2010/756 Change, cooperation and competitiveness in China: A cluster model for the Australian Abalone Industry

By Ben Manning

Despite being the dominant player in the Chinese market for premium live product, the Australian abalone industry faces considerable challenges including a lack of price control, competitive pressures from an expanding aquaculture sector, a lack of consumer and buyer product awareness, an insufficient promotional strategy, and a fragmented supply chain that lacks responsiveness in a dynamic market. Without a significant cooperative response to these challenges, the industry's dominance and profitability are in danger. These challenges may be better faced through the formal development of an abalone industry cluster.

Clusters are not a new concept and have been defined in several different ways in the last 10 to15 years. One definition is 'a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities'.

The development of an Australian abalone industry cluster may assist in competing and negotiating in the Chinese market through the development of local level linkages and cooperation. Clustering can assist in shortening the supply chain, developing alternative supply chains or providing product differentiation to achieve better margins. It can enable greater price control enhanced product offerings through cooperative marketing initiatives and regulated traceability systems.

This project involved a combination of case study and statistical analysis of relevant cluster initiatives, to provide a model relevant not only to the Australian abalone industry, but one that can be adapted for other Australian seafood sectors. It included structural and human change management practices required to meet the demands specific to China in this context.