Asian Financial Forum 2015, Hong Kong

Interested in expanding your knowledge, understanding and connections in Asia? Looking to raise capital from China for business expansion, migration or other purposes?  Our annual Australasian Mission to the Asian Financial Forum to Hong Kong and China is the perfect start to your New Year. Please download the list of delegates in 2014 and watch the highlights of our mission via Think Global with David Thomas - February 2014.

For more details, please download the expression of interest form hereregister your interest here or via reply via email

Join us in Hong Kong from 18 - 22nd of January 2015 - we have so much to offer Asia in financial services and investment and yet I still feel we're only scratching the surface. To view a list of testimonials received from past delegates, please click here (please scroll to the bottom of this page).

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Thursday
Jul312014

Australia in the Asian Century

For the first time in its history, Australia finds itself located in the right place at the right time - in the Asian region in the Asian century. Every Australian entrepreneur, investor, business leader, and organisation has an opportunity to take advantage of the changing dynamics within our region by leveraging the new opportunities created by rapid developments in urbanisation, consumption and innovation. Asia’s emerging middle class of aspirational consumers offers opportunities in many areas where Australia leads the world, particularly in food, agriculture, healthcare, education and tourism, not to mention mining and resources which has already prospered from Asia’s urbanisation program.

However, this is a challenging time for many Australians as we contemplate our colonial past (with the UK and Europe) our special relationship with the USA (which is mainly based on strategic military ties and diplomatic collaboration) and our trading future with Asia (particularly China, Japan, Korea and Indonesia). These are unique challenges for our political and business leaders to grapple with as we re-think the position of “Modern Australia” a bold new multi-cultural society seeking to find its way in the Asian Century.

The future prosperity of Australia must surely depend on our ability to strengthen and deepen our relationship with China, the next global economic super-power and the economic engine of the Asian region. China is “modernising” not “westernising” and is barely recognisable from the country that emerged from communist rule in the late 70s and opened up to the world in the 80s and 90s. Now a world leader in technology, clean energy and high end manufacturing with the ability to innovate at speed on a scale never seen before, China’s processes, regulations and logistical networks are now highly sophisticated and their markets have become more transparent and accessible to foreign companies and businesses.

So far, Australia has been slow to take advantage, and nervous to participate, almost as if we don’t fully trust China’s ability to keep everything going. We saw Japan prosper and then falter in 1991. Now we worry about whether we can deepen our trade relationship with China whilst maintaining our military ties with the US.  What would we do if we had to make a choice?

In my view, we worry too much about these things. Australia is a traditionally conservative society and has never been good at accepting or adapting to change. Political leaders are too scared to make bold long term reforms due to a three year election cycle and, despite many attempts, referendums have never succeeded in passing bold constitutional reforms.

As with our past, our future depends on our ability to welcome immigrants to Australia so as to accelerate our participation in the Asian Century. The Asian-Australian community is already strong and growing, and can play an important role in building bridges between our colonial past and Asian facing future. Success in Asia depends on our ability to master a number of complex and unfamiliar challenges, in particular differences in language and culture, and the need to build trusted relationships, local knowledge and to access new sources of capital. “Old Australia” will never be able to do this without the support and assistance of “New Australians” with Asian backgrounds, experience and connections. It’s time to open our doors to Asian skilled migrants, develop new innovation hubs in regional centres (not in over-crowded cities straining from creaking infrastructure) and bring Asia to Australia. This approach has worked well in the past and can transform our future.

Are we bold enough to give it a try?

Tuesday
Jul082014

Mongolia: a leading frontier market

Overshadowed by China, Mongolia has quietly emerged as the fastest growing economy in the world. Expected to grow at 15.3% in 2014, its economy has many burgeoning industries with rapid growth rates and untapped resources. As a nation powered by its abundance of natural resources (large deposits of copper, coal, molybdenum, tin, tungsten and gold) Mongolia’s government is looking to reduce its reliance on natural resources and develop other sectors to ensure long term sustainability. As a result, sectors such as property development, renewable energy and mining present unique global investment opportunities. Mongolia’s story of rapid growth and urbanisation is a distinct one – that of an emerging frontier and a market for business and investment - it may not only be the world’s fastest growing economy, but also the world’s best kept secret.

