Category News of China

Shanghai Top Marques 2006 attracts well-heeled buyers

Fancy cars, private jets, diamond watches and designer clothes are attracting well-heeled buyers at Shanghai Top Marques 2006, a four-day luxury lifestyle expo at the Shanghai International Convention Center in Pudong. The organizer expects visitors to spend 500 million yuan (US$62.5 million) on luxury goods. The list of pricey products includes a rare 89.98 million yuan woodcarving, a 9.99 million yuan Koenigsegg CCR sports car – the fastest in the world – and a 7 million yuan Porsche.

Korn/Ferry Relocates Asia/Pacific Leadership From Singapore to Shanghai

– Move is in Response to Growing Demand for Skilled Professional Labor in Greater China Region (GCR) –

Korn/Ferry International , the premier provider of executive search and leadership development solutions, today announced that it is relocating the office of its Asia/Pacific leadership to Shanghai, effective March 1, 2005. Charles Tseng, President, Korn/Ferry Asia/Pacific, will move from Singapore to oversee the strategic development of the firm’s operations throughout the region, reflecting the growing importance of the Greater China Region (GCR) including Hong Kong to its business worldwide.

“As China becomes the focal point for many multi-national companies’ (MNC’s) long-term strategies, securing our footing here is one of the most important strategic ventures for Korn/Ferry’s long-term growth,” said Paul C. Reilly, Chairman and CEO of Korn/Ferry International. “Demand from our clients from around the globe has prompted this move. Shanghai alone is already home to more than 65 regional headquarters for established MNC’s, with more arriving every day. ”

Korn/Ferry first opened a representative office in Beijing in 1995, and then in Shanghai in 1997. In 2002, Korn/Ferry was the first major international search firm to be awarded a sino-foreign joint venture by the Beijing Personnel Bureau, followed by a similar venture in Shanghai in 2003.

“The much-used phrase ‘war for talent’ clearly applies to the China market — not only in terms of Chinese and international companies looking to hire CEOs, but also in terms of mid-level managers and other ‘knowledge workers,'” said Mr. Tseng. “Many of our clients are struggling to attract and retain enough local talent to fuel their plans for the market, and demand for our services is booming as a result. I am extremely pleased to make this move, which will enable us to capitalize on the tremendous opportunities presented in China and around the region.”

Korn/Ferry in China: Milestones

* 1978: Opens office in Hong Kong
* 1995: Opens Representative Office in Beijing
* 1997: Opens Representative Office in Shanghai
* 1999 and 2002: Voted “Best Recruitment Firm” by “China Staff”
* 2002: Awarded sino-foreign search joint venture by Beijing Personnel
Bureau
* 2003: Awarded sino-foreign search joint venture by Shanghai Personnel
Bureau
* 2004: Introduces Futurestep service in Shanghai

About Korn/Ferry International

Korn/Ferry International, with more than 70 offices in 35 countries, is the premier provider of executive search and leadership development solutions. Based in Los Angeles, the firm partners with clients worldwide to deliver unparalleled senior-level search, management assessment, coaching and development and middle management recruitment services through its Futurestep subsidiary. For more information, visit the Korn/Ferry International Web site at http://www.kornferry.com/ or the Futurestep Web site at http://www.futurestep.com/.

Website: http://www.kornferry.com/
Website: http://www.futurestep.com/

O’Melveny & Myers Receives 2006 China Practice of the Year Award

Annual Award Recognizes Legal Excellence in World’s Most Dynamic
Marketplace

HONG KONG, Sept. 29 /PRNewswire/ — O’Melveny & Myers LLP has been
recognized by Asian Legal Business (ALB) with the 2006 China Practice of
the Year award. Finalists were recognized for their “outstanding client
service as well as their ability to combine rigorous analysis with astute
judgment to give clients a competitive edge.” O’Melveny’s selection from a field of seven international law firms was announced at ALB’s annual awards dinner on September 22, 2006 in Hong Kong.

