Click here for the full report
11 April, 2016
Chinese investment in Australia has returned to positive growth[i], rising very strongly with a record number of deals taking Chinese investors into new industries – including healthcare for the first time – and new geographies. Investment into commercial real estate has made up for the drop in investment in the mining sector. The return of the mega deal, with seven investments of AUD500 million or more during the year, helped propel the total value of investment to USD11.1 billion (AUD15.09 billion), a 32.9 percent increase on the previous year in USD terms (or a 59.5 percent increase in AUD).
This was the second highest inflow year for new Chinese investment into Australia, behind the previous peak driven by mining sector investment in 2008. On an international stage, Australia maintained its position as the second largest recipient of aggregated Chinese direct investment between 2005 and 2015, behind the United States, attracting a cumulative USD78.7 billion during the period.
In Australia, commercial real estate[ii] remained dominant for the second year in a row, accounting for 45 percent of the total deal volume. There was also significant investment into renewable energy and health, and long-awaited growth in agriculture and agribusiness investment. Chinese investors also moved into new geographies, with the Northern Territory receiving over AUD565 million of investment for the first time. NSW remains the top destination for investment, attracting 49.3 percent of the national total.
These are among the key findings of the latest Demystifying Chinese Investment in Australia report by KPMG Australia and The University of Sydney, analysing Chinese outbound direct investment into Australia in 2015. This year’s report also includes new research analysing the sentiment and attitudes of Chinese investors towards the Australian market.
“Following two years of moderately declining Chinese investment, the resurgence of interest and the diversification by Chinese companies in 2015 is a strong endorsement of the attractiveness of Australia’s economy. Alongside continued interest in the NSW and Victorian commercial real estate sectors, there has been activity and major deals in renewables, agribusiness, and for the first time, healthcare,” said report co-author, Doug Ferguson, Head of KPMG Australia’s Asia and International Markets.
“Overall we are seeing a strong story of Chinese investment into Australia’s broader economy which is in line with premium products, services and lifestyle-oriented themes,” he said.
Professor Hans Hendrischke, Professor of Chinese Business & Management at the University of Sydney Business School commented, “Our research has also shown that, for Chinese companies looking to expand internationally, Australia is seen as a strong first port of call, allowing them to gain experience and management know-how before taking on other overseas markets. As China embarks upon its next Five Year Plan and continues to develop as a leading global economy, Australia is poised to profit as one of its major trading partners.”
“All Chinese investors we interviewed held a highly positive medium-long term view of Australia and are looking to increase their investments in Australia,” he added.
Investment by Industry
Chinese direct investment in Australia continued to be centered on commercial real estate (45 percent), with a focus on new areas such as renewable energy (20 percent) and for the first time, material investment in the healthcare sector (17 percent). Mining fell to 9 percent (down from 11 percent the previous year), with energy (oil and gas) at 3 percent. Investment in agribusiness attracted a new high of 3 percent.
Commercial real estate[iii] was the standout for Chinese investment in 2015, continuing its rapid rise, growing to AUD6.85 billion from AUD4.37 billion in 2014. NSW attracted 94 percent of this investment, with investors focusing more on long term development projects. China Investment Corporation’s AUD2.45 billion purchase of Investa Office Portfolio was the major deal of the year in this sector.
Renewable energy was the second largest sector of interest for Chinese investors with State Power Investment Corporation’s AUD3 billion acquisition of Pacific Hydro the largest deal of the year in any sector. The outlook for the wind energy sector is more positive than in previous years, influenced by policy stability.
Healthcare was a new area of investment, with interest moving from the exploratory stage to realisation in 2015. Four large deals took place during the year, representing a total investment in healthcare of AUD2.55 billion.
Agribusiness. 2015 was the first year to see substantial growth in Chinese investment in agribusiness, with AUD375 million spread across 12 deals in sectors including dairy, beef and cotton.
The year also saw a lowering of the Foreign Investment Review Board limits for mandatory approval for agricultural land acquisition and the rejection of an application from a Chinese investor to purchase S Kidman & Co – illustrating the sensitive and very public debate over investment in this sector. Nonetheless, Chinese investors are expected to remain strongly interested in Australian agribusiness.
Mining, energy, oil and gas. Mining remains on China’s investment agenda with an increasing interest in non-ferrous metals including gold, lithium and copper. A total of AUD1.29 billion was invested in the sector in 2015. Looking forward, expanding Chinese government infrastructure spending under the 13th Five Year Plan could see demand for Australian iron ore and coal being stronger than previously expected.
Infrastructure. Chinese investment in the Australian infrastructure sector continued during the year, with the major deal being the 99 year lease of the Darwin Port to the Landbridge Group for AUD506 million. The outlook continues to look very positive, with Chinese companies attracted to the strong local pipeline of opportunities offering relatively safe returns and a longer term investment horizon for co-operation.
Investment by Geography
NSW continues to attract the largest share of investment of any state, at 49 percent, however 2015 saw Chinese investors diversify geographically, with Victoria increasing its share by 7 percent to 34 percent. For the first time, the Northern Territory placed ahead of South Australia, Western Australia and Tasmania with 4 percent of overall investment value.
Investment by Deal Size
During the year seven mega sized transactions with values of AUD500 million or more, including four deals over AUD1 billion, were made. These occurred in sectors including renewables (Pacific Hydro), commercial real estate (Investa office portfolio), healthcare (Swisse and Healthe Care) and mining (PanAust Ltd).
Forty-two percent of the deals were between AUD25 million and AUD100 million in size; and 65 percent of the deals were below AUD100 million in size – consistent with 2014.
