'Invest in Australia' Mission

Hong Kong & China 2015

Our 2015 'Invest in Australia' Mission is designed to source, attract and develop relationships and partnerships with Chinese investors, entrepreneurs and business leaders for investment, trade and/or migration purposes. Join us in Hong Kong and Guangzhou from 18 - 23rd of January 2015.

For more details, please download the information flyer and register your interest here

LIMITED TIME OFFER: Book before 30 September 2014 and receive $500 of the standard registration price (excluding GST)

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Our address:
Suite 33, Level 3,
International House
104 Bathurst Street,
Sydney, NSW 2000

Tel: +612 9267 1488
Fax: +612 9475 4357


A Bull in a China Shop?

For many years, and certainly since I arrived in Sydney from Hong Kong in 1995, I have laboured under the assumption that Australia’s financial services capabilities can, should and will be exported to Asia.  I have led many study tours and delegations, organised many events and business matching activities, and worked with individual companies to explore their market entry options. I have to say that I have not been very successful! This remains an area of “unfinished business” as far as I am concerned, and still very much a ‘work in progress’.

When I talk about “exporting our capabilities”, I’m not talking about selling existing funds management products to Asian investors. Asians are not particularly interested in investing in Australian funds for a variety of tax, investment, regulatory and other reasons. Australia still represents only a small share of global GDP and, more importantly, a tiny share of MSCI, and Asian investors who don’t want to live in Australia only invest here to get exposure to hard and soft commodities, precious metals and, on occasions, a higher yield from a strong Australian dollar. And don’t get me started on tax…I’ve never understood why Australian Governments persist with a tax regime which seeks to collect tax from foreign investors (who pay very low levels of tax if they live in Asian countries) on their holdings in Australia. Try explaining that to an Asian investor!

No, when I talk about “exporting our capabilities”, I’m talking about the detailed, complex and gruelling work that goes into designing, promoting, managing and administering financial services products which have been developed for a particular purpose and/or market. In Australia’s case, financial products are not designed simply to generate a return on investment. Our unique tax, superannuation and social security regime means that we have to jump through myriad and complex layers of regulation, legislation and industry practice to offer products to somewhat reluctant and apathetic consumers. A highly sophisticated product offered by a world class industry to a reluctant consumer.

What if we could offer a sophisticated product to millions of highly engaged and investment savvy Asian consumers?? Wouldn’t this be worth a shot??

Whilst past Australian Governments have talked about the massive opportunity to export our financial services capabilities in Asia, this current one has moved the debate forward by including “financial services” as part of the negotiation for Free Trade Agreements. According to Austrade, The China-Australia Free Trade Agreement (ChAFTA) “secures a range of unprecedented financial services commitments from China. These commitments represent the most substantial market access commitments China has agreed with any FTA partner (other than in its agreements with Hong Kong and Macau) and create new commercial opportunities for Australian banks, insurers and securities firms. They will facilitate deeper participation by Australian financial institutions in China, strengthen financial services trade and investment in both directions and enable future growth in the bilateral economic relationship as a whole.”

The Agreement goes on to spell out a wide range of measures designed to provide improved access for Australian financial services companies operating in the areas of banking, finance, funds management, securities and insurance, aswell as a commitment to review bilateral tax arrangements and the introduction of double taxation agreements.

Will any of this make any difference?

Australia’s financial services industry is relatively stable, profitable and comfortable. The mandatory superannuation system ensures a steady stream of new funds into the industry each year, and Australia’s “four pillars” framework ensures that our major banks are, to some extent, protected from competitive pressures from foreign banks.

As Australia’s largest industry, the financial services and insurance sector accounts for over 10% of GDP, grows on average by 6% per annum and employs over 400,000 people. Is there any need or incentive to risk our domestic business by attempting to compete in Asia? Wouldn’t we better to protect our existing business and make it even harder for foreign players to compete in Australia? And build “Fortress Australia”?!

It probably won’t surprise you to hear that I would have to leave the country if this were to happen!! We owe it to the world, if not to future generations of Australians, to internationalise our financial services sector to truly compete on the global stage. If we believe our financial system is ‘world class’, as many of us do, let’s tear down all the barriers, allow all players (local and foreign, including the banks) to compete on equal terms and challenge ourselves to be the best we can be? Wouldn’t it be more satisfying to compete on the international stage? To win the world cup for financial services?

