China remains Papua New Guinea’s second largest source of imports and third-largest export market. Fresh from three years in Beijing, Austrade’s new Deputy CEO considers the prospects for doing more business with China.

Daniel Boyer, Deputy CEO of the Australian Trade Commission (Austrade). Credit: BAI/Stefan Daniljchenko

Prior to becoming the new Deputy CEO of the Australian Trade and Investment Commission (Austrade), Daniel Boyer completed three-and-a-half years managing its office in Beijing.

During his time in Beijing, he identified a number of ‘mega trends’ that can help PNG companies do business with China.

The first is to understand its changing demographics and their needs.

‘Broadly, Chinese people are becoming older, wealthier and more health conscious,’ Boyer told the recent 2022 Business Advantage Papua New Guinea Investment Conference. ‘Today, 20 per cent of the world’s middle class lives in China and this sophisticated and urbanised consumer class is demanding safe, reliable and high-quality goods and services.’

Boyer points out that China boasts around 20 per cent of the world’s population, but only holds nine per cent of arable land, which means that imported food will be part of the country’s food security mix for a long time to come.

‘If I could single out one sector with the potential for strong growth and commercial cooperation it would be health.’

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China’s substantial ageing population is also presenting significant demand for high-quality health services – services that China’s own health system is struggling to provide.

‘If I could single out one sector with the potential for strong growth and commercial cooperation it would be health,’ he said.

China now has over one billion citizens online and is perhaps the most digitally sophisticated market in the world. Within China, 32 per cent of internet users access online education, 24 per cent use online medical services and 80 per cent do online shopping. This represents over 800 million potential customers.

China is also planning to be a global leader in renewable energy with 50 per cent of total installed power capacity and two thirds of the total increase in electricity consumption to come from renewable energy. The country plans to reach peak carbon emissions before 2030 and carbon neutrality by 2060.

This will mean a huge increase in demand for ‘expertise in solar, wind, micro grid, smart grid, energy storage, hydro election generation, geothermal and bio energy amongst many others’.

He also noted that China’s urbanisation meant there would be continued demand for raw materials.

Partnerships

China’s hardline approach to containing the COVID-19 virus has also made business with this economic colossus more challenging.

‘Additional challenges of operating in China include unpredictable up market access, changing regulations, disrupted supply chains and freight and logistics issues resulting in higher prices and longer transit times, particularly around refrigerated containers,’ Boyer said.

Boyer says that, despite the raft of challenges thrown up since 2020, China is a place worth doing business with, for the ‘right firms with the right mindset’.

He suggested that PNG and Australian companies are well placed to work together to increase business with China.

‘Australian companies have a long history of working successfully with PNG companies. We have more than 4000 Australian companies trading with PNG at the moment and we are also PNG’s largest foreign investor.

‘There are significant opportunities to partner with Australian companies and, by partnering with Australian companies, PNG companies can increase their knowledge and technical skill set and build new capabilities to service customers.

‘This can lead to strong domestic business and eventually lead to creating a business that can trade and expand internationally.’