“O’Melveny & Myers is honored and very proud to receive this award,”
said Howard Chao, co-head of the firm’s China Practice. “We thank our many loyal clients in China for their support over the years and in connection with this award. Our growth and successes have derived from their confidence in us.”
ALB gathers peer nominations from a wide range of practitioners in the relevant jurisdiction. A summary of the nominations together with firm submissions and additional third-party material gathered by the ALB
research team are then forwarded to a panel of judges. The panel, mainly
composed of senior in-house lawyers, then vote for winners in each
category.
“This award acknowledges the great platform we have developed in China and the terrific work we are doing here,” said Michael Moser, co-head of the firm’s China Practice. “Our clients are very focused on the myriad opportunities in China and we are dedicated to ensuring their success.”
“As one of the world’s most important economies, China is a top
priority for virtually all of our clients,” said Arthur B. Culvahouse, Jr., Chair of O’Melveny & Myers LLP. “To provide the level of service to meet our client’s growing needs in Asia — and more specifically in China — we have assembled an outstanding group of lawyers. This honor from Asian Legal Business confirms the excellence and prominence of our China Practice.”
Asian Legal Business is the only independent magazine dedicated to the latest legal news, events, and developments in the Asia-Pacific region.
About O’Melveny & Myers’ China Practice
O’Melveny’s China practice is one of the leading international law firm practices in Asia. With close to 100 professionals in Shanghai, Beijing, and Hong Kong, we provide quality advice in the areas of foreign direct investment, mergers and acquisitions, capital markets transactions, private equity, financing, intellectual property and dispute resolution. Our China operations are closely integrated with China practice groups located in our U.S., Japanese and European offices. O’Melveny & Myers is licensed as a foreign law firm in China and works closely with local law firms on China law matters.
About O’Melveny & Myers LLP
O’Melveny & Myers LLP is a values-driven law firm guided by the
principles of excellence, leadership, and citizenship. With the breadth,
depth, and foresight to serve clients competing in a global economy, our
lawyers devise innovative approaches to resolve problems and achieve
business goals. Established in 1885, the firm maintains 13 offices around
the world, with more than 1,000 lawyers. O’Melveny & Myers’ capabilities
span virtually every area of legal practice, including antitrust/Competition; Appellate; Class Actions, Mass Torts & Aggregated
Litigation; Corporate; Corporate Finance; Electronic Discovery;
Entertainment & Media; Global Enforcement & Criminal Defense; Health Care & Life Sciences; Insurance; Intellectual Property & Technology; Labor & Employment; Mergers & Acquisitions; Private Equity; Project Development & Real Estate; Restructuring; Securities Enforcement & Regulatory Counseling; Securities Litigation; Strategic Counseling; Tax; and Trial & Litigation.

China Gaining Ground in Global ‘Head and Brains Race’

COLUMBUS, Ohio, Sept. 29 /PRNewswire-FirstCall/ — Global competition, once defined by the Cold War arms race, has evolved into a “head and brains race” where nations measure success through the development and application of technology.

That was one of the conclusions from a Battelle-R&D Magazine report on international research and development trends. The report frames international competition as evolving from the arms race to a “hands race” based on lower-cost manual labor and now to the head and brains race driving the current escalation of R&D spending.

“It is tempting, and certainly reasonable, to acknowledge the fact that each of these races has involved a reliable adversary,” says Dr. Jules Duga, senior research scientist at Battelle and co-author of the report. “These adversaries continue to present challenges to the United States that can be met and conquered or accommodated only by long-term strategic investment and will.”

While the U.S. remains the standard-bearer in terms of worldwide R&D, China is emerging as an R&D giant. That trend will continue, the report projects.

The U.S. is responsible for 32.4 percent of global R&D this year, compared to 13.4 percent for China. Those numbers were first and second, respectively, worldwide but represent a decline for the U.S. and an increase for China. The same trend will continue in 2007, according to the report, when the U.S. will be responsible for 31.9 percent of global R&D and China 14.8 percent.

“There still is a considerable gap,” says Duga, “but it’s closing.”

With China leading the way, Asia continues to seize more and more of the international R&D market. Asia’s share of global R&D grew from 34.9 percent in 2005 to 35.6 percent this year and should continue to grow to a projected 36.5 percent in 2007, according to the report. The U.S., over the same period, has declined from 32.7 percent to 32.4 percent this year and is projected to dip to 31.9 percent next year.

Changes in government attitudes, direct government investments, liberalization of their economies, and an increased emphasis on developing a highly educated, technology-oriented population are some of the factors leading to the R&D growth in Asia. These also are reasons why industry from all over the world is changing the way it develops relationships with the R&D communities from these burgeoning countries. The first steps could be characterized as casual, “testing-the-waters” interactions that included preliminary contract research arrangements. These quickly have evolved into major investments in institution-building, the creation of subsidiary operations, and the development of a wide range of joint ventures.

“It is apparent that the modifications in the internal policies of East and South Asia, in particular, have had and will continue to have an influence on the amounts and patterns of R&D performance in the U.S. and other nations,” says Tim Studt, editor of R&D Magazine and Duga’s co-author on the report.

