The Abacus

Should you attend CIIE 2019? Reflections from the ground in 2018

By: ACBC National
15-02-2019

In November last year, more than 400,000 buyers from China and beyond made their way to the National Exhibition Centre in Shanghai for the inaugural China International Import Expo (CIIE).  This would be the largest trade fair in the history of the world.  In welcoming delegates, President Xi Jinping said CIIE would ‘help friends from around the world seize opportunities presented by China’s development and offer a platform for us to deepen international business cooperation for shared prosperity and progress.’

More than 160 Australian businesses were represented, as well as state and federal governments.  Why were they there, and what did they find?  We spoke to some people who were on the ground.  Four themes emerged: the scale of CIIE and the opportunities it presents; the emerging Chinese middle class consumer; the importance of person to person contact in China; and CIIE as a sign of an economy still opening up to the world at a time when other economies are closing their doors.

The biggest trade fair in the history of the world

‘This event dwarfed any trade fair or convention previously undertaken,’ said John Brumby, National President of the Australia China Business Council and the Victorian Government’s Special Envoy to CIIE.  ‘The number of Chinese companies and buyers attending was staggering.  Goods on display ranged from electric vehicles through to dairy, food and wine, IT, pharmaceuticals, AI and much, much more.’

‘It was enormous,’ said Amelia Williams, from Australia Post.  ‘The atmosphere was very exciting, not just at the Expo but throughout Shanghai for the two weeks leading up.  It was magical; Shanghai was glittering.  It was particularly important for Australia Post to be at the inaugural CIIE, championed by President Xi himself.’

Sheridan Wright of skin care and cosmetics company Natio agreed that CIIE was ‘vast—a huge display of the high level of interest in China for importing products.  It was an amazing opportunity having all these brands and all these traders under the one roof.’

Attendees saw the CIIE as reminder of the scale of opportunity presented by an economy that is not only now, in purchasing power parity terms, the largest in the world, but is predicted to keep growing at more than 6 per cent per annum for the foreseeable future.  In his address President Xi said that China expects to import more than US$40 trillion of goods and services over the next 15 years.  But as with any market, businesses that want to take advantage of this growth need to understand their customers.  The range of products and services available at CIIE reflected the demands of a growing Chinese middle class—one that does much of its buying online.

The new Chinese consumer

China’s technological advance is shown not just in the kinds of products available, but in the way they are obtained.  ‘By 2020,’ says Australia Post’s Amelia Williams, ‘China’s e-commerce will be worth $1.6 trillion.’  That’s a big reason for Australia Post to have a presence at CIIE.  ‘Our mandate is to help Australian businesses grow—locally and globally.  Cross border e-commerce is an important platform to do that.  Our goal is to help Australian products be even more accessible to Chinese consumers across online and offline platforms, which is why exhibiting at CIIE was so important for us.’

Sheridan Wright from Natio said that presence at events like CIIE becomes more important in the age of e-commerce:  ‘Natio is online only in China.  We’re not in the bricks and mortar stores due to animal testing requirements in the general trade.  That makes it all the more important for us to be at trade shows like CIIE to give potential customers the opportunity to touch and feel and experience the products.’

Attendees agreed that the global reach of e-commerce opens up special opportunities for Australian businesses in China.  Sheridan Wright:  ‘Australian products are more sought after than ever.  We’ve really hit a sweet spot for Australian brands.  Australia has an established reputation for safe products you can trust—and trust and safety are paramount in the Chinese market.  There are clear benefits for both Australia and China by making Australian brands available to Chinese consumers.’  Amelia Williams agrees:  ‘Australia has a reputation for clean and green products, high manufacturing standards and quality production conditions.  These elements are very important to the Chinese consumer.’

Face to face and feet on the ground

As China’s growth profile moves from development to consumption, Australia’s trading relationship with China will become less transactional and more relational.  The CIIE is an important opportunity for businesses to make this happen.  ‘Businesses who want to enter the China market should use CIIE 2019 as a research and networking opportunity,’ says Amelia Williams.  ‘It’s an opportunity to learn, meet incredible people from all over China and the world, and completely immerse yourself in the opportunity.’

40 years and counting—the opening up continues

There was a conspicuous absence at CIIE: no official US delegation.  Many US businesses were represented, of course, but it was a reminder that we are living at a time when the benefits of free trade are increasingly under question.

History and narrative is important in China.  President Xi made it clear that he sees CIIE as another step on a journey begun 40 years ago:  ‘China has grown by embracing the world, and the world has also benefited from China’s opening-up.’  In his speech, President Xi committed China to further reform, announcing five major new initiatives to expand imports and trade more generally.  John Brumby said:  ‘In my view, these commitments—combined with the power of the Expo itself—are as important to future world growth as was China’s original opening up back in 1978.’

President Xi also linked the CIIE with the Belt and Road Initiative (BRI).  BRI is China’s massive effort to improve and increase trade and economic activity along six land corridors and a maritime route through Asia and Europe.  It’s an infrastructure-building initiative of unprecedented size and scale.  It crosses three continents, and directly involves 68 countries containing more than 60 per cent of the world’s population.  The area covered by BRI is currently responsible for about a third of the world’s economic output, and the very existence of BRI is likely to increase that share in the future.  Eventually, it is estimated that a quarter of the global goods trade will go via the ‘New Silk Road’.

As President of the Australia China Business Council (ACBC) and Special Envoy for Victoria, John Brumby attended high level meetings with the leaders of Jiangsu Province, Sichuan Province, Chengdu and Tianjin.  ‘Chinese leaders see BRI as a key mechanism to help lift hundreds of millions in our region out of poverty, through shared investment in infrastructure such as ports, rail, water, sewerage and health care,’ he said.  ‘Each of the leaders we met welcomed Victoria’s recent formal commitment to BRI, saying it would help generate growth and trade and lift millions out of poverty.’

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Should Australian businesses go to CIIE in 2019?  ‘China and Asia present major market opportunities due to ballooning middle classes, and Australia has a real competitive advantage to capture those opportunities thanks to our close proximity,’ says Amelia Williams.  Sheridan Wright adds:  ‘The Expo encompassed all sizes and types of business—from small boutique businesses to large established ones.  Businesses of any size will get an advantage out of being there.  It’s definitely the trade show to be at.’

@AusChinaBC

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