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June 19, 2013
There's an interview with Ken Henry, the former Treasury Secretary, at The Conversation about Australia's economic future. In part I of the interview Henry says that the emergence of China as a major economic power has to be recognised as the most spectacular economic shock ever, to hit the world and that Australia needs to secure its place in the Asian Century.
There are two prongs to Henry's argument with respect to Australia's economic future after the mining boom. The first is selling quality products to the Asian middle class:
Today, there are something like 60 million people in China that could be regarded as middle-class people....In 15 years time, Asia will have 3.2 billion middle class consumers. The Australian market... will be less than 1% of the Asian middle class consumer market. Those business that are likely, those Australian business that are likely to be successful in the Asian century are those that have already figured this out and are already repositioning their businesses in order to market product, whether it’s goods or services, to that 3.2 billion middle class consumers in the Asian region.....How do you get a tiny percentage of that market? What’s the best ingredient for success? It’s quality. Quite simply, it’s quality.
The Chinese middle class want to buy very high-grade stuff Henry adds, And they actually see Australia as a supplier of high-grade stuff. It’s not just wine but also design and architectural services. They see Australia as being a supplier of high-grade stuff.
In part 2 of the interview Henry says that the second prong is to become part of the global supply chain:
The trick for business success, and I’ve seen this with Australian businesses operating in Asia....What they are doing is, they are developing strategies that will see them become integral parts of regional, and in some cases, global supply chains.They’re identifying niche market opportunities in which Australian expertise is acknowledged and Australian expertise is highly valued.
The level of the currency is a consideration, but you know in the list of things that really matter in executing that strategy, the level of the dollar might be number five, it’s certainly not number one.
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Over time, there has been an understanding begin to develop between China and Australia. I wonder what will happen when the bull in a china shop (?)opposition, with its can-do crassness and anti-Chinese hangups assumes government