In recent news Prime Minister Malcolm Turnbull has announced a $1 billion ‘innovations package’ set to spur Australia on from a 3 decades long mining boom into a future no longer reliant on resources and the limited shelf life of a two speed economy.
Following the global economic slowdown due in part to the 2008 financial crisis, this seems to be a concern of many major economies, attempting to shift away from traditional industry in the face of repressed commodities prices, and re-brand as innovation hotspots going into the future.
China’s Guangzhou, the capital of Guangdong Province is experiencing similar change, with government officials shifting support from traditional industry to the burgeoning science and technology industries. Plans to more than double fiscal expenditure over the next several years, in order to incubate high-tech start-ups and spur innovation are on the agenda, as the city seeks to reposition itself as a science and technology hub in the region.
With GDP at 1.81 trillion RMB, third in China for the 27th consecutive year according to the China Daily, and economic growth rounding at the previous year at 8.4%, claims of increasing R&D expenditure to 3% of GDP during the 13th five year plan will significantly stimulate technology industries.
According to Nanfang Daily, Guangzhou officials are eyeing off biological medicine, computer science and intelligent manufacturing in order to fuel economic growth. As traditional industries’ power to drive economic growth weakens, government officials are opting to invest in innovation rather than reliance on existing infrastructure.
In contrast to the focused approach to investment by Guangzhou officials, the Australian innovations package hailed by the Australian Financial Review as a holistic approach to innovation, has taken into account such pervasive issues as cultural aversion to failure and lack of incentives for start-up investments. It offers attractive incentives for initial investors in the form of a 20% non-refundable tax offset and waiver on capital gains tax, as well as apportioning funds for the rekindling of interest in science and technology in schools.
Taking advantage of both nations shift in economic policy and available incentives could well be a smart business decision of many Australian and Chinese businesses.
With investment in both countries set up to become even easier over the medium term with the completion of the Chinese Australian Free Trade Agreement, savvy entrepreneurs and investors will be well positioned to collaborate on projects moving forward.
The Australian Government is also poised to invest $36m in a ‘Global Innovation Strategy’ as part of the proposed innovations package – allowing Australian entrepreneurs to establish themselves in global innovation hotspots including Silicon Valley and Tel Aviv, as well as several other key regions. If one of these proposed key regions was a city like Guangzhou, positioning itself to be a regional science and technology hub in south china, Australia-China project collaborations and investment could appear even more attractive in coming days.
As both nations attempt to answer the question of how to drive economic prosperity and manage a transitioning economy in the years ahead, with both South China and Australia competing to appear attractive to high-tech start-ups, perhaps the only way to ensure mutual prosperity is to foster better connections between both regions.
So the question is – where would you like to establish your tech start-up empire?