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How Aussie businesses can benefit from China’s 4 trillion Yuan stimulus package

Written by Sara Cheng

Last November China announced a 4 trillion Chinese Yuan (AUD 905 billion) stimulus package to stabilise its economy and reach 8 percent GDP growth in 2009. CNY 4 trillion will be fully invested before the end of 2010, and China has a detailed implementation plan which has been in action since the end of 2008. Some economists predict China may consider a further 8 to 10 trillion Chinese Yuan investment.

What does this mean for Australian businesses?

According to the China National Development and Reform Commission the stimulus package will be divided amongst several sectors, industries and causes, with railway, road, airport and electricity networks the big winner – standing to receive 45 percent of the stimulus package. 25 percent will be allocated to recovery construction after natural disasters, while other beneficiaries include environment, rural infrastructure/welfare, residential development, innovation, health, education and culture.

Australian businesses have enjoyed a good reputation and decent market share in education, infrastructure design and project management, biotech, environmental protection products, technology and services, and rural development management in China. Thus, the CNY 4 trillion stimulus package fits well with Australia’s key competencies and provides a perfect opportunity for Australian businesses.

But the key to success is speed.

As China plans to spend CNY 4 trillion before the end of 2010 to boost GDP growth by an extra 1 percent to reach the target, (over 3 times the average annual GDP growth of OECD countries), Australian businesses need to seize the opportunity and quickly identify niche markets in China, especially government tenders and invested projects.

When entering the China market, Australian SME’s will face challenges including limited financial resources, a lack of existing business networks and a lack of track record in China. Hence leveraging local Chinese partners to conduct business development and co-bidding for government tenders are quick and viable options to tap into this market of enormous potential.

For more information about this topic or if you are interested in strategies to grow your business in China, please contact Sara Cheng, Manager, Greater China, Australian Business International Trade Services on 1800 505 529 or emailinternational.trade@australianbusiness.com.au