28 Nov Opportunities for Chinese investment in Australia
With the signing of The China Australia Free Trade Agreement (ChAFTA), the China-Australia business relationship is stronger than ever.
During late 1980s and early 1990s, doing business was mainly through joint ventures between foreign and Chinese companies. These days, the focus for Chinese companies has definitely shifted to expansion into other countries such as Australia, to establish operations and compete internationally.
Australia offers a mature economic environment. With a highly educated labour force, few barriers to entry and a solid legal and corporate framework, doing business in Australia is highly attractive. For Chinese companies looking to invest in Australia, it is important to note that Australia offers a generous Research & Development (R&D) tax offset that benefits business and innovation-based activities.
Sectors attracting Chinese investment
In the past few years, sectors that have experienced significant growth in Chinese investments have been agribusiness, resources & energy and properties.
Growth for investment in Australia’s agribusiness is expected to continue as China shifts from the mining boom to a ‘dining’ boom. Australia has a reputation to produce safe, clean & premium food products so demand in this area is strong. China’s biggest E-commerce company, Alibaba, decided to open an Australian office this year, signalling the importance of Australia and the potential that the Australia market has to offer.
Health and aged care
Given Australia’s world class scientific institutions and health care, another industry that is expected to gain increased Chinese investment activities is Australia’s health and ageing sector. With an ageing population within the Asia region, the demand for high quality health care, especially from the Chinese, is strong.
We are seeing growth in merger and acquisition activities and joint ventures in this sector where investors are looking to transfer and replicate the services back to China and increase knowledge sharing. Following the signing of ChAFTA, we are also expecting an increase in investments in new services in hospitals, health and aged care.
Tourism
The number of Chinese visitors to Australia has doubled from what it was five years ago. China is an important tourism market for Australia which presents another opportunity for growth. Keeping up with the demand requires investment in Australia’s tourism infrastructure. There will be a lot of potential for Australian and Chinese enter into business partnerships, such as resort and hotel developments catered to Chinese visitors.
Construction industry potential
China’s One Belt, One Road (OBOR) initiative, known as the ‘New Silk Road’, is a development strategy and framework proposed by the Chinese government to connect the countries between China and the rest of Eurasia, aimed to open new markets & facilitate trade.
Early versions of the OBOR map doesn’t include Australia, however, President Xi Jinping signalled this may change. Given Australia’s state of the art technologies and construction expertise, this could mean a strong boost in Chinese investments in Australian infrastructure & other trades.