KPMG and the University of Sydney’s China Centre have conducted the first detailed study and survey into the experiences and views of Chinese investors in Australia.
It provides insights in the perceptions of the investment climate by Chinese investors based on interviews with senior executives from 51 Chinese-invested companies registered in Australia.
The survey was released ahead of a Free Trade Agreement being signed between China and Australia today, expected to be worth $18 billion to the economy.
Chinese companies invested more than $60 billion directly into Australia between 2007 and 2013.
They are still relatively new investors in Australia, which is a mature and highly regulated developed economy fundamentally different to their home market and other developing countries.
The survey results show Chinese companies are learning from past experiences and gradually adapting their approach to suit local market conditions. They are also increasingly concerned about their reputation.
While Australia has the advantage of political stability, a favourable business environment and government support, the survey identified key challenges faced by Chinese investors in Australia. They are:
1. Costs of doing business. Chinese investors have an understanding of comparative costs and see Australia in third position behind the US and Canada as more cost effective locations. Chinese investors estimate that in Australia overall business costs are 30% higher than in the US.
2. Infrastructure bottleneck. Chinese investors feel Australia’s physical infrastructure is constraining their operations.
3. Institutional integration. The institutional integration poses challenges to Chinese investors when it comes to working with local governments, trade unions and local communities. Chinese investors need to adapt to the Australian legal and regulatory context by learning to work with formal and informal stakeholders, including local planning authorities, environmental protection bodies, trade unions and community representatives.
4. Negative media coverage. Chinese investors feel that Australian media are not supportive. Only 16% of respondents agreed that Australian media were supportive towards Chinese investment.
5. Entry and approval process. Chinese investors recognise that the foreign investment approval process has become easier and faster. However there remain concerns relating to discrimination and unequal treatment. Chinese investors feel that investors from other countries are more welcome and enjoy better terms and conditions. Chinese investors feel that investment approval should be decided on the basis of commercial criteria rather than ownership.
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