I have often been called “A Bull in a China Shop” when it comes to my views on Australia’s potential as a global financial services player, with China as our launching pad.

Am I really that crazy to think this could be possible?


A Golden Phase?

I have just returned from our annual delegation to Hong Kong and China, our 6th Australian mission to the Asian Financial Forum, and the first under the banner of "Invest in Australia" which captured the attention and imagination of Chinese investors, entrepreneurs, business leaders and potential migrants. For more information on this year's delegation, and to view the individual profiles of each of our delegates, please download the delegate booklet via this link.

During our visit to Hong Kong and China, I met with many local business leaders and entrepreneurs who described the Australia-China relationship as about to enter a "Golden Phase" with the signing of the China-Australia Free Trade Agreement, the recent visit to Australia by President Xi Jinping, and increasing awareness of Australia's agricultural resources and services capabilities, particularly in the following sectors:

  • Food
  • Healthcare
  • Education
  • Tourism
  • Property
  • Technology
  • Financial Services
  • Other professional services (legal, accounting etc.)

China's "Going Out" Strategy is in full swing, with large and small companies looking to diversify, grow and learn by investing in well developed and established markets in western countries. Australia often gets overlooked due to its small population and other factors and misperceptions, but this is changing. With Canada shutting its door to new migrants from China, Australia is now becoming increasingly seen as a safe, stable and attractive country for migration, investment and business purposes.

This represents opportunities across the board for Australian companies and industries who can position themselves for Chinese investment and are ready to engage with investors, migrants and entrepreneurs. The signficant wave of investment into Australian property is just the beginning. Are you ready?


Historical FTA signed in Canberra!

I was honoured to be invited to Canberra on Monday 17th November for the unique occasion of a joint sitting of parliament, the address by President Xi Jinping of China and the signing of the historic China Australia Free Trade Agreement. After the joint sitting of parliament, I attended the dinner in honour of President Xi and his wife, Peng Liyuan, which included large numbers of MPs and members of the Australia China business community. It was a warm and happy occasion and a wonderful moment for Australia in bilateral trade and diplomatic relations. The signing of the Free Trade Agreement with China is a big leap forward in the Australia China relationship, and just the start of a deepening relationship with our biggest trading partner and neighbour. So, what practical implications will the free trade agreement have across the economy?

After ten years of negotiation, Monday was a landmark date in our 40 year relationship as Australia and China finally signed a Declaration of Intent that will result in a Free Trade Agreement between our nations which is expected to see trade more than double from the current level of $150bn over the next decade (New Zealand’s two-way trade with China more than doubled since its signing in 2008).

In fact, this FTA will mean that, over the next four years, 95% of Australian exports entering the Chinese market will do so free of all local tariffs. The biggest winners on the Australian side include the dairy, horticulture, mining and services sectors. On the China side, an opening up of access to the Australian labour market and a loosening of regulation surrounding direct investment are the key takeaways. The Chinese investment threshold requiring FIRB review was raised to $1.087 billion in line with other FTA countries (such as Japan, USA and South Korea) and this is expected to generate plenty of new interest amongst Chinese entrepreneurs, business leaders, investors and new migrants looking to invest in Australia (particularly in real estate, agriculture, healthcare, tourism, education and professional services).

So how will the average Aussie notice the effect of the FTA? Firstly, Australian consumers can expect to see cheaper clothing, electronics and household goods as local tariffs are removed from Chinese imports. Not only SMEs but also the big corporates will benefit from the deal, with Australian banks and financial institutions being given unprecedented access to the China market. Insurance companies will have access to China’s third party insurance market and superfund managers will be given special access to Chinese investments.

There is no doubt that this FTA has come as a sigh of relief to many industries, in particular the dairy industry which has been lobbying the government for a ‘New Zealand Plus’ package. Now, with an agreement similar to that of New Zealand’s, the FTA could save the Dairy Industry $190million in tariffs over a ten year period which could be directed into servicing debt and reinvesting in ageing infrastructure. Australian SMEs are expected to also be big winners from the deal, with unprecedented access to the China market across hospitality, education, agriculture, law and pharmaceuticals. Australian law firms will be the first in China to be allowed to operate freely and provide services to clients from a special zone in Shanghai. The agreement also highlights areas which have currently been placed in the “too hard basket” for review in three years’ time. Until then, this is just the 'end of the beginning' and the FTA will hopefully provide a much needed boost for the Australian economy as it tries to rebalance and shift focus from mining/resources to agriculture and services.