Mongolia’s story

Mongolia became a democracy in 1990 after almost 80 years of communist rule since its independence in 1911. Its story and growth has been very low-key compared to the spotlight that has been shone on the rest of the region. With a population of almost 3 million and approximately 30% of its population living nomadic or semi-nomadic lifestyles, Mongolia is still at the early stages of the growth cycle and maturation, a new investment opportunity for those who can take a long term position.

The reason most people haven’t heard about Mongolia’s rapid growth story is that its GDP is only around USD11billion. To put that in perspective, the economy of the City of Newcastle in FY2012-13 was roughly the same, AUD12.4billion and Sydney’s economy alone was AUD319.5billion. Its capital, Ulaanbaatar (UB), is home to 1.1 million people and has seen property prices in the city centre grow on average 30% in 2013. In addition, overseas visitors to Mongolia are expected to grow by 50% to 700,000 by 2024. Currently, over 50 Australian companies have a presence in Mongolia including Rio Tinto, Xanadu Mines, Leighton Holdings, McMahon Holdings, Minter Ellison, Macquarie Bank and WorleyParsons. Many respected commentators have said Mongolia’s fundamentals are strong as ever and numerous fortunes will be made in the next decade in Mongolia just as they were in the last.  Although prone to climatic, political and economic cycles, Mongolia’s overall trend is very positive.

An emerging frontier

Mongolia is one of the world’s last frontiers for investors to benefit from continual and rapid double digit growth. With over USD10billion currently committed to infrastructure and mining projects – the economy shows no signs of slowing down.

Mongolia’s strength is the sheer speed of its growth – the equivalent to Australia’s annual growth rate in one month. Also, what separates Mongolia from other high-growth markets such as those in the Middle East, is that it is both safe and politically stable. Its competitive advantage in the natural resources space is its location, its strategic neighbours China, Russia, Kazakhstan, will see Mongolia be able to competitively ride the highs and lows of the commodities market prices.

Mongolia is currently seeking investors in mining, energy and transport infrastructure to finance the US$50billion of mega projects planned by the government over the next 10 years. Chinese companies are currently negotiating to invest in a US$2billion highway connecting Russia, Mongolia and China. China is currently Mongolia’s biggest foreign investor, accounting for over 30 per cent of its FDI and controlling over 5,000 companies operating in Mongolia, mostly commodity exporters. A key pillar in the future growth of the Mongolian economy is investment. Today, foreign direct investment accounts for over half of the nation’s total GDP and the government is striving to attract more FDI to stabilise and secure their nation’s economy and social development. So, where are the potential opportunities?

1. Property

Mongolia’s property market is more liquid than its equity market and an increasingly popular destination for FDI in Mongolia.  For conservative investors, real estate presents an opportunity in Mongolia, which does not distinguish between foreign or domestic investors in the real estate market, protecting the rights and interests of everyone. In addition, laws that prevent expropriation, eviction or confiscation are strongly enforced and protected by property laws and the constitution of Mongolia. In addition, demand will be stimulated by a recently implemented mortgage policy which reduces interest rates from around 20% to 8% which will see GDP per capita increase to USD$6,000 from USD4,000 and further increase the demand for property.

2. Clean Energy

As part of its move away from a reliance on non-renewable energy, Mongolia’s renewable energy industry is a priority for the government. In fact, Mongolia’s first wind energy system, called Salkhit Wind Farm (31 turbines), located 70km Southeast of the capital, was opened by one of Mongolia’s largest conglomerates, Newcom in partnership with GE, EBRD and the Dutch Development Bank in July 2013. This marks the first major step to a sustainable future, generating approximately 5% of Mongolia’s energy needs, reducing pollution and improving stability in a country heavily dependent on fossil fuels.  The companies involved plan to transform Mongolia into one of Asia’s renewable energy centres. Potential growth in this sector is enormous, with Newcom’s estimating that Mongolia’s southern province alone possesses enough wind energy potential to power the entirety of China, that is, more potential than any other country in the region. More specifically, the Asian Development Bank claims Mongolia holds approximately 1.1 terawatts of potential capacity in this area.  Mongolia’s government has even showed interest in the concept of an “Asian Super Grid” – a massive energy grid that connects the majority of Asian nations who would supply the grid with the energy needed to function properly.

