The education demands of China are continuing to grow inline with the ongoing development of the economy. As demonstrated in previous articles, Australia has succeeded in attracting a range of Chinese university students over the past decade and this has continued to grow, although at much smaller levels than in previous periods. China still remains the most important education market for Australian Universities. But are Australian education institutions reaching the opportunities inherent in the Chinese market?
Academic studies and many airline business books on China have long acknowledged the importance of Guanxi or ‘Social Capital’. Guanxi is a confusing term to many business people in the West, but it is important to take time to understand how it works and why it works. Guanxi is essentially the level of status or respect that is accorded to a person based upon their level of social capital or personal connection which they hold within a given group of people. It is related to trust and trustworthiness, but it is much more. In the West we tend to not worry so much about this aspect of the business deal because we use legally binding contracts to ensure the other partner is kept to the agreed bargain (and in some cases even this is not sufficient to ensure ethical behaviour).
International students have an overwhelming positive economic impact on Australian cities, and particularly inner city urban development, and vibrancy. Economic analysis in recent years has suggested that international students have an annual economic impact of $17.5 billion on the Australian economy. There has consequently been considerable discussion about expanding international student numbers and attracting more students to Australian institutions.
This is a good story of Australia’s position as an education destination of choice for Chinese students, however they may demonstrate a emerging challenge for the Australian education industry to continue to reap the economic benefits of Chinese students in Australia. This leads to an important question about whether Australia, and its key government and institutional stakeholders in the education sector are effectively approaching market capacity in what can realistically be achieved from Chinese students to Australia. Does Australia and its education institutions need to look at adapting its engagement model with China to train more students?
In recent years we have seen growing demand for Australian food consumer goods such as milk powder, which has lead some Australian supermarkets to impose daily limits on the number of milk powder units that can be purchased in any single transaction. Similarly there have been great stories of the insatiable appetite for Australian wines in China, and particularly since the ratification of the China – Australia Free Trade Agreement in 2015. But does this apparent demand for Australian food and wine translate into huge market opportunities for our farmers, wine makers and premium food producers in China?
The importance of relationship building to the Chinese is paramount. Apparent social functions like banquets are held in very high regard by Chinese businessmen and government official due to the ability for one to get to 'know' their potential business partners. This knowledge is achieved through watching foreign businessman’s behaviour during the formal and informal drinking and eating rituals that are performed during every formal banquet. It is therefore important to be aware of these rituals, drinking strategies and how to ensure you leave the banquet in higher esteem than when you arrived.
Conducting business in China can be a confronting affair, with the rules of engagement vastly different from what we would expect in many western countries. The number one rule when conducting business in China is to take it slow, develop your reputation or Guanxi, and build your relationships with the people you meet, whether they be business or government officials.
China has attracts a large amount of attention, and is perceived by many in government, business and the broader society as synonymous with Asia. The Asian Century that we often hear discussed, could very well be replaced with the “Chinese Century” in the eyes of many business and government leaders. But how much of this sentiment is based in reality? Can we distil the Asian Century into a story about China?
China is the most important emerging market to the global economy, and arguably has been for hundreds of years, if not a thousand years. The 21st Century is no stranger to the allure of China, but do we in the west really understand China? Are we looking at China for what it is, or what we think it could be? Are we perhaps looking at opportunities in China through rose coloured glasses, tinted by the experiences of our home markets?