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Asia’s middle class set to drive Australia’s export success

Australia’s reputation, geography and strengthening trade ties provide enviable access to some of the world’s fastest-growing markets, including Asia - which was once again named as a major driver of potential export growth this time for Australian horticulture.

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Launched in China as part of an agriculture delegation featuring 15 Australian producers and industry leaders, ANZ’s new InFocus report, Future of Fresh, shows the largest growth in exports of Australian fruit and vegetables has been in Asia.  

“The growth and purchasing power of this demographic has been significantly underestimated.”

Behind much of this demand is the well-documented growing Asian middle class. While the rise in meat and protein consumption amongst this demographic has been significant, so too has its hunger for quality, fresh fruit and vegetables.

Excitingly for Australian producers and exporters the report says the growth and purchasing power of this demographic has been significantly underestimated.

Positives

Pointing to a 2017 study by the Brookings Institute, the report states there were 500 million more people in the global middle class than previously estimated at the end of 2016, putting the figure closer to 3.2 billion and increasing by a rate of 140 million people each year.

In a positive move for exporters, around 88 per cent of those new entrants into the middle class are likely to be in Asia. By 2030 it is estimated that Asia’s middle class will surge to just under 3.5 billion people – right on our doorstep.

In terms of the middle-class spending power, the true figure of $US35 trillion in 2015 is roughly 12 per cent higher than previous estimates and now accounts for one-third of the global economy.

Despite these positive trends, understanding and capitalising on a complex market like Asia can be a challenge.

Relationships

Kingsley Songer, General Manager of South Australian horticulture producer and exporter 4 Ways Fresh says while freight costs and branding are the biggest challenges when looking to export, finding trusted partners is key to being successful in Asia.

“It’s relationships,” he said. “You need a distributor in the market that can do the job for you. That’s a matter of persistence and eventually you develop that relationship.”

“If you’ve set up an arrangement with a good distributor which can handle your product well in the market than you’ve got half a chance.”

While aligning to consumer demands is a must, understanding the intricacies around market access, Free Trade Agreements (FTAs), logistical constraints and the opportunities that emerging e-commerce platforms present all require a considered approach and ongoing focus.

Isaac Rankin is General Manager Business Banking at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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