Investment by Ownership
Investment from Chinese State Owned Enterprises (SOEs) rebounded in 2015 with two major deals accounting for 49 percent of investment value (AUD7.4 billion). However, the overall number of investments by private Chinese companies continued to rise, with 51 investments led by private enterprises, compared to 13 by SOEs.
Chinese Investor Sentiment
Profit is the main driver of Chinese investment in Australia, according to a survey of 46 senior executives from Chinese investor companies conducted for the report. The survey revealed that making profits, securing resources and building an international brand were their top 3 motivators.
In-depth interviews with 11 Chinese companies invested in Australia (including 6 SOEs) found that Chinese investors enter Australia based on a desire for long term stable returns, low sovereign risks and the stable policy environment. Investing in Australia is not opportunistic, in fact one company studied over 20 overseas markets looking at the local economy, policies, migration data and more before ultimately choosing Australia as their first overseas investment destination.
Despite the perception of Chinese investors offering high premiums to secure Australian deals, investors revealed that most carefully consider the medium and long term returns. SOEs in particular have withdrawn from deals that did not meet strict returns criteria within 3 years of purchase.
“Australia is seen as a learning ground for entering other developed markets. The closer economic relationship between China and Australia has helped, as does the time zone compatibility between our countries. The sense that Australia is a preferred destination for Chinese students, tourists and migrants also provides us with a competitive advantage,” said Professor Hendrischke.
Overall, Chinese investors remain bullish on Australia, with 65 percent saying their 3 year outlook is positive, and 55 percent planning to increase their Australian holdings in 2016.
Ninety percent of respondents believe they will benefit from the China-Australia Free Trade Agreement (ChAFTA), with reduced export and import tariffs enhancing profitability and asset value prospects. They also expect lower investment costs and easier entry for managerial and technical staff, and to a lesser degree labour import from China.
With China’s global ODI expected to continue to grow by over 10 percent each year – driven by Chinese companies’ desire to acquire experience, tech and human capital as the countries consumption trends evolve – agriculture and food, high-end manufacturing and real estate will continue to attract investment. ICT, healthcare and transportation will be the new ‘hot’ sectors to watch.
“The China-Australia Free Trade Agreement has helped to cement the strong relationship between our two countries. And our national Innovation Agenda is challenging Australia to commercialise fintech, medtech, agtech and cleantech products and services that can help China address its national objectives. This augurs well for continued trade with China, and continued investment by Chinese enterprise in Australia,” concluded Mr Ferguson.
The Full Report
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies.
Today, KPMG China has around 10,000 professionals working in 17 offices: Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
Director, Media and Publications, KPMG China
Direct: +852 2140 2824
Mobile: +852 9724 6092
[i] Demystifying Chinese Investment in Australia, April 2016 Update, examines investment during the 2015 calendar year.
[ii] “Commercial real estate” includes residential development projects, but does not include the sale of individual residential apartments and homes to Chinese investors.
[iii] “Commercial real estate” includes residential development projects, but does not include the sale of individual residential apartments and homes to Chinese investors.
这些都是毕马威澳大利亚与悉尼大学新近联合发布的《中国企业对澳投资探秘》（Demystifying Chinese Investment in Australia）报告中的关键发现。本期报告不但对中国对澳大利亚直接投资的现状和趋势进行了深入分析，还探访了中国投资者对澳大利亚投资环境的评价和在澳大利亚投资的体验。
悉尼大学商学院中国工商管理学教授汉斯‧杭智科 （Hans Hendrischke）博士评价说：“我们通过研究还发现，对于想要实现全球化的中国企业来说，澳大利亚被他们认为是迈出国际化第一步的首选地。在澳大利亚初试身手可以帮中国企业获得海外投资和管理运营的相关经验，帮助他们更顺利的拓展其它海外市场。中国迈入下一个五年计划，作为全球领先经济体继续发展，澳大利亚作为中国最主要的贸易伙伴之一，无疑是中国发展的受益者。 ”
农业方面，2015年，我们第一次看到中国企业在澳大利亚农牧业投资有大幅增长，共完成了12项交易，总金额达3.75亿澳元，包括乳品、牛肉、棉花等类目。这一年，我们也看到了澳大利亚外国投资审查委员会进一步加强了对外商购买农用土地的限制，以及中国投资者购买S Kidman & Co的申请被驳回，这些都反映出这个行业在外商投资议题下的敏感性和争议性。尽管如此，中国的投资者仍会对澳大利亚的农牧产业有强烈的投资兴趣。
这一年中，中国投资者共完成7个5亿澳币及以上的大型交易，其中4个交易的金额超过了10亿澳币。这些大规模交易涉及了可再生能源（Pacific Hydro）、商业地产（Investa写字楼组合 portfolio）、医疗健康（Swisse和Healthe Care）、和采矿业（PanAust Ltd）。
毕马威是一个由专业成员所组成的全球网络。成员所遍布全球155个国家，拥有专业人员超过174,000名，提供审计、税务和咨询等专业服务。毕马威独立成员所网络中的成员与瑞士实体 —— 毕马威国际合作组织（ “毕马威国际” ）相关联。毕马威各成员所在法律上均属独立及分设的法人。
直线： +8610 85085068
[i] 《中国企业对澳投资探秘》(Demystifying Chinese Investment in Australia) 2016年4月更新版，審視了2015年的投资。
[ii] “商业地产行业” 包括住宅发展项目，但不包括出售个人住宅，公寓予中国投资者。