From cluster to buster

Published 01 March 2012 05:04

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Hanging Rock Winery, founded in 1987, is an example of what until recently has been seen as a significant success story: the development of a global wine industry in Australia.

A Harvard University expert on industry clusters, Michael Porter, said in 2002 that the Australian wine industry was an example of how globally competitive businesses could be developed. He said that such clusters emphasised the importance of relationships, that people in industry clusters interact “on lots of different levels” without needing a contract.

Porter argued that the cluster concept suggested two types of outsourcing: global outsourcing, which is looking at other markets and countries; and local outsourcing, where business people take advantage of proximity.

“What I have come to believe is that for many – if not most – businesses, the local outsourcing model is superior to the vertically integrated model and the global outsourcing model,” he said.

This may have been true in 2002 of the Australian wine industry but the sector has been transformed by oversupply, the supermarket duopoly and the high dollar, which has harmed export competitiveness. It is no longer unambiguously an example of a home-grown industry with global reach.

But Hanging Rock has been able to take advantage of another feature of globalisation: the stunning economic rise of China.

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