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The increase in manufactured exports to China is set to continue. Chinese producers are in-sourcing an increasing proportion of inputs from global markets. China will continue to need high value-added manufactured goods, including those that build upon Australian advantages such as specialised mining equipment and R&D intensive parts and components. The challenge for Australian exporters will be to identify niche markets and to safeguard intellectual property rights while working closely with Chinese partners. Australian manufacturers are concerned about the risks they are facing in this report.
A firm that is directly addressing the problems and risks involved in finding niche markets and sourcing materials and components is South Australian company, Mawson Global.
Mawson Global is a text book case of a company bridging gaps in increasingly fragmented production processes with their long value chain. Their two step approach of first sourcing materials and then offering to source components facilitates the transition from localised to globalised production for clients.
Mawson Global is offering these services to Australian SME clients who otherwise would not be able to access global sourcing. Where clients possess competitive intellectual property rights, this might be the only way for them to keep production and R&D in Australia, while reducing the scope of their production activity to the sustainable minimum.
Bringing Australian companies in contact with Chinese suppliers can lead to flow-on business when access to products affords access to markets and new supply chains. Peter Evans, the founder of Mawson Global, observes that his company plugs Australian manufacturers into global supply chains. The reason for sourcing in China lies more in the access to supply chains and information than in cheap labour.
Among the success stories of Mawson Global is a South Australian engineering firm trying to source stainless steel products from China in order to reduce costs. After initial contacts with Chinese suppliers, the sourcing scope expanded to include components of machinery which enabled the manufacturer to resume the production of three types of machines which had been discontinued because they were no longer competitive due to high local production costs. With Chinese components reducing production costs, these machines are able to go back into export markets in North and South America.
Findings from the Australia China Business Survey on the manufacturing sector highlight the positive outlook for Australian manufactures doing business with China and the opportunities for Australian high value added manufactured products, while acknowledging some of the constraints.