel, petroleum or both!

Australian cleantech companies, product-providers, consultants and suppliers should go to Brazil to research the significant progress and commitment being made to the renewable energy sector, not just in ethanol and biofuels but also in hydroelectric power, solar and wind farms, and look for opportunities to compare notes, collaborate and export products, services and technology to the Brazilian market.

Financial Services
In addition to the above, the Brazilian financial services industry offers a wide range of products, services and opportunities that attract numerous new entrants each year. Having lived through the Latin American debt crisis of the 1970s and the Mexican devaluation in 1995, Brazil’s banking and finance sector has been under the microscope of the IMF and the World Bank for many years and is now amongst the most well regulated in the world. Furthermore, the Brazilian Government is run by a sophisticated technocracy of top economists and international bankers, many of whom held top positions in leading international banks, and has allowed Brazil to develop a financial services sector which is thriving in the post GFC environment. Opportunities exist across the board for Australia’s financial services sector to participate in the growth of Brazil’s banking, wealth management, funds management and insurance sectors.

Challenges
Brazil offers many challenges for Australian exporters and this would explain, to some extent, the reticence of Australian companies to make the long flight across the Pacific Ocean to engage with a country which has for many years been associated with the burdens of Latin American debt, hyperinflation, military dictatorships and extreme violence and poverty.

Furthermore, with high tariffs, onerous red tape, bureaucracy and language challenges (unlike most other Latin American countries, Brazilians speak Portuguese rather than Spanish) Brazil continues to offer many challenges for Australian exporters.

However, Brazil is committed to a program of structural reform, including a raft of changes to labour, taxation and infrastructure programs, which will alleviate some of the current challenges over time. But, in the meantime, Australian exporters should be prepared for complex and onerous export documentation and customs clearance issues which calls for advice, support and patience!

Can you ignore Brazil?
During this century, Brazil will become one of the largest economies in the world, taking its place behind China, USA, India and Russia as the dominant markets of the 21st Century for business, trade and investment. Brazil will lead the world in many sectors that compliment, enhance and offer opportunities for Australian business, particularly in agriculture, resources and renewable energy, and leading Australian businesses can’t ignore the chance to gain a foothold in this large and significant long term market.

(Extracts from the above article were first published in Dynamic Export, magazine of the Australian Institute of Export (July 2009). Click [http://www.dynamicexport.com.au/articles/markets/building-business-with-brazil here] to read the full article.

Best wishes

David Thomas

Please consider coming with the BRIC+ Program on our BRIC+ Study Tour to Brazil from **1st to 8th May 2010**. A rare and unique opportunity to experience, research and explore investment and business opportunities in Brazil’s booming economy. Please contact us at mail@bricplus.net to receive more information.

China's Booming Economy

I have just returned from China at the end of our latest BRIC+ Study Tour China, a one-week program of briefings, presentations, site visits, activities and workshops for a leading group of Australian investment professionals on their first visit to Shanghai and Beijing.

This was my first visit to China since the Global Financial Crisis (referred to in China as the “American Financial Crisis”!) but the signs of confidence, growth and national pride are everywhere.

Here follows a summary of my key learning and observations from the visit:

1. China’s economy is booming

The evidence is everywhere – in construction, infrastructure, property, retail and large scale manufacturing. China’s economy seems certain to maintain its average growth rate of 8.5% p.a since 1978, despite the dire predictions of late last year, and 2009 will surely be remembered as the year in which China “de-coupled” from the US. To use a well worn analogy: the train has most certainly left the station – either get on it or get out of the way!

2. The Chinese Government is making all the right moves to ensure confidence, stability and national pride in the country’s achievements

The timing, size and impact of last year’s US$586 billion stimulus package has delivered an immediate return to the economy but the greatest benefits have been delivered in so many other ways, including:

* the upgrade in infrastructure in the first tier cities, notably Shanghai and Beijing, which are now as impressive as any city in the world

* the investment in the second tier cities (I made a brief visit to Ningbo prior to the commencement of the BRIC+ Study Tour) is large, significant and impressive and will ensure that the wealth, opportunities and infrastructure are also available to the residents of hitherto unknown cities like Chongqing (population 30m), Dalian, Hangzhou, Tianjin, Ningbo and many others.

