Are Australian producers ready to capitalise on the Chinese FTA?

Tuesday, 18 November, 2014

Australia’s beef, dairy and wine producers will be key beneficiaries of the Australia-China free trade agreement, according to Grant Thornton National Head of Food & Beverage Tony Pititto.

However, they need to consider whether they are well positioned to take their place on the world stage as premium providers to the Chinese market, Pititto says.

“Australian food & agri producers will now need to ensure that they have undertaken appropriate market research to fully understand the opportunities which will be opening up in China and its various markets,” he said.

“Whilst the FTA will help Australian producers decrease their reliance on the Australian market and its strong supermarket position, developing the right relationships with Chinese customers will be crucial to Australian companies being able to take advantage of greater access to Chinese markets.”

Pititto says the FTA could spell opportunities for foreign investment in our beef, dairy and wine sectors.

“Our global research indicates approximately one-third of all Australian food and beverage companies surveyed will look at acquisitions in the next 12 months, and a further third will look at selling their organisations or businesses over the same period,” he said.

“The FTA will, in some cases, increase the investment level at which approval from the Foreign Investment Review Board is required (estimated to increase from $248 million to $1 billion). With this reduced regulation, the industry faces a greater wave of acquisitions, and we expect interest from Asian investors in the sector to continue to grow. Australian producers looking to sell should consider their succession planning and exit strategies to ensure they are well positioned to take advantage of the incoming investment opportunities about to come our way.”

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