Outsourcing of R&D has been a growing trend and will continue to grow as long as the cost of doing business makes sense for U.S. companies, concludes the report. The lower costs in most areas, especially China and India, enhance the competitive position as compared to other (usually domestic) resources and lead to measures of higher productivity. When other advantages, such as enhanced global R&D infrastructure and improved support for other global operations, are considered, the value of outsourcing becomes apparent, says Duga.

“Host countries like China and India have come well down the road in terms of providing a technology-friendly environment,” Duga says.

Battelle has prepared a report on U.S. R&D funding annually for more than 40 years, including the last 12 in partnership with R&D Magazine. Duga has co-authored that forecast for 27 years. This is Battelle’s second comprehensive report on international R&D spending.

The full report is included in the September issue of R&D Magazine. Reprints are available by contacting Battelle’s Jean Hayward at (614) 424-7039 or at haywardj@battelle.org.

Battelle is a global leader in science and technology. Headquartered in Columbus, Ohio, it develops and commercializes technology and manages laboratories for customers. Battelle, with the national labs it manages or co- manages, oversees 20,000 staff members and conducts $3.4 billion in annual research and development. Battelle innovations have included the development of the office copier machine (Xerox); pioneering work on compact disc technology; fiber optics for telecommunications; development of new medical products to fight diabetes, cancer and heart disease; breakthroughs in environmental waste treatment; homeland security technologies; and advancements in transportation safety and security.

Avon powers ahead with China recruitment

9/16/2006 – Having received the first license for a foreign-owned company to resume direct sales of cosmetic products in China, Avon added more than 33,000 new sales staff to its workforce there last month, according to data from the Chinese Ministry of Commerce.

The data, which was cited by Morgan Stanley in a note to investors, stated that the 33,339 new representatives were added to the work force in the month of August, bringing the total number of representatives to 188,273.
The figures indicates that the company is recruiting at an even faster rate than it had originally expected. Back in July the company said that its China sales force had reached 114,000 and that it was hoping to recruit a further 31,000 new employees.

Avon received the go ahead to resume door-to-door sales back in January of this year. The move followed the government lifting a total ban on direct sales implemented in 1998 in an attempt to quash pyramid schemes and other scams that were being offered on a door-to-door basis in the country.

Morgan Stanley reiterated in its note to investors that China remains Avon’s brightest hope for future growth at the moment, with the recruitment drive likely to boost sales for the second half of the year and helping to buoy the company’s overall results in the Asia Pacific market.

Although the general trend in the company’s global sales has been positive, the Asia Pacific region has proved particularly disappointing for the company as a whole. With the exception of China, the company reported a poor performance in other countries in the region, contributing to a 10 per cent drop in sales during the second quarter of the year.

But where other Asian markets are showing slow retail sales, the China market remains robust. Currently China is seeing some of the largest industry growth in the world, with almost all cosmetic and toiletry categories reporting sales growth well into double figures – figures that are in line with GDP that continues to exceed 10 per cent.

This growth could prove the key to getting Avon out of a difficult situation. Restructuring charges have hit the company hard of late, forcing investors to shy away from its shares. Following the announcement of its second quarter results at the beginning of August, the Avon share price fell over $5 to reach $27.40 on August 8. Since then the share price has leveled off and finished trading at $29.54 this week.

But the downward trend in the company’s share price reflects a general loss of confidence. The company’s latest results showed that sales had gone up, but underlying growth was below analyst’s expectations, due mainly to the heavy restructuring charges the company incurred.

During its second quarter net income dropped 54 per cent to reach $150.9m on the back $2.1bn in sales, up 5 per cent on the same period last year.

This figure was impacted by a $49m charge, as part of its massive $500m restructuring program, introduced in the last quarter of 2005. The scheme has seen profits tumble by 54 per cent but eventually could save the company $100m a year.

The restructuring costs have included organizational realignments and a reduction in the workforce, particularly in its middle management that has seen the elimination of more than 25 per cent of its management positions and lowered the number of management tiers from 15 to eight.

To date the company has now eliminated 10 per cent of its 43,000 worldwide workforce, however the expansion into China is helping to reverse that trend, emphasizing just how important the upturn in the China market is to the company.

Google and Guanxi in China

Jake at Demo China has an important article on Google’s market share in China with plenty of back-up links. Google continues to fall behind China’s premiere search engine Baidu. Two research groups show about a 13% increase in Baidu search trsaffic and a 12.3% drop for Google searches in Beijing. The stats seem to be consistent with data mined in other parts of China.

