Victor Smorgon Group eyes China agro market

Peter Edwards, managing director of Victor Smorgon Group

The Victor Smorgon Group, a privately owned industrial leader with diversified businesses in Australia, is looking for trade and investment opportunities again in China after it quit the steel business in the world's second-largest economy some two decades ago, according to a senior company executive.

"We are planning to export agricultural products to the Chinese market, as well as seeking other investment opportunities, as both countries are highly complementary in the agricultural industry," said Peter Edwards, managing director of Victor Smorgon Group.

With plenty of land, natural resources and an advanced technology and management system, Australia, whose agricultural industry has great advantages in terms of cattle farming and planting crops, would provide agricultural products to consumers in China, where demand is growing for high-quality foodstuffs, according to Edwards.

One of the latest developments in VSG's strategy in China is a cooperative project, called "My Cow in Australia", in which Chinese consumers are allowed to feed and manage their cattle until the beef is finally delivered, according to Edwards.

He said that the company also plans to export other products such as green vegetables, blue fin tuna and fruit juice to China.

"We are prepared to see more Chinese elements in our development," said Edwards.

China's booming Internet industry would help build a more direct, economical and competitive platform for Australian agricultural products and other industries to enter the Chinese market, said Edwards.

"The fast-changing mobile industry has provided new business models for us to enter the market," said Edwards.

He said the company's growing presence in China will mainly be prompted by a free trade agreement between China and Australia. "As more and more Chinese enterprises invest in Australia, more Australian firms are expected to enter China in the future," he added.

China and Australia concluded free trade agreement talks in November and are expected to sign an agreement this year after completing the legal review and translation of the text, according to the Australian embassy in China.

Under the FTA, Australia will eventually reduce tariffs to zero on all goods imported from China, and China will remove tariffs on the vast majority of Australian goods.

With a history of more than 100 years, Victor Smorgon Group will take China as an important market for the company's development, according to Edwards.

"The Chinese market should not be ignored by Australian companies that want to expand globally," he said.

A wide variety of traditional products from Australia are expected to enter the Chinese market as business grows between the two countries, according to industry insiders.

"The FTA will encourage more Australian wine brands to explore or expand their market shares in China," said Marco Cheung, deputy general manager of Jebsen Fine Wines (South China).

Jebsen Fine Wines, a subsidiary of Jebsen Group, a regional leader in marketing and distribution of premium products across China, recorded year-on-year growth of 8 percent in southern China in 2014, according to Cheung.

"We are willing to build up partnership with Australian companies to provide diversified Chinese consumers with fine wines," Cheung said. The wine industry will benefit from the FTA, which will help improve bilateral business and trade cooperation by reducing trading costs, according to Cheung.

"We will adjust and increase the proportion of Australian wine according to the Chinese market demand," Cheung said.

According to Cheung, medium - and low-priced wines are enjoying wider recognition and popularity in China, after the country's austerity measures had an impact on the imported wine industry.

"We will provide more choices of wines with better prices to Chinese customers in the middle- and low-priced segment by initiating more marketing activities," said Cheung.