The Chinese love affair with Australia continued in 2016 with direct investment into Australia surging 56% to A$4.8b.
Investment mainly flowed into Australian real estate, leasing and commercial services and transportation, according to China’s Ministry of Commerce.
So the saying ‘markets climb a wall of worry’ has rung true again.…i.e concern that the well-publicized rejections of the S Kidman and Ausgrid proposals last year would slow future Aus-Chinese deal-making… now seem to be misplaced.
(US equity markets are also surging to record highs despite ‘worries’ ever since the US election about Trump’s administration)
Which brings me to three Basis Point initiatives reflecting the current reward/risk equation in the Aus-China space.
1 First is Basis Point’s Aus-China portal to be launched shortly. The portal is designed to showcase Australian investment & business opportunities ‘specific to leveraging China’s growth’ to Chinese & Australian high-net-worth & corporate investors, and fund managers such as VC, pre-IPO and small-cap funds. The deals must have the potential to leverage China’s growth, consumption or capital. (think of Blackmores & Treasury Wine Estates etc before they grew off the back of Chinese demand). For details, please click here.
2 Second is the provision of financing solutions as Chinese investors are now seeking alternative finances to complete their Australian asset purchases, due to tougher regulations on getting their money out of China This topic will be covered at an event supported by Basis Point, the Australia-China Property Finance Conference in Sydney on 30 March, which is being organized by CrossBorder Management. (see details below)
3 Third, is our ongoing Aus-China newsletters. Information over-load is a perennial problem on this topic, particularly when ‘alternative facts and fake news’ have to be weeded out. So we’re introducing a selection of curated news articles in-between our more indepth commentaries on Aus-China. (see below)
Property and Finance………………………………………………………………………………………………………………………..
ODI in Australia soars by 56%
China Daily, 22 February 2017
Chinese direct investment in Australia grew by 56.1% in 2016, according to China’s Ministry of Commerce.
http://usa.chinadaily.com.cn/business/2017-02/22/content_28295197.htm
Are the Chinese finally abandoning Australian property?
LinkedIn, 26 February 2017
The Chinese haven’t fallen out of love with Australian real estate, but selling to them is definitely harder than it was.
https://www.linkedin.com/pulse/chinese-finally-abandoning-australian-property-ct-johnson?published=t
Chinese investment in Australian real estate crucial to economy: Experts
China Daily, 20 February 2017
“I think an easy answer people have come up with about the housing affordability problem is to say, well, it’s all the Chinese capital,” Sydney University lecturer David Rodgers said. “The housing affordability problem is a very complex problem, and the ways that you might address it can be quite confronting to people.”
http://www.chinadaily.com.cn/bizchina/2017-02/20/content_28268130.htm
Australia’s hotel boom is masking tanking sentiment in the commercial property market
Business Insider, 21 February 2017
Confidence in Australia’s commercial property sector surged to an all time high spurred by the hotel boom. Hotels surged, retail and industrial segments dropped and office towers scraped out a modest increase.
http://www.businessinsider.com.au/australians-hotel-boom-is-masking-tanking-sentiment-in-the-commercial-property-market-2017-2
Are Asian home buyers facing racist backlash in Australia?
Property Report, 22 February 2017
Real estate agent Yancheng Wang discovered racist messages on his billboards at a construction site in Ryde.
http://www.property-report.com/are-asian-home-buyers-facing-racist-backlash-in-australia/
Minister smooths over China investor angst
Yahoo Finance, 22 February 2017
Trade Minister Steve Ciobo has attempted to smooth over Chinese investor angst over past scuttled bids and a new body to flag public and private assets off limits to overseas buyers.
https://au.finance.yahoo.com/news/minister-smooths-over-china-investor-055708435.html
Agriculture & Food………………………………………………………………………………………………………………………….