3. Mining

The oldest and largest destination of foreign direct investment in Mongolia, Mongolia’s mining sector presents vast opportunities for investors. In fact, there is estimated to be approximately USD2trillion worth of mining commodities still in the ground and it would be no surprise if Mongolia’s GDP reached USD100billion in the next ten years. With the world’s most rapacious consumer of natural resources on its doorstep and an abundance of natural resources, Mongolia has been described as the “Saudi Arabia of Asia”. In such a position, there is every reason to believe that Mongolia’s growth boom is sustainable. In 2010, FDI inflows to Mongolia were just US$1billion, rapidly reached $4.7billion and $4.4billion in 2011 and 2012, respectively. Most of this investment went into the mining sector.

Mongolia’s story is not all one of high growth numbers and glowing statistics, it also has a number of challenges along its growth trajectory including:

  1. Inflation: Mongolia’s rate of inflation is concerning reaching 13.7% in May 2014. Government spending as a percentage of GDP was 14.1% in 2012, significantly reduced from the years in the early 1990s where levels left investors sceptical as to whether such a stimulus was justifiable or sustainable.
  2. Quality Control: The real estate market has huge growth potential but the average lifespan of a building in Mongolia is about 20 years (at most) as buildings are currently built at low cost and poor quality.
  3. Infrastructure: Mongolia’s infrastructure sector is experiencing  growing pains as the government tries to control development. The City of Ulaanbaatar council will not be giving out new heating permits for non-residential construction until 2016. This may mean a number of some soon-to-be opened apartment complexes will lack heat and power failures may be a regular occurrence.
  4. Equity: The Mongolian Stock Exchange has a capitalisation of approximately $2billion and there are more than 300 companies listed on the exchange. Mongolia’s equity market is in its early stages of development, securities regulation is still extremely new and untested and liquidity in the equity markets is low, with the entire stock market’s trading volume a mere $50,000 to $100,000 per day. However, many investors have avoided the potential risk and exposure by investing in companies on the ASX whom have operations in Mongolia.
  5. Pollution: Mongolia’s capital, Ulaanbaatar, was ranked as the world’s second most polluted city mainly because of the coal fired power stations and coping with extreme winters. During winter pollution levels are six to seven times higher than the WHOs highest acceptable limits.
  6. Agriculture: Under the Soviet Union between 1921 and 1990, Mongolia’s transformed from a nomadic nation to an industrial agricultural exporter. The fall of the Soviet Union resulted in a sudden crash of its food industry which left farmers in a newly privatised market economy. As a result of subsequent overgrazing of land and oversupply of livestock, Mongolia has a 78% desertification rate of the country’s arid lands today. Consequentially, the country is now quite dependent on its import of dietary staples such as wheat, potato and milk.
  7. Government regulation: At the centre of a long term dispute between Rio Tinto and the Mongolian government is a $6.6billion Oyu Tolgoi copper mine. Rio Tinto has been in an extended dispute with the government over the revenue sharing arrangements and restrictions around sending profits overseas. As a result, Mongolia’s government greatly undermined foreign investment and left investors nervous at the restrictive and unpredictable nature of Mongolia’s investment regime, causing foreign investment to plummet.
  8. Foreign Investment Laws: In 2012, the Mongolian government introduced new laws surrounding foreign investment which saw FDI decrease by over 50%. However, recent revisions of the law after much negative backlash stemmed the extent of the damage. A new law implemented in October last year saw an end to different rules for foreign and domestic investors and a simplification in investment approval processes for foreign investors.

So why Mongolia? As the fastest growing democratic and politically stable country in the world, Mongolia presents an opportunity for foreign investors to gain a foothold in one of the world’s last emerging frontier markets.  Although challenges remain, there is no doubt that the Mongolian story will capture the eyes and ears of international investors, business leaders and entrepreneurs from around the world.

