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European Australian Business : 2008
27 A century ago, Australia sat isolated at the end of a long, thin trade route. Economically, the country was tied to Europe and struggled to overcome the disadvantages of its location. It survived and thrived by drawing on its innovative and enterprising spirit, characteristics which still exemplify the Australian approach to business. Today the world looks very different and Australia is, economically speak- ing, in the thick of the action. Over the last quarter of a century, and emphatically in the last decade, Aus- tralian trade has turned to Asia. This puts the country in an enviable position to benefit from the region’s booming growth. By 2015, Asia is expected to account for 45 per cent of global GDP. It is China that is largely responsible for this shift. While Europe and the United States are struggling to balance their trade with China, Australia’s exports have expanded. China now accounts for nearly 10 per cent of the country’s exports. This trade is not entirely re- source dependent. Between 2002 and 2006, Australia’s services exports to China more than doubled. While Hong Kong and Singapore have carved out their niche as hubs for financial services, it’s worth pointing out that the market capitalisation of Australia’s floating stocks is more than double that of Hong Kong and Singa- pore combined. In addition, Australia has the fourth largest funds under management market in the world. Services now account for nearly 80 per cent of Australia’s economic activity. A stepping stone to Asia The trade dynamic is, in turn, having a profound impact on the pattern of European investment in Australia. In recent years, Australia has become a springboard for European trade with Asia, and China in particular. This is happening in two ways. First, European companies are choosing to base regional operations for the Asia Pacific in Australia. UBS and Nestlé host their regional IT support centres in Sydney; Lufthansa, Air France and KLM run their Asian booking systems in Melbourne, Sydney and Brisbane; and Deutsche Bank, Ericsson and Software AG run technical and cus- tomer support services for the region from an Australian base. European companies are also building Australia into their supply chains. Sie- mens VDO designs and manufactures automotive components in Australia that are then exported around Asia and back to Germany. Electrolux has a design centre in Sydney and Ferrero, Australia: A Bridge Between East and West Australia has a highly skilled work force. Image courtesy of Invest Australia. The ties that bind. Image courtesy of Invest Australia. department of innovation, industry, science & research