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  China looks for opportunity in the Australian auto industry. Photo Gallery

China is hungry for Australian business to fuel its relentless economic miracle.

Anyone who believes that China's economic boom is nearing its end is totally wrong. And Australia's deputy consol general in Shanghai, Christopher Wright, says Australians who ignore the immense trade opportunities will miss out on access to the world's biggest market.

"Few people understand how quickly progress is happening here," he says. "Even this hotel," he looks around the 87th floor of the 101-storey Park Hyatt "bottle opener" Hotel, "and all the east side of the Shanghai River, barely existed a decade ago."

Wright says though the economic acceleration in the past decade had been stunning, it is getting even faster. "Progress up the learning curve is getting quicker," he says. "The car industry alone is simply fantasy. Chery built its first car in 1999. It is now the biggest car maker in China with annual production of 480,000."

"China will make nearly 11 million cars this year. It is working on two-year cycles with car development and model changes while the rest of the world, at best, is working on four-year cycles." Wright says now is a great time for new businesses coming into China.

"OEMs (original equipment manufacturers) have been formed with joint ventures which show how desperate global manufacturers — of all products — are to get into the Chinese market," he says. "But they also want to export and must understand that the Chinese Government will only allow home-brand companies to export."

Wright says car companies will be some of the first to export under their own name, rather than the name of an offshore venture partner or one selected from an English dictionary. "There will be changes to suit the offshore markets and the first thing to change will be the company names," he says. "It will be similar to the change from Lucky Gold Star to LG for the Korean electronics giant.

"There have been some selective successes — white goods maker Haier and computer firm Lenovo (which bought IBM) being two — but in general the Chinese are yet to package themselves for western markets."

Wright believes that China's current expansion places Australia in a prime position. "I see Australia as being a prominent target for Chinese goods," he says. "It is a small yet sophisticated and accepting market that the Chinese would target and use for experience to bounce into other Western markets."

How does Australian business get a slice of the action? Wright says China's advantage isn't its low labour cost — it's the nation's economies of scale. "China can recover the cost of car — or any product — development because of volume sales," he says.

"So China should always form part of an Australian company's manufacturing aims. "There really is an opportunity opening up for Australian suppliers and car makers to use the ability of China to make huge volumes to keep the unit price very low."

Wright says Australia is one of only 15 countries that can make a car from pen to showroom. "That's extremely relevant to China and what's more, China wants that.

"Geely (Chinese car maker) just bought Albury, NSW, transmission maker DSI and will bring it to China. Geely will use the existing technology but will also redesign it to build it for the future, so there's this constant development. That's typical of Chinese companies today."

Other automotive joint ventures with Australian companies include Futuris which makes car interiors — dashboards, roof linings, seats and so on — and is heavily involved with Chery.

"In addition to Geely's deal with DSI, Chery has an R&D centre in Australia and Great Wall Motors has an R&D and testing facility in Melbourne," Wright says. "China is big on research and development and a lot of major corporations — Ericsson is one — base their R&D here (Shanghai) because this is the most inventive R&D centre in the world. "Shanghai can get more PhDs than anywhere else in the world. This goes across other industries so there's a huge pool of development here."

China has one of the lowest car numbers per capital in the world. It has 176 million cars for 1.3 billion population and 188 million people have a driver's licence — 80 per cent of those being first-time drivers. "There are basically three phases in China's development and I'll use the car industry as an example," Wright says.

"Before 1949, for a period of about 100 years, China was always preoccupied with war and internal struggles. Phase One is from 1949 to the early 1980s when China made basic trucks, tractors and commercial vehicles that were built and designed in the Soviet style."

"Phase Two started in the early 1980s and is highlighted by the start of joint ventures. These included GM, Citroen, Volkswagen and Peugeot. That ran until the late 1990s and meant the Chinese car industry was effectively tied to the global giants of the automotive industry and therefore carried the same technical cycles and suppliers and habits — good and bad.

"The Third Phase came in the late 1990s and is the start of the national identity of the car industry. The next phase, according to a leading professor at the Chinese university, is the integration of global technology to strengthen the Chinese brands so they are ready for the world markets. That means a steady increase of vehicles with prices that will make you weep."

Wright says there are some similarities with the development of the Australian car industry which also started — in effect — from 1949 by basing future models on the US principles of design, manufacture, operation and sales. Today the state and provincial governments have shares in most of China's 90-odd vehicle makers.

Two major exceptions are Great Wall Motors and Geely and some — Great Wall is one which is listed on the Hong Kong market — are also public. Though this appears at odds with China's communist principles — though in effect is more a totalitarian regime — Wright says the system works and believes the evolution of government involvement in business will continue for some time.

"They (government) don't really want to get out," he says. "After all, they make a lot of money in dividends in these companies. China is a country that since the open-door policy (1978) has had an annual growth rate average of 9 per cent."

"Last month it was annualised at 7.9 per cent despite China taking a dip because of the global financial crisis. That's 9 per cent for 30 years — no matter what dips it endured such as Tiananmen Square protests of 1989, the 1988 Asian financial crisis and the 2008 crisis. All down and immediately ricocheted up."

"This is a developing country. It can accept money, employment, buildings and so on, before it becomes over capitalised. There's lots of growth to go."