The data does not surprise me as Google pays little attention to the unique needs of Chinese users. The sad part for Chinese users is: Baidu’s top search results are pretty much bought and paid for by advertisers; so, the average netizen is not getting an honest cyber-portrait of the best site for his query. And expats and tourists to China are more likely (based on my personal un-scientific study involving 25 new visitors and 15 fossilized expats) to use Google to find services and businesses in their area. And they would get infinitely better results by using Google or Yahoo!: type in Embassy phone numbers China and none of the top 10 entries will get you to a consular officer. In contrast, Google gives you 7 official and unofficial sites that will help those in need of a bureaucrat.

And I think Baidu’s numbers will mislead businesses that cater to foreigners. Advertising dollars that could bring them real traffic from customers with disposable income will likely be diverted to an ineffective Baidu. And Baidu is as expat friendly as Google is attractive to Chinese Nationals. Google spent a Googol last year on market research (100 times more than Baidu), but did it from the comfort of their California home. Baidu does not have to get off the couch as they have the confidence, whether worthy of it or not, of Chinese netizens and advertisers.

A funds manager in New York asked me last year asked me why I believed that Baidu would outdistance Google in China when it paid so little to understand the marketplace. I predicted that Google would flounder based on the ancient Chinese pronciple of Guanxi (literally: relationships, but far deeper in meaning) that so far, only Bill Gates has done a good job of understanding. According to Robert Buderi and Gregory Huang in Guanxi: The art of relationships: Microsoft went at the problem of opening up the China market in a way that was a departure for most Western companies. Instead of focusing on sales or cheap manufacturing possibilities, Bill Gates imagined tapping into China’s vast pool of talented computer science students and harnessing their energy in a way that would be mutually beneficial to Microsoft and China. He visited China’s top leaders repeatedly over the years, building a relationship and opening doors. He practiced Guanxi, a Chinese term that conveys trust and mutuality. Says Huang, the “most important principle is that relationships must be nurtured over time. They can’t be bought or rushed.”

I have not agreed with Google or Yahoo’s policies since they came to China, but along MSN, I rely on their accuracy in reporting. But, if they are going to stop the economic bleeding they had better find a vendor of Guanxi fast and take a double dose just for good measure. And Baidu had better wise up before someone actually tries marketing a home-grown engine with a touch of honesty.

by Lonnie Hodge

Korn/Ferry Profit Rises 28% on Strong Demand

Executive recruiter Korn/Ferry International reported higher quarterly profit on strong global demand for senior-level staff.

Net earnings rose 28% to $14.8 million, or 31 cents a share, in its fiscal first quarter, from $11.6 million, or 27 cents, a year earlier.

Analysts, on average, expected profit of 30 cents a share, according to Reuters Estimates.

Total sales were up 25% to $161 million, compared with Wall Street estimates of $149 million in revenue. Fee revenue was $153 million, up 25% from a year earlier.

The company, which also provides leadership development services, won more search engagements and charged higher fees, citing continued global economic expansion for the improved results. It also said clients were focusing as much on retention and development of their workforces as on recruitment.

Los Angeles-based Korn/Ferry said it expected second-quarter earnings of 28 cents to 32 cents a share, compared with Wall Street forecasts of 31 cents. It estimated second-quarter fee revenue of $147 million to $157 million.

Its shares gained 27 cents at $20.19.

Report: China struggles with people management issues

Author: RP news wires

Despite being the world’s most populous country, filled with people who would prefer to work for foreign companies, multinational corporations operating in China are finding their businesses hindered by a pervasive talent shortage and struggling to retain their management and employees. A new white paper by Manpower Inc., a world leader in the employment services industry, examines this paradox and offers insight and answers to help multinationals improve their talent management strategies in China.

“Ninety percent of the world’s top 500 multinationals have now invested in China, yet many of them are struggling to generate the sales or growth they want because of talent management challenges,” said Jeffrey A. Joerres, chairman and CEO of Manpower Inc. “Recruiting the right people, retaining the best staff and developing leaders of the future are difficult tasks in any market. For foreign companies operating in China, the difficulties are magnified by the talent shortage – particularly of managers and executives – and the difficulty of understanding how to adapt talent management strategies to the country’s unique business culture and values.”

