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KPMG: Chinese direct investment into Australia
August 5, 2012
By Rob Starr, Content Manager, Big4.com
Demystifying Chinese Investment – the latest report on China’s direct investment in Australia by KPMG and the University of Sydney China Studies Centre – provides greater clarity on Chinese ODI into Australia and the behaviours exhibited by the organisations behind the deals.The average size of deals was larger in Australia compared to other countries, with 19 of the completed deals having a transaction value of more than USD 500 million, and almost half having a transaction value of over USD 100 million each.
An examination of the ownership structure of the 11 largest Chinese investors and their investments in Australia resulted in three preliminary observations. First, unlike other international investment locations for China, the majority of investment is by long-established central SOEs with a considerable track record of international activities. Although M&A is the most dominant form of Chinese ODI in Australia, the variety of entry strategies used by large Chinese SOE’s is the second notable point. And third, Chinese SOEs are behaving similarly to other international investors in Australia.
The report concludes that informed and constructive discussion by business and among policymakers about the nature and extent of China’s ODI in Australia is critical for stimulating greater opportunities for engagement between Australian and Chinese organisations, which in turn has an impact on Australian prosperity. Experiences in the USA and Europe show that with growing diversification of Chinese ODI, Chinese investors can become positive contributors to domestic job creation.