Business Case Studies Investment Attraction and Trade Program

Business Case Studies Investment Attraction and Trade Program CASE STUDY ONE Experienced exporter (wine sector) growth in China market Background Company A is a family-owned and operated wine company with more than 160 years of family history in grape growing and winemaking in South Australia. The company is made up of three South Australian wineries and has its main office and vineyard in McLaren Vale. It produces around 1.2 million bottles of wine per year, with about half of this volume available for export at a price range of $9.50 to $150.00 per bottle. In 2012 and 2014, the company was named Winestate Magazine Australian Winery of the Year. In 2016, the company was again included in the Top 5 wineries in these prestigious awards. Australia s most prominent wine writer, James Halliday, has also rated the winery with 5 red stars. Council s role Through the City of Onkaparinga s ongoing efforts and positive relationships established with state government agencies including the Department of State Development and Immigration SA as well as key stakeholders such as the Australia China Business Council and private business agents we have successfully positioned our region to host business delegations, some at minimal or no cost to ratepayers but all with strong potential value for trade and investment benefiting local companies. Company A is one of several local companies that participated in many of these delegations and activities including: April 2016 outbound business mission to Shandong September 2016 Shandong inbound delegation to Adelaide September 2016 Southern Adelaide Food and Wine Experience (hosted by the City of Onkaparinga at the McLaren Vale and Fleurieu Tourism Information Centre) May 2017 outbound mission to Shandong and Shanghai September 2017 - Shandong, Shanghai and Guangzhou inbound delegation to Adelaide (four trade events and functions across a three day period) Southern Adelaide Trade Program (hosted by the City of Onkaparinga at the McLaren Vale and Fleurieu Tourism Information Centre) PIRSA Wine Trade Delegation (China and Hong Kong) September 2017 CTC Wine (Guangzhou) private wine trade and investment delegations 2015 and December 2017. March 2018 Chengdu Wine Association delegation to McLaren Vale. The supports and services provided by council over recent years have included: Vetting and pre-qualification of trade and investment interest, business matching prior to trade missions and delegations Trade expo services and logistics enabling professional presentation of the company to connect with visiting business delegates Development of a bilingual business profile, bilingual corporate presentation and registration on the SA-China Connect business portal Undertaking campaigns informing local export-ready businesses of the opportunity to apply to AusTrade s Export Partnership Program Facilitating businesses connections during the mission and delegation itineraries variously involving the business directly at meetings with key stakeholders such as Jinan

Bureau of Commerce, or directly by CEO Mark Dowd or Mayor Rosenberg when in China, or indirectly by the investment attraction team (through lobbying state government staff responsible for leading wine and trade streams) Positioning the business as a reputable and premium quality producer of wine by CEO Mark Dowd and Mayor Rosenberg during meetings with the Jinan Bureau of Commerce and at other official meetings during business missions and delegations. Pre-departure briefings, China market appraisals by TradeStart and China cultural competency training provided by the Australia China Business Council. Campaigns on behalf of participating businesses via City of Onkaparinga official We Chat account and On Growing Business bilingual website to contacts throughout China, particularly in connection to Onkaparinga s friendly city Jinan. An example of council s facilitation role and support can be found in August 2017, when representatives of several local companies including Company A s General Manager and Export Manager were overseas on business and it became apparent that they might be under represented at trade events hosted as part of the coming September inbound delegation from Shandong, Shanghai and Guangzhou. Council s investment attraction team vigorously and successfully lobbied to ensure that Company A was fully represented at all five relevant trade events and business functions that were hosted. In doing so, council s investment attraction team ensured the participation of local companies beyond what they were able to secure themselves. Outcomes Participating in council s investment attraction and trade program has added undeniable value to the company s export and China engagement strategies. Advice provided by the company s Export Manager to the investment attraction team on 13 December 2017 included: Company wine exports to Shandong (including Jinan) has been approximately $500,000 since April 2016 including one large wine trade contract of $123,000 that was secured during the inbound mission to Adelaide from Shandong in September 2016 (and previously reported to Council s Strategic Directions Committee in November 2016). This figure represents about 4.6% of total sales in the past two years There has been value in retail wine trade and wine sample contracts arising from inbound delegations to McLaren Vale. Without having specific figures at hand, this value would be in the range of $10,000 to $25,000 since September 2016 The company secured $50,000 in funding from TradeStart s Export Partnership Program in 2017 alone to enable its participation in international trade missions More than 50 genuine trade leads (wine buyers, wine agents and distributors) in Guangzhou and Shandong that have been facilitated since April 2016, some of whom are now sustainable business clients and many of whom the company continues to communicate with about potential future trade opportunities The company s brand is now well recognised in Shandong. The introductions to wine distributors and wine buyers brokered by Onkaparinga since April 2016 in Jinan and other Shandong cities do provide potential for both small and high volume trade negotiations. During the September 2017 inbound delegation Company A and other participating McLaren Vale wine brands were introduced to some major corporations such as Jiajiayue Holding Group - Shandong (comparative in scale to the IGA network of supermarkets in South Australia) with a potential interest in premium Australia wine. This opportunity, which is less than six months old, remains under investigation. Company A s general manager has publicly credited the program of outbound and inbound trade missions that state and local government have led and facilitated to the company s many export successes and awards irrespective of the political make-up post march 2018, this program of missions certainly need to continue even if it is in a modified way....