Manpower’s white paper, The China Talent Paradox, offers five practical strategies for multinational corporations to embrace if they want to improve employee attraction, engagement and retention in China:

1) Create a learning organization

2) Appoint competent leaders

3) Establish an appropriate organization and culture for China

4) Provide competitive compensation and benefits packages

5) Select the right people

“It is vital that organizations view these five strategies as a holistic, integrated solution,” said Joerres. “Neglecting even one of the strategies will weaken the solution considerably.”

These five strategies represent the core elements of Manpower’s proprietary Workforce Optimization Model that is used to assist clients in recruiting and retaining permanent employees in China.

Joerres said, “These strategies may seem to be self-explanatory to an HR professional, but it is important to recognize what they actually mean in the work environment in China. Effective talent strategy in China relies heavily on grasping the cultural nuances and leveraging this knowledge.”

“Learning is a priority for Chinese employees because they are acutely aware of the limitations of their educational system and possess a strong desire to continuously acquire marketable skills,” said Lucille Wu, managing director of Manpower China. “Learning has to be embedded into employees’ daily activities so that they learn new skills and gain new experience every single day. Lacking this stimulus, they will leave for another company to find better career development opportunities.”

Previous Manpower research of 33,000 global employers found that vacancies at the manager and executive level are much more difficult to fill in China than in other countries, which has a direct impact on the ability of organizations to grow.

“To fuel the current level of growth that multinationals are experiencing in China, they need to attract and develop competent leaders that can work effectively in the Chinese workplace,” said Wu. “Chinese employees respond best to hands-on leadership and having a role model to demonstrate what is expected of them so that they may replicate their actions. They are also unlikely to tell a manager when they do not understand how to complete their work. This requires a different leadership approach than most Western multinationals expect when they come to China.”

Manpower has found that nearly 75 percent of Chinese employees would prefer to work for wholly owned foreign companies rather than joint venture companies or wholly owned Chinese companies. This is a distinct advantage for foreign multinationals competing for talent in China, yet ironically, retention remains an issue for them.

“In addition to the many multinationals who come to China to set up manufacturing operations, there are also many companies that come to China to market their products and services to Chinese consumers,” said Joerres. “The preference of Chinese workers to join a foreign company underlines the tremendous opportunities for companies that develop the right talent strategies to compete for a bigger slice of the world’s largest consumer market.”

Deloitte plans to increase its numbers in China

Deloitte, one of the world’s four biggest accountancy firms, is planning to beef up its staffing pool in China from the current 6,000 to 9,000 by 2009 to handle its growing business in the country, a top executive said yesterday.

“Currently we have 6,000 professionals in 10 offices in China serving our clients and we expect (the number) to be in the range of 9,000 in 2009,” said Manoj P. Singh, regional chief executive officer for Deloitte Touche Tohmatsu Asia-Pacific region.

“Our presence is sometimes dictated by the needs of our clients,” said Singh, who took the post in 2003.

“Building larger practices on the (Chinese) mainland is part of our growth strategy,” the CEO said.

China is already one of the top eight markets for Deloitte’s global operations as measured by staff numbers, Singh said.

The service firm has seen tremendous growth in China in the past few years thanks to the country’s booming economy, he said, declining to reveal specific revenue figures.

Deloitte achieved aggregate revenue of US$18.2 billion last year, a 10.9 per cent increase over the US$16.4 billion reported the previous year.

“We have been growing at a double-digit rate both in terms of headcount and revenue in China in the last couple of years,” said P. Christopher Lu, regional managing partner.

Singh said the firm’s market share had increased four-fold among the top 100 Chinese companies over the past three years, including not only auditing services but also consulting, tax and other services.

“Our strategy is focusing on building our brand around the transformation of Chinese companies, especially for those top 100 and 200 firms,” Singh said.

He said the services firm is well-positioned to provide auditing, tax and management consulting services to help build domestic enterprises into world-class or Fortune 500 companies.

Deloitte’s existing client base in China is dominated by multinational companies operating in the country, but this varies according to the service.

For example, Lu said, about 70 per cent of its tax customers are multinational companies, while about 65 per cent of its corporate financing customers are foreign firms.

But he said Deloitte is luring more and more Chinese companies.

“We could only achieve our six-year strategy by having the right balance of both local domestic firms and multinational companies and being able to provide valuable services to them,” Singh said, referring to his firm’s ambitious goal to become the best service provider, a roadmap announced three years ago.

The company announced two years ago it would invest US$150 million in China over the next few years, which Singh said “is the biggest and most significant” global investment the firm had ever made.

The investment in recruitment, training and resources is “well on track,” said Singh.

