Chinese Tourism Investment in Australia ??????

1
Chinese Tourism Investment in Australia??????

• Henry WANG ???
• Senior Investment Commissioner, Greater China
• ?????????????????????
• Sydney, 10 June 2011

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China Economic Snapshot
3
37 of the worlds top 500 companies are Chinese
(29 in 2008)
Top 50
Top 250
Top 500
Since 2005, China has more than doubled its
number of Fortune 500 Companies
Source CNN
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Chinese outbound FDI significant growing rapidly
12.3
Source Dealogic McKinsey J.P.Morgan
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Chinese outbound FDI 2005-2010
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FDI vs MA

• Both actively pursued
• MA the fast track approach
• FDI longer-term political goals
• A combination of Strategies Goals
• Economic
• Political
• Industrial

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The last five years - Chinese investment in
Australia
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China FDI - still relatively small
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Assistance to International Investors
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• Offer expert advice on Australias industry
  capabilities and strengths.
• Help identify potential investment opportunities
  in Australia.
• Arrange site visits and meetings with key
  Australian and State Government representatives.
• Help find joint venture partners.
• Provide advice on investment regulations.

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Not just resources beyond the headlines

• Financial services - banking IPOs
• Renewable energy RD, solar, wind, geothermal
• Manufacturing automotive, advanced composites
• Textiles, wool R D
• ICT
• Pharmaceuticals TCM
• Agribusiness - abattoirs, aquaculture, dairy,
  wineries, sugar, ingredients
• Retail restaurants
• Water
• Training pilots, tennis, swimming, safety,
  standards
• Tourism

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Examples of our recent projects

• Clean Energy
• Goldwind wind farm in VIC and NSW
• Aero-sharp service centre in VIC
• Trina Solar RD with ANU
• Financial Services
• ICBC the worlds largest bank by market
  capitalisation - established a branch in
  Australia
• CCB one of the worlds top five banks by market
  capitalisation - established a rep office in
  Australia
• Yunnan Tin and Yunnan Copper successful IPOs on
  the ASX
• Auto
• Chery Automobile the first auto RD investment
  from China
• Geely a private Chinese car maker acquired
  Australias auto parts maker DSI
• Yapp car fuel tank producer acquired Nylex
• Resources and Energy
• Yancoal the largest Chinese investment in
  Australia
• ECE mineral exploration projects
• CGNPC Energy Metals
• ICT
• Huawei the largest privately-owned
  telecommunication equipment company

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Tourism investment roundtable

• Time April 2009
• Venue Guangzhou, China
• Chaired by Minister Ferguson
• Attendees
• Fullshare Group
• China Coke Chemicals Ltd (Rocklands Richfield)
• Lushida Enterprise Group
• Huaqiang Group

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China tourism investment projects

• Existing Projects
• Fullshare
• Laguna Whitsundays Airport , QLD
• Laguna Whitsundays Golf Course, QLD
• Laguna Village, QLD
• Laguna Whitsundays 5-star hotel, QLD
• Xian Hongfeng Eco tourism resort, SA
• China Coke(Rockland) Leonda function center , WA
• China Southern Flight training center, WA
• Lushida Enterprise Group New China Town, VIC
• Potential investors
• Hainan Airlines Hotels, airport ,etc.
• Huaqiang Theme parks

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Issues/challenges

• Different business cultures and integration
  issues
• Lack of understanding of market economy
• Transition from planned to market economy
• Lack of proper due diligence work
• Lack of experience in investing in developed
  economies
• Inadequate understanding of legal / other risks
• Chinese Governments economic control, lengthy
  approval process
• Political sensitivity of Chinese investment
  abroad
• Lack of international management talent
• Lack of suitable opportunities in Australia
• China needs considerable foreign advice -
  culturally difficult
• to accept that they need it
• even more difficult to get them to pay for it !
• Chinas main concerns Australia has a high cost
  base, government approval process, labour
  strong A

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What did not work

• Over ambitious
• Insufficient understanding of market dynamics
• Experience limited to domestic MA practices
• Knowledge skills still lacking
• Brand management failure no previous experience
  
• Underestimate cultural differences harder than
  expected
• Slow to react
• Protectionism

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What will happen next

• Determination to understand overseas markets
  succeed
• Deep pockets steady China cash-flow sufficient
  to weather restructuring costs
• Increased willingness to retain senior western
  management
• Watching learning from others
• Availability of cheaper finance

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Trends

• Continued government backing
• SOEs - still main player
• POEs - quickly catching up
• SWFs - focusing on more direct asset investments
• Chinese financial institutions (resource funds) -
  more active in deals
• Will invest more in RD
• Interested in investing in infrastructure
  including tourism infrastructure
• Teaming up with Australian partners to invest in
• Hotels
• Eco-tourism projects
• Airports