Note: In the following outcomes cited below, it is not implied that the City of Onkaparinga has exclusively been the key influencer in Company A s export success and other achievements. Company A has successfully grown wine exports to China from less than 1% in 2011-12 to 55 per cent of total revenues in FY18. The family-owned and operated company s export sales grew by 961% between 2012 and 2017 with 81% growth in 2015-16 and further growth of 41% growth in 2017. FY18YTD export growth has been a further 64% - a seventh straight year of double digit export growth. This has, in turn, contributed to overall revenue growth of 413% since 1 July 2011. This continued growth is also reflected in figures recently released by peak body Wine Australia which revealed McLaren Vale wine exports earned $87.3 million in the 12 months to December 2017 its best market result since 2009. In December 2017, the company s General Manager said while sales to China have played a major role in that growth, we have also opened new markets in India, Finland, Sweden, UK, Hong Kong and Canada, Taiwan with further markets opening soon in Peru, the Philippines, Indonesia and Vietnam. We still have plenty of scope for further growth in the UK and mainland Europe, as well as North America, where we have little to no representation. We are actively looking for new partners in these more traditional markets, together with other new and emerging markets in China and Asia. The company has won numerous national and international accolades in the past few years for their considerable achievements in international trade. Some of these include: Winner Australian Exporter of the Year: 2017 Optus My Business Awards (this is the longest-standing business awards program in Australia) Winner Exporter of the Year: Hong Kong Australia Business Association (South Australia) 2016 and 2017. Finalist AustCham Westpac Australia-China Business Awards 2017 (Business Excellence in Agriculture, Food and Beverage as well as Small-to-Medium Enterprises categories) (this is the first time a business from SA has been a finalist) Finalist: o Business SA 2016 Exporter Awards o 2016 Hong Kong Australia Business Association Export Awards o 2016 Optus My Business Awards (export category)