        I.            has a capitalisation of approximately $2billion and there are more than 300 companies listed on the exchange. Mongolia’s equity market is in its early stages of development, securities regulation is still extremely new and untested and liquidity in the equity markets is low, with the entire stock market’s trading volume a mere $50,000 to $100,000 per day. However, many investors have avoided the potential risk and exposure by investing in companies on the ASX whom have operations in Mongolia.

Wednesday
Jun112014

China’s Priorities: Education, Healthcare, Tourism

China’s 12th Five Year Plan (2011 – 2015) made some bold statements about the importance of education, healthcare and tourism to transform their services sector and improve the quality of life for the middle and upper classes. Western economies, particularly Australia, are currently benefiting from China’s shortcomings in these three areas as can be found from recent statistics:

  • There are currently 150,000 students from mainland China studying at Australian universities, making up 28.5% of our total international student numbers and only 12% of China’s outbound international students. This number is expected to reach over 220,000 in the next ten years.
  • Australian Tourism reports that there are currently 700,000 tourists from mainland China visiting Australia in 2014 and this will rise to one million by 2020
  • Over 10,000 Asian tourists travel to Australia for medical reasons, requiring treatment, care and/or surgery from Australian hospitals and healthcare facilities, spending over $26 million per annum. A recent Deloitte survey looking at the opportunities in medical tourism, noted that 8% of Chinese tourists travel to other countries for medical care.

As with all things in China, when the Government makes a plan to do something, and takes it seriously enough to state it as a priority in the Five Year Plan, you can be sure that serious and concerted action will follow, and this is exactly what’s happening in each of these three areas:

1. Education

As everyone knows, China’s education system was effectively shut down during the Cultural Revolution (1966 – 1976) and a rising generation of students, academics and teachers were lost forever. Today’s education system was re-born in 1986 when the Chinese Government passed a new education law, making it compulsory for all Chinese children to attend school for at least 9 years. Today, China’s education system is the largest in the world, with 99.7% of the population achieving the nine-year basic education and over 20% of students going on to attend higher education.

Over 9 million students took their National Higher Education Entrance Examination this year and many choose to complete their studies overseas (US universities report that there are 235,600 Chinese students studying in America comprise nearly 29% of all foreigners enrolled in US higher education, a number which has increased by more than 21% over the past 12 months). With over 150,000 students enrolled in Australian universities, education has become Australia’s top services export and fourth largest export overall, behind iron ore, coal and gold but ahead of tourism, natural gas and crude oil.

But China now has plans to fight back, to retain more of its own students and to attract foreign students aswell, transforming itself into an ‘innovative economy and an education hub'. The Ministry of Education has publicly declared its ambition to increase the international student population in China to reach 350,000 students by 2015 (currently 260,000) and 500,000 by 2020.

China’s growing middle class places a high value on study and high quality education and, despite the Government’s commit to invest in the education sector, demand will continue to outstrip supply. Australia’s education sector is uniquely positioned to participate in the development of China’s education system by providing access to world class teachers and educational platforms, plus specialised IT systems for on-line delivery, remote access to learning materials and flexible program delivery modes. With a huge gap between future skill needs and current skill levels in vocational training, China’s vocational industry is growing rapidly and is likely to dominate the world stage in the future, encouraging foreign students to study in China. With China as our largest source of international students, contributing approximately AUD 4 billion to our economy, Australia can’t afford to be complacent.

2. Healthcare

China has become significantly more conscious about the importance of health, food safety and medical services as a result of some of its well publicised challenges:

  • rapid urbanisation
  • an ageing population
  • pollution and environmental degradation, leading to severe concerns about food safety, air quality and water sanitation
  • changing diets and lifestyles, leading to a sharp increase in western style health problems and diseases (for example, the number of diabetics in China has doubled in the last 5 years to over 100m people)

China’s public hospital system, which in many areas is antiquated and under severe pressure, suffers from a lack of funds compared to more developed countries. The Chinese Government allocates only 5% of its total GDP to the provision of healthcare services (hospitals, medication, equipment, drugs etc.) which is less than half of most western countries and one-third of the US, but this is expected to rise to 7%, representing a public healthcare sector of over US$1 trillion by 2020. At the same time, its encouraging the development of new privately owned healthcare players and providers with a plan to double the number of private hospitals and facilities by 2020.