Global CEO Bill Parrett said last year that the firm planned to build China as its second-largest market by 2010 and the largest by 2030.

Source: China Daily

Local manufacturers struggle to compete with China

The World Today – Friday, 25 August , 2006 12:38:00
Reporter: Andrew Geoghegan
ELEANOR HALL: As BHP Billiton’s multi-billion dollar profit result revealed this week, China’s relentless growth has been a huge boon for many Australian business.

But there’s a downside. A survey of Australia’s manufacturing industry has found that this sector of the local economy is losing out to Chinese competition. In just the last year, manufacturers have suffered a net financial loss of almost $900 million in trade with China.

And as finance correspondent Andrew Geoghegan reports, some manufacturers are warning that the local industry will not survive.

ANDREW GEOGHEGAN: It would be an understatement to say China is a country on the move. The rapid pace of economic growth has created huge demand for private transport. In Beijing alone, 1,000 new cars are estimated to be pulling onto the roads every day.

JASON LI: The car and the growth of the car is just an extraordinary phenomenon in china.

ANDREW GEOGHEGAN: Jason Li, a Chinese Australian living in Beijing, works for the China Automobile Association.

JASON LI: It’s really stuff of dreams. It’s very much tied to growing economic development, the rise in middle class. It’s such a status symbol. It’s such a centrepiece of lifestyle now.

ANDREW GEOGHEGAN: And Australian business is cashing in on the Chinese dream.

GLEN DOBINSON: Certainly with the population based in China of around about 1.2 billion people, and that’s a lot more than the Australian population, quite a few fold.

ANDREW GEOGHEGAN: Glen Dobinson is the Managing Director of Dobinson’s Springs and Suspension, a Rockhampton manufacturer. He’s been successful in capitalising on the growth of China’s car industry.

GELN DOBINSON: So we are trying to capitalise on that four wheel drive market, particularly up there where they have suspension range of products and we’ve had a client dealing with us since early this year, who’s had around three orders, and we have to grow on that base.

ANDREW GEOGHEGAN: However, Glen Dobinson says he’s making hay while the sun shines. He sees some very dark clouds on the horizon in the form of cheap manufactured goods imported from China.

GLEN DOBINSON: We find, one of our competitors now is starting to import product out of China, and distributed though Australia as well, to our client base, we are going to have to compete head on with Chinese imports, which, I can only see in the long term, if that keeps up, we are … it’s not going to be an easy ride for us down the road further, yeah.

ANDREW GEOGHEGAN: To the point where you think you might struggle to survive here?

GLEN DOBINSON: Yeah, I think 10 to 15 years time it could be a different story to the stage, where if we can’t compete, yeah, we might have to look at maybe importing and rebranding our product ourselves, that’s, either that or you got no business. So that’s something that we’ll have to think seriously about in the long-term future.

ANDREW GEOGHEGAN: Glen Dobinson’s problems are symptoms of an Australian manufacturing industry in decline.

And the car components sector is suffering the most acute pain, as highlighted this week by the struggling Ajax fasteners business in Melbourne. It’s been bailed out by carmakers, because it can’t compete with cheap imports.

HEATHER RIDOUT: A lot of the benchmark prices are China prices, so, if Ajax have to quote for their fasteners, they have a benchmark, Chinese fastener producers, as a price they have to match. So it is very tough.

ANDREW GEOGHEGAN: Heather Ridout is the Chief Executive of the Australian Industry Group.

It’s surveyed 700 manufacturers and found that they’ve accumulated almost $7 billion in benefits from China. However, cheap Chinese competition has cost those businesses closer to $8 billion in lost sales.

Heather Ridout.

HEATHER RIDOUT: Australian manufacturers are now doing much more business in China. China has been identified as the strongest potential overseas market, for industry in terms of their exports, in terms of their overseas production, in terms of their overseas access to Australia. But in that term, the equation still remains strongly in China’s favour with a loss of approaching $1 billion.

ANDREW GEOGHEGAN: While the outlook may be gloomy for manufacturers the forecast for Australia’s services sector is bright.

Australian Andrew Stoler is a former deputy director general of the World Trade Organisation and is in China at the moment.

ANDREW STOLER: Just as the Australian manufacturing sector is nervous and sensitive up here in China, they have a very inefficient services sector, which is quite worried about increased competition from Australia.

ELEANOR HALL: That’s Andrew Stoler, the former Deputy Director General of the World Trade Organisation, ending that report from Andrew Geoghegan.