If you're not there already, this is the time to go to China to see the amazing transformation taking place and to meet Chinese investors, business leaders and entrepreneurs with an interest in Australia, particularly in light of the new opportunities presented by this FTA. Please join our ‘Invest in Australia’ Mission to Hong Kong and Guangzhou from 18th to 23rd January 2015 and fly the flag for Australia. Click here for more details.


Alibaba: History in the making

As Jack Ma, the founder of the largest e-commerce company in the world – Alibaba – travels around the US, Europe and Asia on an Investment Roadshow prior to the listing of Alibaba on the New York Stock Exchange, investors all around the world are taking a step back to look at Alibaba’s growth journey. Alibaba is now bigger than Amazon and eBay combined and growth is set to snowball. In fact, the Alibaba ecosystem isn’t just Amazon, under its umbrella sits China’s equivalent of Dropbox, PayPal, Hulu, ING Direct, Uber and much more… Just 15 years ago, when Alibaba was in its infancy, Jack Ma travelled to the Silicon Valley to raise US$2 million from Venture Capitalists, only to walk away empty handed.

Now, Alibaba is pitching to the world’s most savvy investors to raise up to US$21.2 billion dollars, the largest technology or internet related offering in history, which would value the company at over US$160 billion. To give you an indication of size, the largest IPO ever was that of the Agricultural Bank of China which raised US$22.1 billion in July 2010. The price range for Alibaba stock, set by the company, is $60-$66. Analysts have commented that the lack of fluidity in the governance structure (Ma still controls the board) will be priced in as a discount, but nevertheless, the growth opportunity remains enormous in the short term.  Other analysts argue that with Alibaba maintaining control of the board and its appointments will protect the long-term investors from the speculators and short-term investors.

Alibaba holds an 80 per cent market share of China’s e-commerce market and has its eyes set on the global stage. A core part of its business is e-shopping platform, Taobao, which accounts for over 90% of online consumer transactions in China. Some see Alibaba becoming the world’s second Amazon, yet Alibaba distinctly sees itself as a platform for small businesses to do business around the world with China as its primary market. Alibaba’s model is that of a marketplace – connecting buyers and sellers, whereas Amazon’s is a merchant model – owning the stock – the questions arises as to whether as the Chinese market matures, whether the marketplace model will give way to the merchant model which has been so successful in the US.

There is no doubt that the e-commerce and consumer spending story in China will be a fruitful one and Alibaba will provide a well-regulated gateway for foreign investors to tap into the Chinese market. China has over 600 million internet users, over half of which shop online  - as both these numbers grow to equivalent Western ratios – we will see unprecedented growth fuelled by the sheer size of the Chinese market and the rise of the wealth amongst Chinese consumers.

With lots of debate surrounding the IPO, the question still remains – is the Alibaba investment opportunity too good to be true? With its strong track record and ability to innovate on scale at speed, Alibaba will keep sending ripples through the world’s market.


What can PNG learn from the BRIC countries?

This week I enjoyed the opportunity to speak at the PNG Advantage Investment and Infrastructure Summit 2014, a gathering of the local business and international investment community to explore opportunities, challenges and threats for PNG, a country richly endowed with natural resources, including mineral and renewable resources such as forests, marine, food and agriculture.

I was given the honour of speaking straight after the Prime Minister, The Honourable Peter O’Neill (pictured with me above) on the topic of “What can PNG learn from the BRIC countries”, a rare and unique opportunity to influence and/or support the political process, so here follows a quick summary of the five main points I offered the PNG Government:

1. Choose your friends carefully

The BRICS Leadership Group is a great example of five countries, with very little natural geographical, cultural or historical ties, coming together to focus on mutual opportunities and challenges. I was interviewed by the Conference Organisers, Business Advantage PNG, on this topic in the days before the Conference (click here to read the article) and highlighted the remarkable achievement of establishing the BRICS Development Bank as their response to the collective view that the IMF, World Bank and other western influenced institutions are not doing enough to support and invest in developing countries.