The current five year plan identifies the bio-technology and bio-medical sectors as the key strategic innovative industries of the future. Multi-national companies are identifying significant opportunities to participate in the demand for world class expertise, knowledge, products and services in many areas:

  • Diagnostics and Treatments
  • Pharmaceuticals and Health Supplements
  • Medical equipment and devices
  • Physician and Patient education

Whilst starting from a fairly low base, the growth in demand in these areas is expected to rise by over 20% per annum for the foreseeable future.

With over 300 million people still to be urbanised, and more than 500m people expected to enter middle class income brackets in the next 30 years, China’s healthcare sector represents a major growth opportunity for foreign and local players. Our recent visit to the headquarters of Lancare, one of China’s fastest growing private healthcare players, is a great example of how the landscape is changing. Click here for more details.

3. Tourism

When I first visited Beijing in 1989, I was surprised to find myself virtually alone in the Forbidden City with only a small handful of foreign tourists and virtually no locals. Back then, Chinese people couldn’t afford to travel even within their own country and, in any case, travelling domestically was discouraged and in some cases even prohibited. How much has changed! The local tourism sector in China has increased at a steady rate of 10% per annum since then and now there over 2.5 million local domestic tourists and approx..129 million visiting foreigners.

China’s Tourism sector is already experiencing the benefits to employment, consumption and the economy from a thriving domestic tourist sector but it has to make a dramatic leap to cope with the expected ‘tsunami’ of foreign tourists expected to flood into China in the next few years. According to the World Tourism Organisation, there will be an annual increase of 43 million foreign tourists visiting China over the next 20 years, with a total of 1.8 billion by 2030! These numbers are staggering even by Chinese standards!

In order to rapidly build and develop its local tourism sector to cope with future demand, China will be paying close to attention to the experience of their own people when travelling overseas. According to the Economist “nearly one in ten international tourists worldwide is now Chinese, with 97.3m outward-bound journeys from the country last year, of which around half were for leisure”.  Australia is experiencing a strong increase in the number of Chinese tourists and this is highlighting some of the shortcomings in our own tourist sector which is having to adjust to the cross-cultural challenges of dealing with mainland Chinese tourists.

Australia’s world-class reputation as an iconic tourism destination provides unique opportunities for Australian tourism operators and service providers to export their capabilities, products and services in IT operations, customer service and engagement, logistics, systems and product offerings to China. With over 1300 operating travel agencies in China, there is considerable scope for joint ventures, alliances and partnerships. Since China’s opening up in the 1970s, China’s growth as a tourism market has been phenomenal, now the third most visited country in the world. Australia’s expertise and capabilities can play a dominant role in the successful and sustainable development of China’s tourism industry on a global scale.  

Monday
May052014

After BRIC comes MINT

In 2001, Jim O’Neill (then Head of Economic Research at Goldman Sachs) coined the acronym “BRIC” to place the spotlight on four countries (Brazil, Russia, India, China) which he believed were poised for amazing growth in the decades ahead and would one day take their place amongst the world’s largest economies. 10 years later this prediction has been widely described as the “biggest market call of the decade” and the term “BRIC” has become synonymous with the process of investing in global emerging markets, researching the economic powerhouses of the future and even geo-political leadership (the BRIC leaders, along with South Africa, now meet once a year to debate their own political, economic and social issues, independently of the G8 group of nations, an unexpected development which surprised even Jim!).

Whilst Jim believed that the “BRIC dream” would take at least the current century to fully unfold, such is the world these days that he was constantly asked to make bold predictions about which countries would come next. He now believes he has the answer: “MINT” (Mexico, Indonesia, Nigeria and Turkey) the next four economies that over time will take their place amongst the world’s top 10.

Much has already been said, written and discussed about the MINTs amongst journalists, commentators and economists, and Jim’s predictions are now followed closely by the investment community and blogosphere. If you google the word “MINT”, you’ll find numerous references, predictions, criticisms and even praise for Jim’s latest grouping, and who knows what will come next! In making my own assessment of the outlook and characteristics of each of these four countries, I believe you need to weigh up their merits against five key drivers of economic growth:

1. Demographics

Everyone understands the benefits of a young, dynamic and energetic population which can propel economic growth over long sustained periods. Conversely, many developed countries, and even two of the BRICs (notably China and Russia) understand the long term challenges associated with an ageing population which places constraints on economic growth as a shrinking working population has to support more and more old age pensioners.