CASE STUDY TWO Established business (education sector) new to China market Company B is an experienced South Australian registered training organisation with their head office based in Flagstaff Hill and another office in Darwin servicing the Northern Territory market. In early 2017, the company established a new venture providing innovative authentic learning and touring experiences customised for business visitors from overseas markets learning from Australian companies and education providers while also experiencing Adelaide s unique tourism offerings and South Australia s spectacular outback and coastal regions. While the company has as much as 17 years experience in international markets including Vietnam, Malaysia, Papua New Guinea and Indonesia, as part of the new venture the company completed the Australian China Business Council China Ready Accreditation Program and developed new program options specific to the China market. The company then sought to establish sustainable business partnerships with providers of training and education providers in China. Company B registered to participate in the May 2017 business mission to Shandong and Shanghai and through this were introduced by the Department of State Development to council s investment attraction team. Council s role Following an initial meeting with the company director s in late March 2017 to discuss their needs and objectives, the investment attraction team developed an action plan to support the company s participation in the business mission specifically and their China engagement activities in general. The supports and services provided by council included: Assistance with the translation of corporate information from English into Mandarin and further translations and advice regarding the development of marketing collateral appropriate for the China market Development of a bilingual business profile, bilingual corporate presentation and registration on the SA-China Connect business portal Assistance with setting up personal We Chat accounts for the company director s and basic training and induction in the use of We Chat Leading the company to AusTrade s Export Partnership Program (successful in achieving a grant of $11,500 to offset their business expenses) Facilitating businesses connections during the mission itinerary - either directly by Mayor Rosenberg when in China, or indirectly by the investment attraction team Positioning the business as a key provider of education services during meetings with the Jinan Bureau of Commerce and at other official meetings on the itinerary. Simultaneously, the City of Onkaparinga was exclusively approached to host a private delegation of high net worth business migrants from Qingdao and Laoshan (Shandong province) investigating Adelaide as a potential place to make home and invest. It was identified that amongst the members of the delegation were senior executives of a major human resources firm seeking a partner similar to Company B. Investment Attraction team negotiated for this firm and Company B to meet during a South Australia business mission to Qingdao in May 2017. In addition, Company B and other local businesses that participated in the outbound mission benefited from the following services offered exclusively by the City of Onkaparinga: Pre-departure meet and greet with Mayor Rosenberg, briefing and China market appraisal by TradeStart and China cultural competency training provided by the Australia China Business Council. Campaign via City of Onkaparinga official We Chat account and ON Growing Business bilingual website to contacts throughout China, particularly in Jinan.

The company directors commented in a post mission survey The pre-departure briefing was extremely useful to ensure we were all on the same page and included previous connections and experiences to assist us in participating in the mission and understanding what work had been done and updates on outcomes on Mayor Rosenberg's outcomes during the mission. Communication by the City of Onkaparinga whilst overseas was prompt and responsive, we received great support before departure on translation of materials and understanding the current climate of Shandong businesses that had previously visited Adelaide and wished to expand their connections in Adelaide. The outcomes achieved by Company B arising from the May 2017 business mission to Shandong and Shanghai are summarised in the section below, along with other known outcomes. In addition, Company B is one of a number of local businesses that the City of Onkaparinga has supported to participate in a range of value-added activities that have been actively negotiated and secured by the investment attraction team. These include: Shandong, Shanghai and Guangzhou inbound mission September 2017 (education stream) Southern Adelaide Trade Program (hosted at the McLaren Vale and Fleurieu Tourism Information Centre) 8 September 2017 Immigration SA Vietnam and Malaysia delegation to McLaren Vale. Outcomes Following the introduction brokered by Onkaparinga in Qingdao, Company B signed an MOU with their main China partner (and separately another MOU with one other company) and in December 2017 hosted their first Doing Business in Australia program in Adelaide. This is reported to be one of the first programs established by a South Australian registered training provider specifically cooperating with a major human resources corporation from Shandong. Participants enjoyed workshops about starting a business in Australia combined with networking with some of Onkaparinga and southern Adelaide s prominent entrepreneurs as well as experiencing some of South Australia s best tourist attractions in McLaren Vale, Adelaide hills, Victor Harbor and the CBD. Specific details of the direct economic value to Company B in hosting this delegation remain commercial in confidence however the company directors advised there was a a high trade value direct to their business. Company B was successful in achieving a grant of $6,000 from the TradeStart Export Partnership Program to support this delegation. The direct regional expenditure benefit arising from this delegation though accommodation, tourism spend, services and supplies provided by local companies is conservatively estimated at $26,400 using REMPLAN figures. At least four casual staff were employed short-term. During this delegation, directors of both companies commenced negotiations for an ongoing program of business delegations to be hosted annually and with the potential for several hundred business visitors to visit Adelaide on educations programs of between 5 and 10 days in duration. Once secured, these delegations would provide further regional economic benefit along the supply chain including accommodation, tourism, administration, venue, shopping and education. Additional staff will need to be engaged to support and deliver programs including interpreters, translators and for the December 2017 delegation. Between May 2017 and December 2017 Company B has reported the following key achievements and outcomes arising directly from their engagement with the City of Onkaparinga: Economic outcomes: 25 trade and investment leads generated by participating in activities as part of the City of Onkaparinga investment attraction and trade program

