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SCMP Reporter

SOUTH Australia has found itself lagging behind other Australian states in the fight to attract business to within its borders.

  A report by a state government officer warns that racist attitudes and unprofessional behaviour by the state government has badly hit the region's chances of attracting entrepreneurs from Hong Kong.

  Adelaide is not the most high-profile city in Australia; nor is South Australia the most high-profile state.

  Hong Kong entrepreneurs and immigrants have so far preferred to invest in other states.

   An inter-province deal with China's Shandong, forged in 1986 when the two signed a friendly-relations agreement, has yielded virtually no extra trade. The state has just one employee lobbying in Hong Kong.

  Ventures have collapsed and companies - including Standard Chartered Bank, one of Hong Kong's two note-issuing banks - have pulled out.

  Standard Chartered set up in Adelaide in 1986, with A$270,000 (about HK$1.43 million) in assistance from the state government, and should have been perfectly positioned to manage a steadily increasing flow of trade from its customers in Hong Kong.

  But it shifted its headquarters to Sydney in 1991, and maintains only a branch office in the city now.

  It could be expected, then, that Adelaide would be working three times as hard as its more successful neighbours to attract business from Hong Kong and China.

  But according to the internal government report, that is not the case.

  A series of Hong Kong companies have been repeatedly frustrated in their attempts to do business in the state, and the report - by Campbell Thompson, a project officer of South Australia's Economic Development Authority - says Australian racism could be partly to blame.

  This is an issue which affects the whole of Australia. Prime Minister Paul Keating has repeatedly said he would like to sever links with Britain and Europe and develop as an Asian nation.

   Yet although immigration from Asia is now a major demographic factor for the nation, very few of Mr Keating's compatriots feel anything like Asian.

   They think of themselves as Europeans, and the Asians they find themselves surrounded by seem alien.

   Mr Keating himself managed to offend Malaysian sensibilities recently by describing that country's prime minister as a ''recalcitrant''.

   A cultural abyss opened up and Mr Keating plunged in to it, foot firmly in mouth - not a case of overt racism, but obviously one where greater cross-cultural understanding would have helped.

  But before we put the boot into red-neck Australia, the report needs closer inspection. At one point there is a telling paragraph on the territory.

  ''Hong Kong is of great strategic importance to South Australia as an export market and as a point of entry to other markets in Asia,'' the report says.

  ''However, there is little chance of attracting significant wealth-creating investment from Hong Kong unless the state's general business environment improves,'' it concludes.

  And indeed, most of the failures of investment discussed by Mr Thompson in his 80-page report tell of companies from Hong Kong which have gone to South Australia to invest in property rather than build wealth-creating industry - the reason why nations and states actually seek inward investment.

  The report notes that Hong Kong investment into member nations of the Organisation of Economic Co-operation and Development (OECD) tends to be in property or trading ventures - buying up flats or flogging footwear.

  It says the bulk of Hong Kong investments are in the hotel trade, because tourism is seen as having a good future.

  The ambivalence towards Hong Kong's entrepreneurs is hardly surprising when the investment pattern is so described.

  It is good for South Australia to undertake the kind of self-examination the report requires, and hopefully its government will respond to the message of the report, but there is a message for many other people.

  Inward investment, like any other business deal, only works when both sides are getting something out of it.

  A territory full of entrepreneurs who employ people in dangerous conditions in China, then plough the profits into property speculation in foreign markets, will not be flavour of the month for too long when other parts of the region start to catch up. Overseas earnings are no company's right.



Double-edged blade cuts problem state