Savvy Chinese go online for Australian food
The Australian, 20 February 2017
Chinese online retail giant JD.com reported that sales doubled overall compared with the last Chinese New Year, and that imported fresh produce purchases soared by 14 times.
http://www.theaustralian.com.au/business/savvy-chinese-go-online-for-australian-food/news-story/ff4dc65bc32890b6b8661c221c69a38c
Australian team start studying grain in world’s biggest selling spirit
Food Navigator, 20 February 2017
Research is underway to help Australian farmers better understand a key ingredient in baijiu, China’s national drink and the world’s top-selling spirit.
http://www.foodnavigator-asia.com/Formulation/Australian-team-start-studying-grain-in-world-s-biggest-selling-spirit
New Alibaba office opens China export potential for Aussie food companies
The Advertiser, 21 February 2017
Business development general manager of Alibaba Tmall John O’Loghlen told a National Dairy Conference in Adelaide last week that a newly launched Australian office would build on the Chinese relationship that was putting Australian brands on the map.
http://www.adelaidenow.com.au/business/new-alibaba-office-opens-china-export-potential-for-aussie-food-companies/news-story/444337478aa266d8cdc66120dd3a78e3
First Australian beef cattle sea shipment arrives in China
Beef Central, 21 February 2017
The first sea freight shipment of live slaughter cattle sent from Australia to China has arrived at its destination at the Port of Shidao today.
http://www.beefcentral.com/live-export/first-australian-beef-cattle-sea-shipment-arrives-in-china/
Australia’s Blackmores cites China challenges as H1 profit slumps
Reuters, 21 February 2017
Australian vitamin maker Blackmores Ltd said on Wednesday that first-half net profit plunged 41 percent, as a strategy to target exports to China rather than Chinese shoppers in Australia backfired.
http://www.reuters.com/article/blackmores-results-idUSL4N1G65QK
Australia’s Murray Goulburn slumps as China sales slide
Reuters, 24 February 2017
Australia’s largest milk processor Murray Goulburn swung to a first-half net loss on Friday as a worldwide glut of milk formula hammered exports to China, sending its shares sharply lower.
http://www.reuters.com/article/mg-unit-tr-results-idUSL4N1G86G6
SIV and China’s Rich……………………………………………………………………………………………………………………………….
Australia leads the world when it comes to millionaire immigrants
South China Morning Post, 23 February 2017
Australia attracted more millionaires last year than much larger, and wealthier immigration destinations such as the US, according to a report by South African market research group, New World Wealth.
http://www.scmp.com/news/asia/australasia/article/2073385/australia-leads-world-when-it-comes-millionaire-immigrants
These Five Charts Show How China’s Newly Rich Spend Their Wealth
Bloomberg, 15 February 2017
Products pitched as healthier, higher-quality are in demand, and the trend is fueling deals like Haier’s acquisition of a GE unit.
https://www.bloomberg.com/news/articles/2017-02-14/these-five-charts-show-how-china-s-newly-rich-spend-their-wealth
Retail, Tourism and Services………………………………………………………………………………………………………………….
Australia’s Trade Minister to embark on tourism mission to China
China Daily, 20 February 2017
Australia’s Minister for Trade, Tourism and Investment Steve Ciobo is on a week-long trip to China to help Aussie business leaders “advance” the burgeoning trade and tourism relationship between the two nations.
http://www.chinadaily.com.cn/bizchina/2017-02/20/content_28265375.htm
First ever AFL Premiership Season game to be played in Shanghai
Port Adelaide FC, 22 February 2017
The first ever AFL Premiership Season game in China will be played on May 14 between the Gold Coast Suns and Port Adelaide Power, and will feature pre-game tourism and food events where Aussie companies will show off their wares to the Shanghai crowds.
Australia picks Chinese actor as tourism envoy
AsiaOne, 24 February 2017
Chinese actor Wu Xiubo, best known for his starring role on the TV drama Before The Dawn, has been appointed Tourism Australia’s Ambassador for the 2017 China-Australia Year of Tourism. http://news.asiaone.com/news/showbiz/australia-picks-chinese-actor-tourism-envoy#sthash.940lsWDM.dpuf
Infograph: The O2O Opportunities in China
ChinaSkinny, 17 February 2017
O2O is one of the most cost effective and engaging marketing strategies brands can adopt in China. Most aspirational brands selling in China have a strong O2O component in their marketing mix, yet many foreign brands have been falling behind in implementing O2O initiatives in China.
http://www.chinaskinny.com/blog/o2o-china/
Education………………………………………………………………………………………………………………………………………………
Chinese learn their lesson with $212m G8 Education raising
The Australian, 21 February 2017
G8 Education (GEM) revealed yesterday it would raise $212.8 million in a special placement that would be taken by China First Capital Group (CFCG), a Hong Kong-listed investment and financial services advisory institution.
http://www.theaustralian.com.au/business/dataroom/chinese-learn-their-lesson-with-212m-g8-education-raising/news-story/33a34fd4d0082092778986e1f4bf6f23