In addition to the economic value cited above, an additional $20,000 in trade contracts signed Employment of a full time bilingual China project officer to assist coordinate elements of their China programs TradeStart Export Partnership Program funding of $11,000 in total in the 2017 calendar year. Social outcomes: Signing three new MOUs with China business partners Development of a full suite of bilingual marketing collateral that can be offered across all of their China programs and services Development of a new bilingual China page for their corporate website Successfully brokering introductions between visiting business delegates and local businesses (companies in all industries - local tourism operators, real estate agents, accountants, legal service providers etc). As almost all program participants are senior executives or owners or directors of their own companies (and some have intent to migrate to South Australia as business migrants) Company B has successfully introduced some program participants to businesses in our city, for example wine businesses, where additional retail and trade sales have been advised (but the economic value of these is unknown). An established, strong relationship with the City of Onkaparinga and an ambassador of the council s investment attraction program as reflected in the following feedback provided in a letter to Mayor Rosenberg after the South Australia business mission to Shandong and Shanghai in May 2017: Comments included: Congratulations Mayor Lorraine Rosenberg for the positive and professional work done on the SA trade delegation to China and it was pleasing to get support to promote our services to China through the excellent work of our Mayor Well done Lorraine for paving the way for businesses in SA. Other endorsements regarding the China engagement and international investment attraction and trade adopted by the Government of South Australia and the City of Onkaparinga included: The investment by the state and local government in the Shandong (China) market is paying big dividends in the wine industry with record exports from SA to China. We expect the tourism and education sectors to also grow with the flow-on effect great for local businesses and ratepayers like ourselves. Our state urgently needs an injection funds to maintain the lifestyle we are so proud of in South Australia. It s unlikely that revenue will be generated from within the state. China is our largest trading partner - eager to do business, travel and enjoy the benefits of educating their kids in this great state. I underestimated the benefits of a trade delegation and government until seeing how important it has been in building relationships

CASE STUDY THREE Start up Business (food sector) not currently exporting Background Company C is a start up (established about one year ago) business based in Morphett Vale that produces an innovative, real food product range which has been designed by a professional chef and nutritionist utilising state of the art technology. The company s business plan aims to satisfy the needs of a target consumer which are largely unmet in the market today despite the growth in this sector. The company aims to retail locally, wholesale nationally and once established, internationally. Extensive financial modeling has been performed coupled with detailed market analysis as part of the company s business plan. The company aims to have its locally sourced and produced, innovative and health conscious product on supermarket and other retailer shelves in April 2018. Council s role With the assistance of the ON Business Partner Program the company is now leveraging a local supply chain including services such as graphic design & printing for their unique labels and packaging. All ingredients are sourced locally and the company has also engaged a local marketing consultant to develop a marketing strategy. Investment attraction team will continue to liaise with the company regarding their plans to expand into the international markets. Negotiations are currently underway to host the Business SA Export Ready Program in our region (June to December 2018) for the benefit of this company and other emerging exporters. Once export ready, the delegations and other activities that council secures for the benefit of local businesses will provide potential opportunities for export. Business growth and innovation team will help facilitate opportunities for employment, including workforce planning assistance through ON Business Discovery Sessions and the business advisory service offered as part of the ON Business Partner Program. The company aims to further develop an inclusive, flexible and supportive work environment to ensure staff attraction from the local population and ensure retention is high. The personnel requirements of the company will enable engagement of under-represented members of the workforce from the local community including single parents, unemployed and retirees. Outcomes achieved The company successfully applied in Grant Round One (April 2017) to the ON Business Partner Program for a grant of $3,000. The grant has enabled the company to purchase equipment and continue to fit out their production facility enabling them to progress to the stage they are able to retail their products. In September 2017, during the September inbound mission from Shandong, Shanghai and Guangzhou CEO Mark Dowd was able to facilitate an opportunity where the managing director of one of China s largest e-commerce platforms purchased product samples from Company C, and aside from the retail value (of about $200) this has further demonstrated our region s diverse and unique premium product offerings to a key influencer in China. Investment attraction team continues to undertake due diligence and negotiate with Jinan Bureau of Commerce regarding the opportunity for businesses in our city to export their products via this e-commerce platform. There is a clear economic benefit to our community with local businesses involved along the entire supply chain and with future potential for local employment.