One country which has an amazingly young demographic profile is Nigeria with a current median age of 18 which is predicted to increase to only 21 by 2050. This rising tide of young and ambitious workers is predicted to stimulate an increase in Nigeria’s per capita incomes by over 30%, which will help triple the size of its economy by 2030 and propel the population from around 170 million today to just under 1 billion by the year 2100.

Nigeria has already attracted the world’s attention earlier this year when it overtook South Africa to become the largest African economy and the 26th largest in the world. Whilst Nigeria faces many challenges in the years ahead (notably the compelling need to stamp out corruption and raise education standards for its young population) its ‘demographic dividend’ (a term often used to describe India’s young workforce) provides it with an undisputed advantage in the decades ahead. It is this which places Nigeria at the heart of the MINTs.

2. Urbanisation

Urbanisation is a driving force for economic growth and expansion (urban growth alone produces an increase of 20% GDP per capita). It increases rural productivity, boosts demand for resources, commodities and energy and drives domestic consumption (urban residents spend 3.6 times more than rural dwellers). The developed world already knows the significant economic benefits that have been derived from the process of urbanisation. In the two centuries following 1800, the world's average per capita income increased over tenfold as a result of the ‘Industrial Revolution’ in Britain.

Indonesia is experiencing the fastest pace of urbanisation of any country in the world. It is estimated that the ratio of Indonesian urban-rural migrants is poised to leap to 71% from its current level of 53% and, with rapid urbanisation and growth sweeping a nation of 250 million people, analysts are forecasting that Indonesia will rise to become the world’s 7th largest economy by 2030 (overtaking developed nations like Germany and the UK) and the third largest middle class amongst emerging markets by 2050 (after India and China). Productivity gains, economic opportunities and rising incomes are products of Indonesia’s urban-centered growth as the country needs to support its growing middle class. Whilst Indonesia has many challenges (notably an urgent need to upgrade its infrastructure and open up its economy to foreign investment) it is no surprise that Indonesia is being touted to be a nation home to a wealth of developmental possibilities.

3. Innovation

No nation has ever achieved long term sustainable wealth or growth by exporting cheap manufactured goods or digging holes in the ground to supply commodities and resources to developed countries. To take their place amongst the world’s economic powerhouse nations, countries have to move up the value chain to become more innovative, creative and inventive.

A good example of a country which has never been able to rely on cheap labour or natural resources to achieve economic growth is Turkey which for centuries has been known for its abundance of entrepreneurs, traders and innovators.

A great example of Turkish innovation is the company Beko, a privately owned white goods manufacturer which is becoming famous for its highly innovative and award-winning washing machines. Beko manufactures 12,000 washing machines per day and, in addition to shipping them to the US and Western Europe (where it competes on value, price and quality against some of the best known white good brands) it exports over 500,000 washing machines each year to both China and Russia (yes, Turkey exports washing machines to China!). Turkey is now becoming an international hub of innovation, research and development, underpinned by its strong entrepreneurial culture, and many international business leaders are now travelling to Turkey to exchange capabilities, experience and technology. Don’t be put off by some of Turkey’s political challenges. Turkey will soon resume its place as one of the world’s great trading nations.

4. Consumption

With rising incomes, minimal debt and rapidly increasing wealth, the emergence of a new middle class from emerging countries is creating optimism and excitement around the world as business leaders, entrepreneurs and investors work out how best to profit from the billions of new consumers predicted to enter global markets over the coming decades. Members of the middle class do not necessarily have rich pockets, but still wield strong purchasing power, a promising potential to boost a nation’s consumption and long term economic growth.

Mexico is at the heart of this consumption story. Improving education combined with an increasingly skilled work force and its close proximity to a recovering US market, will propel a huge leap in Mexican’s income brackets from low middle to the upper middle/high social class by the year 2038. In 2012, Mexico overtook Brazil to become Latin America’s biggest luxury goods market and is experiencing a luxury boom thanks to a young, affluent middle-class population who are ready to spend.

