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Australian Business in Asia
By Robert Rosen, Previously published in Habitat.
The future of Australian business lies in Asia, or at least that is what we are led to believe. A Coopers and Lybrand survey of 1000 small businesses last year indicated that half of them were doing business in Asia. A parallel survey of listed companies by Price Waterhouse showed that 56 percent of these companies planned to invest in Asia. But do these companies have a positive social and environmental impact on Asia or is the focus solely on the bottom line and their export earning potential ?Rothmans Australia has a $60 million investment in Indonesia, where marketing tobacco no doubt is a little easier than it is in Australia. In the same vein, the first Australian investment in Qingdao in China was Amcor's $15 million investment in a plant to package cigarettes for the local tobacco monopoly and the British Rothmans Group.
One of the most successful Australian food and beverage companies in Asia has been CC Amatil. CC Amatil are bottlers of Coca Cola and manufacturers of popular brands of junk food. The company has been most successful in recent years in establishing Coca Cola plants in Eastern Europe. They also have a $200 million Coca Cola investment in Indonesia. Coca Cola has 80% of the soft drink market in Indonesia and CC Amatil are currently focusing on the "development of a softdrink culture" in the country.
Another food company with an eye to the Asian market is Arnotts. Sales margins for selling Tim Tams and Saos in Australia are better than they are in Asia, so part of Arnotts' strategy has been to acquire a 50% interest in an Indonesian biscuit and snack food company, Helios Foods. Helios Foods' major brand is Good Time a chocolate chip cookie, other brands include Nyam-Nyam a chocolate biscuit snack for children.
Yet Australian business activities in Asia fortunately extend beyond selling cigarettes and junk food to Asian children. Telstra is active in Vietnam, Laos, Thailand, and Hong Kong whilst CSR, BHP and Boral have developed significant interests in the Asian building products industry. Gypsum used in plasterboard manufacture is not easily available in Indonesia, so Boral has instead ingeniously used the by-product from a fertilizer plant to manufacture plasterboard in the country. Boral also has a timber processing plant in Malaysia, which uses meranti, a rainforest timber. Seasoned forestry activists would however be perhaps somewhat sceptical of Boral's claims that this timber comes "only from sawmills which process from designated sustained-yield forests."
Another area where Australian Companies have been active in Asia is in coal mining and the related power sector. CRA, BHP and New Hope have major coal mining interests in Kalimantan in Indonesia, and the Australian coal industry sees much of its future export earnings growth coming from energy hungry Asian economies like Thailand and India.
Australian aid played a pivotal role in the development of a $500 million coal mine in India by the Australian Company White Industries, and a number of Australian Companies have benefited from Australian aid provided to a lignite coal mine in Thailand. In Laos John Holland Constructions, Transfield, the Snowy Mountains Engineering Corporation and the Tasmanian Government's Hydro Electric Commission Enterprise Corporation are involved in major hydro electric schemes that threaten hundreds of square miles of wilderness and will displace many thousands of people. The power from these projects will not directly benefit the people effected, but will be sold to neighbouring Thailand to help supply its burgeoning power needs.
A number of Australian companies are however involved in a more positive way in the Asian energy sector. Pacific Hydro and Hydro Power are bidding for smaller scale, more socially and environmentally appropriate hydro schemes in Laos and the Philippines. Advanced Energy Systems is supplying renewable energy power systems to remote sites in Asia and BP Solar Australia have supplied solar energy equipment to Indonesia, Sri Lanka and the Philippines. Lend Lease and Australian National Industries (ANI) are also providing technology and project management assistance to a $800 million project in Philippines to convert municipal and industrial waste into power.
Many Asian countries have lower environmental protection standards than in Australia, and environmental protection measures are not considered in the General Agreement on Tariffs and Trade (GATT). Indeed environmental regulations can in this context be seen as "non tariff barriers" to trade which should be removed or reduced. It is thus tempting for Australian Companies operating in Asia, to adopt lower environmental standards than they would in Australia. Australian consumers, investors and environmental organisations can play an important role in helping to ensure that these companies are respectful of the impact of their activities abroad.
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