* The English language is widely spoken at all levels of society, particularly amongst the younger generations. This was particularly noticeable in Beijing, presumably in the wake of last year’s Olympic Games, which appears to have become a truly international city compared with only years ago.

* the quality of service in shops, hotels, restaurants and even in the markets is now at an international level. Many regular travellers to China (myself included) used to complain that, whilst the “hardware” (ie hotels, airplanes, shops, roads) was often world class, the “software” (ie service, language, skills, training, attitude) was lacking. This is now changing very rapidly.

3. Domestic Consumption is rising rapidly

This is the great test for China. With the collapse of its exports to the developed world, can it consume enough internally to maintain its momentum? The signs are encouraging on the streets of Shanghai and Beijing, with the shops busy and every sign of western-style consumerism, plus the data is positive in terms of household income and expenditure, consumer sentiment, confidence and other leading indicators (eg use of credit cards). But the greatest indicator of increasing domestic consumption and confidence is the sale of motor vehicles which are exceeding even the most positive expectations. Consider the following facts and figures:

* Overall car sales are growing strongly, up 20% in the first half of 2009

* Luxury car sales are up 7% for the first half of 2009 (a time when the rest of the world was shunning luxury purchases of any kind)

* Sales of Mercedes cars are up 50%, and China is now the No. 1 market in the world for the Mercedes S-Class, their high-end flagship vehicle

* Ferrari sold more than 200 cars in China last year

* 80% of all Rolls Royce car sales in China are custom built, higher than in any other market, with customers adding humidifiers, single rear seats, backseat entertainment options and refrigerators to ensure maximum comfort and status

4. China is leading the world in renewable energy sources

This was a particularly surprising aspect of our recent visit. We learnt that China is now producing more solar energy than the rest of the world put together (by some distance apparently!) and this was certainly evident in Beijing with many of the street and highway lights powered by solar panels which were evident along the side of the road. We also read that China plans to build seven large wind-power bases over the next decade and, whilst China’s energy needs are expected to double by 2030, it could reasonably expect to meet at least half of those needs from wind power.

5. The Private Sector is growing rapidly

China is now shaking off its image as a country dominated by a small, lumbering collection of large state owned companies, with all of the associated risks, challenges and restrictions for foreign investment and trade, and an increasing number of opportunities now exist in the private sector. Private companies in the US$5m to US$50m turnover range were identified as representing the most interesting investment opportunities at the moment.

6. China is going global

I was the guest speaker at an investment forum held at [http://www.creativity.net.cn/en/index.htm Innovation Valley] in Ningbo at which over 70 companies attended to learn how to take their businesses offshore, with a particular focus on Australia as a business and investment destination. I gather similar forums are being help throughout China as the country seeks to implement its new “Going Out” strategy (announced in July 2009) to diversify its foreign reserves and increase its share of global exports.

7. China is moving up the value chain

We learned that China is looking to upgrade the quality of its exports by moving into higher value manufacturing capabilities. Therefore, the development of technology-led sectors and high-value capabilities has become a key policy focus. In this respect, the collapse of low value exports to the developed world is a blessing as it has forced the whole country to accelerate its move down this path.

8. Australia is not taking China seriously enough

In conversation with many Australian Chinese and expatriates living in China, I was surprised and dismayed to hear the view that Australia is losing out to the US, Japan, Korea and European countries by not taking China seriously enough. It seems that, whilst many Australians coming to China to “take a look”, very few ever come back again to do something serious. Australia’s exports to China are dominated by our resources sector (which represents only 6% of our GDP) which means that there is significant potential to export the other sectors of our economy, especially those in which we offer innovative processes, technology and world-class products and services.