Business ties between Austria and the People's Republic of China began more than 10 years before diplomatic relations were established between the two countries.

As early as 1956, official economic relations were established with the signing of the first non-governmental trading agreement. In 1964, the Austrian Economic Chamber and the China Council for the Promotion of International Trade laid the foundation for a very fruitful cooperation.

With the establishment of diplomatic ties in 1971, bilateral trade and economic relations improved further. Several agreements - on investment protection, technical and scientific cooperation, and double taxation - were signed. In addition, partnerships between provinces and cities in both countries were established and direct flights between Austria and China were introduced. All this helped to boost and secure the development of trade and investment between the two countries.

The economic, legal and international framework for doing business in China has evolved dramatically over the last few years. With slower economic growth and a shift toward the manufacturing of more technologically advanced products, competition has intensified considerably. Industrial sectors which had turned out quick profits only a few years ago are now suffering due to overcapacity. At the same time, Austrian companies are finding many new and exciting opportunities in a variety of sectors.

Trade and investment

Over the past 10 years, bilateral trade has trebled. In 2015, according to Austrian statistics, it passed the 11-billion-euro ($12.35 billion) threshold, making China Austria's fifth-largest trading partner worldwide.

The number of subsidiaries of Austrian companies in China has grown to 900. Austrian direct investment in China is 13 times higher than it was 10 years ago. Chinese investments in Austria are also on the rise, profiting from Austria's geographic location and highly developed industry and services sectors.

As far as Austrian imports from China are concerned, labor-intensive and low-tech products are increasingly being replaced by highervalue items such as mobile phones, machines for data processing, optical apparatus and medical instruments. Austrian exports to China are dominated by automotive products, specialized machines, electric and electronic devices and chemicals to satisfy the demand created by China's industrial modernization.

Austrian environmental technologies have for many years made inroads into the Chinese market for water treatment, industrial air purification and renewable energy products. Recently, China's plans for rural development have created a niche market for Austria's unique know-how and technologies in the fields of forestry and agriculture.

Consumer goods and services related to lifestyle are rapidly growing in popularity among sophisticated clients. China's new enthusiasm for winter sports is perfectly matched by Austria's expertise in the manufacturing of equipment in this sector. Given Austria's successful track record as the host of two Winter Olympic Games, many joint activities have been initiated in preparation for the 2022 Winter Olympics in Beijing and Zhangjiakou.

An annual survey conducted among Austrian companies in China by Austria's official trade promotion organization, Advantage Austria, shows that cooperation between Austrian and Chinese firms now extends beyond the borders of both countries. Third markets are gaining in importance.

By utilizing existing contacts and synergies from their business in China, Austrian companies are starting to position themselves as strategic partners as well as potential suppliers for Chinese companies in international projects. Austria's interest in China's Belt and Road Initiative and its membership of the Asian Infrastructure Investment Bank have to be seen in this context.

Forecast

Despite uncertainties relating to the restructuring of the Chinese economy, the overwhelming majority of Austrian companies remain positive about the Chinese market. With the growing purchasing power of its people and the intended upgrading of many industrial sectors, China remains an exciting and very attractive market.

Advantage Austria is committed to helping Austrian companies tap the huge potential of the changing Chinese market. It takes professional scrutiny, organizational strength and local expertise to succeed.

Advantage Austria is affiliated to the Austrian Economic Chamber and represents the interests of Austrian companies abroad. Austria's official trade promotion organization operates in over 70 countries with more than 110 offices, including seven in China.

The writer is the head of Advantage Austria Beijing and commercial counselor at the Austrian embassy.

(China Daily 05/27/2016 page19)