2025 Doing Business in China

Key findings

By AustCham China

The strengthening of Australia-China relations has ushered in a wave of optimism among businesses, significantly enhancing confidence across various sectors. The vast majority of companies now view the bilateral relationship positively, citing tangible improvements in diplomatic and trade dynamics. This positive sentiment has translated into operational ease, with many firms reporting that conducting business in China has become notably simpler compared to previous years. This shift has prompted a strategic realignment, with numerous companies recalibrating their long-term plans to capitalise on China’s evolving market landscape. For many, China remains a cornerstone of global investment strategies, consistently ranking as a top priority due to its vast market potential and economic significance.

Financially, foreign firms have experienced a robust upswing in 2024, with nearly all reporting profitability – a substantial improvement from the prior year. A significant portion of these firms have also seen their profit margins expand, reflecting stronger market performance and operational efficiencies. Over the past several years, many companies have increased their investments in China, signalling confidence in the market’s long-term prospects. However, most maintain a prudent approach to exposure, deriving only a modest share of their global revenue from China. This balanced strategy helps mitigate risks and counters concerns about overreliance on a single market.

Looking ahead, the outlook remains overwhelmingly positive, with a majority of foreign firms expressing enthusiasm about China’s market opportunities over the next few years. This optimism is underpinned by confidence in their ability to execute innovative and digitally driven strategies tailored to China’s dynamic business environment. Key growth priorities include expanding sales revenue, forging deeper partnerships with local entities, and streamlining operations to boost efficiency. To navigate potential risks, many firms are proactively diversifying their supply chains, ensuring resilience against disruptions. Australian exports continue to flourish in high-demand sectors such as agribusiness, clean energy technology, biopharma and education, while Chinese investments in Australia are increasingly focused on areas like renewable energy, critical minerals, electric vehicle infrastructure and healthcare. Geographically, major cities like Shanghai, Beijing and Shenzhen remain focal points for business expansion, though emerging inland hubs are gaining traction as viable investment destinations.

Despite the positive momentum, challenges persist. In China, firms face complexities arising from regulatory intricacies, macroeconomic uncertainties, and ongoing geopolitical tensions, which continue to shape the risk landscape. Meanwhile, in Australia, the Foreign Investment Review Board’s (FIRB) policies are a significant point of contention. The majority of firms find FIRB’s guidance unclear and its settings overly restrictive, particularly for Chinese investors, creating hurdles for cross-border investment. While most companies describe China’s economy as stable or on a growth trajectory, some acknowledge pockets of volatility that warrant careful monitoring.

Nevertheless, the commitment to the Chinese market remains steadfast. The optimism surrounding future opportunities far outweighs concerns, driven by China’s unmatched market scale, innovation ecosystem and strategic importance. Businesses are navigating challenges with a blend of caution and ambition, leveraging local partnerships, digital capabilities, and diversified strategies to sustain growth. This resilience underscores a broader narrative: despite uncertainties, China continues to be a pivotal market where opportunities significantly outweigh risks for forward-thinking firms.