Lecture 7 (MCQ and SAQ) Flashcards
Top 3 receivers of China’s ODI, by region 2005-2015
- USA (close to USD 100b)
- Australia (USD 78.6b)
- Canada
Growth rates in China’s ODI - US and Australia 2005-2015
30% Compound Annual Growth Rate
When did China’s ODI begin to grow at a high rate?
2005, 2016 one of strongest years
China’s ODI accounts for over ….. of the world’s ODI
10%
Acceleration of ODI in 2016 triggered
Scrutiny from Chinese gov
- Tightening capital controls to mitigate depreciation of the Renminbi
Analysis of ODI in China, includes/excludes:
Excludes:
- personally owned residential real estate
- portfolio investments such as stocks and bonds which do not result in ownership control
- investments under USD 5 million
Includes:
- Real estate not personally owned (commercial, industrial, residential buildings)
Chinas ODI to the world in 2015, 2016
USD 118 - 143b (2015)
Almost USD 200b (2016)
ODI to Australia in 2015
11 billion (32% ^ from 2014)
China’s ODI is transitioning from …, to other industries, such as …. and …. (in Australia)
Mining, Health, Agribusiness
Investment in Real Estate accounts for … of China’s ODI in Australia
45% (AUD 7b)
Chinese private investors accounted for … of China’s ODI in Aus
78%
Fastest growing investment in a secondary industry:
Severe contraction in …
Construction (27% CAGR)
Mining
Fastest ODI growth (in medium term 2011-2014) in Tertiary Industry
Health (189% CAGR)
Culture, Sports, Entertainment (70%)
ICT (60%)
Faster ODI growth (in short tern 2013-2014) in Tertiary Industry
Health (801%)
Water, Environment (281%)
Hotels and Catering (198%)
Chinese ODI in Australia, by Industry 2015 (Top 3)
Real Estate (45%) Renewable Energy (20%) Healthcare (17%)
Chinese ODI in Australia, Key Transactions (Top 3)
Pacific Hydro
Investa Office Portfolio
Swisse Wellness
2015 was the first year in which SOE/Private surpassed SOE/private Chinese ODI in china
SOE, Private
Driven by: Investe and Pacific Hydro investments
Top Reasons for China’s ODI
Rationale for Investing in Australia:
- Make profits
- Secure resources
- Build and international brand
- Access global markets
- Gain experiences for operating in overseas markets
Top Reasons for China’s ODI
Reasons for Choosing Australia:
- Long term stable returns
- Low sovereign risk
- Stable policy environment
- Mature financial markets
- Transparent legal system
China’s ODI in Aus, Real Estate
…. of investment went to …
(TOP)
94%, NSW
China’s ODI in Australia, by Region (2015) - States
- NSW (49%)
- VIC
- QLD
- NT
- SA
- WAS
China’s ODI in NSW, by Industry
Real Estate (86%)
Healthcare (13%)
Agribusiness (1%)
China’s ODI in Victoria, by Industry
Renewable Energy (59%)
Healthcare (32%)
Real Estate (6%)
Agribusiness (3%)
China’s ODI in QLD, by Industry
Mining (88%)
Real Estate (7%)
Agribusiness (5%)
China’s ODI in Northern Territory, by Industry
Infrastructure (90%)
Agribusiness (10%)
China’s ODI in South Australia, by Industry
Energy (93%)
Agribusiness (7%)
China’s ODI in Western Australia, by Industry
Mining (87%) Real Estate (13%)
Top Chinese ODI Industry in each state
NSW, VIC, QLD, NT, SA, WA
NSW - Real Estate VIC - Renewable Energy QLD - Mining NT - Infrastructure SA - Energy WA - Mining
China-Australia Managerial Challenges
- China’s corporate culture more hierarchal, command and control in Aus more horizontal and egalitarian
- China head offices tend to play a key role in local operations without detailed local knowledge
- Dealing with Aus trade unions is difficult
- Regulatory burden in Aus is high, relative to China - high cost of doing business