The MINT nations are set to lead the world’s millionaire boom, according to research by Wealthmonitor. In a list of the countries set to create the most millionaires in 2014, the MINT countries overall performed better than both the BRICs and the G8, with a 7% increase expected alone in Mexico, which ranked eight out of fifteen.

5. Globalisation

Anyone who claims that the real economic benefits of globalisation have already been realised may only be considering the experience of the developed nations. In fact, the genesis of globalisation is still germinating for the MINTs, especially in Turkey. Turkey’s geographical location places it right in the centre of a new globalised world, with Russia to its North, Africa to its South, Western Europe and the USA to its West and Asia to its East.

According to the latest KOF Globalization Index, Turkey is the most integrated nation amongst all the MINTs and the BRICs. Istanbul is poised to become a commercial hotspot as a result of the success of Turkish Airlines, the world’s fastest growing airline, to establish Turkey as an international transport and business hub. Istanbul’s main airport, Ataturk, already handles nearly 50 million passengers per annum, and with a commitment to double the size of its airport in the next decade, Turkish Airlines have unveiled their grand ambition to service at least 90 million people by 2020.

So what now?

All of the MINT countries have political, social and economic challenges to overcome before taking their place at the world’s top table of economic giants. But one thing is clear. The rapidly changing dynamics in the global economy will change our lives forever. Nothing is certain, anything is possible. Don’t let past assumptions dictate future actions. In the new world of the BRICs and the MINTs, nothing is sacred. Our challenge is to keep up!

Thursday
Mar132014

How to engage with Chinese Investors

As our largest trading partner and a new foreign investor, China will play a big part in the future lives of every Australian company and individual. A wave of investment from Chinese entrepreneurs, migrants and business leaders is flowing into a variety of Australian industries, from mining, food and agriculture to retail, healthcare, technology, tourism and financial services, and this has only just begun!

Having dealt with Chinese investors for over 25 years, I believe that Australian business owners and leaders need to address existing weaknesses in five critical areas to succeed in the Asian Century:

1. Language

Having people in your team who are fluent or native speakers of Mandarin and/or Cantonese will give your business a distinct advantage in every market sector. Many wealthy Chinese people cannot speak English (even if their children can) and a direct line of communication to your clients will speed up all business dealings and enable your team to develop deeper relationships which will inevitably lead to more sales, referrals and repeat business

2. Culture

An understanding of Chinese culture is crucial to all negotiations with Chinese nationals. This will include cultural issues relating to relationship building, valuations, negotiations, deals, gift-giving, choice of restaurant and even the way you look at a business card! Chinese people often say, ‘we don’t talk business until the third cup of tea’, meaning that building trusted relationships is more important than doing deals. Understanding these types of cultural insights, and the impact it has on decision making, will give your business a distinct advantage over your competitors.

3. Connections

Does your business have deep and meaningful connections into the key centres of influence within the Chinese communities in both China and Australia? Building and maintaining the right connections with relevant business networks, including migration agents, relocation agents, accountants, lawyers and other intermediaries will bring Chinese investors to your business. By developing and deepening these networks, you can establish a reputation for reliability, dependability and trust. These are essential factors in building relationships with any Chinese investor.

4. Understanding

A deep and thorough understanding of the economic, business, political and social environment in China, in particular the factors driving Chinese investment into Australia, will allow you to tailor your services and marketing messages to Chinese investors. This takes time, and requires you to invest in your China capabilities and knowledge (through business visits, networking events, conferences etc.) but will give you a strong edge over your competitors. Why not attend Australia China Business Week in 2014? See www.abforum.com.au

5. Money

Investing in the growth and development of your value proposition for Chinese investors will help you achieve both long and short term rewards. For example, Chinese clients often look for a “concierge-type” business service which offers a much more holistic approach to their investment (e.g. the availability of local shops, entertainment, transport and even sight-seeing). Take the time to understand the needs and preferences of Chinese investors and invest in your ability to over-deliver. Your reward will quickly show up on your bottom line!

With everyone trying to compete for the attention of cashed up Chinese investors, Australian companies have a significant opportunity to beef up their Chinese and Asian capabilities and credentials. This doesn’t happen overnight.