PNG is a member of many groups and forums, including APEC, the Pacific Islands Forum and CHOGM, and has strong relationships and historical ties with Australia, New Zealand, Malaysia and the Philippines, amongst many others. My advice to PNG is to think hard about the countries that can and/or will have the most impact on their future direction and progress, and work hard to establish a tight knit group of like-minded leaders who meet regularly to make things happen. This can be achieved (as with the BRICS) without upsetting or excluding other countries who are important from a trade or investment perspective.

2. Attracting Foreign Investment

China is the most significant investor in the region and with a well developed “Going Out” strategy to focus on energy and food security, PNG is very well placed to attract substantial investment from China, particularly in the mining, resources, food and agriculture sectors. Australia has achieved great success in attracting investment from China and appears well placed to attract much more as China looks to invest in the food supply chain.

PNG has a chequered history with Chinese investment, with local stories of cultural misunderstandings, poor execution and even corruption, and is perhaps not focusing as much on China as as it should. I encouraged the Governor of Port Moresby (who was sitting to my right) to work hard on their sister city relationship with Jinan in the province of Shandong (he mentioned that he would be leading a delegation there in October) and the PM to make regular visits to Beijing.

3. Accelerate PNG’s Urbanisation program

I mentioned the importance of Urbanisation as 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). Just on PNG’s doorstep, Indonesia is the fastest urbanising country in the world and is witnessing growth in the numbers of middle class consumers, and all of the BRICs are benefiting from rapid urbanisation, notably China and India.

By contrast, PNG is a rural and agricultural economy with only around 18% of the population currently living in urban centres. Furthermore, Port Moresby, PNG’s capital, is ranked as the world's third worst city for liveability by The Economist magazine, with 50% of the estimated population of 700,000 living in slum-like conditions. PNG towns and cities are under major stress from unmanaged urbanisation and, unless properly managed, quality of life issues including urban security, customary land development and affordable housing issues will further deteriorate.

In 2010, the Government of PNG adopted the "National Urbanisation Policy 2010-2030" which is intended to guide the urbanisation process in Port Moresby, as a model for the management of urban development in PNG over the next 20 years. My advice was to speed up this process.

4. Stability is the key

I used Brazil as a good example of how political and fiscal stability can lead to substantial economic growth by comparing two periods in Brazil’s recent history:

From 1980 to 1994 (14 years):

• 5 presidents

• 15 finance ministers

• 14 CB presidents

• 6 currencies

• 730% average annual inflation

• Inefficient public sector

• Closed economy

• Balance of payment crisis

• Incipient monetary policy

• Fiscal mess

From 1995 to 2010 (15 years)

• 2 presidents

• 3 finance ministers

• 5 CB presidents

• 1 currency

• 7% average annual inflation

• Privatisation

• A more open economy

• Lower external vulnerability

• Inflation targeting

• Improved fiscal policy

During the latter 15 year period, two popular and reforming Brazilian Presidents, Fernando Henrique Cardoso and Lula Da Silva, created political stability which led to an increase in domestic confidence, an influx of foreign investment and a period of strong economic growth which has propelled Brazil to the top table of economic giants.

My advice to PNG is to become a beacon of political stability amongst the Pacific Islands, and the region as a whole.

5. The Importance of Planning

I cited China as an example of a planned economy which benefits greatly from the existence of a well developed Five Year Plan but, more importantly, a long track record for having met and exceeded almost all of the targets, milestones and objectives outlined in each of the 11 Five Year plans over the past 60 years.

Like many western democracies, PNG has a big vision of what it would like to become and a high level plan of how it will get there. The PNG Government's long term “Vision 2050” and shorter term policy documents and white papers, including the 2014 “Responsible Sustainable Development Strategy”, emphasise the need for a more diverse economy, based upon sustainable industries, improved infrastructure, the development of SMEs and greater collaboration with foreign investors and the private sector. These grand plans are admirable and necessary but my advice was to gain a reputation for not just having a vision, but for execution, implementation and deliverables. I don’t think anyone would disagree with that!

I enjoyed my brief visit to PNG, including a brief but enlightening tour of Port Moresby with the local CEO of the Port Moresby Chamber of Commerce & Industry, David Conn, and I hope to go back again one day to see how much has changed. From talking to the locals, its hard to come away without the impression that PNG is going places, and as hosts of the Pacific Games 2015 and the APEC Summit 2018, it seems we’ll all be going there soon!