Foreign direct investment (FDI) into Australia continues to grow. “From innovation to a highly educated and multicultural workforce Australia is a globally competitive location for business,” according to Austrade - the Australian government department responsible for attracting investors. Add to that a stable government, secure legal system, great infrastructure, competitive tax environment and high quality of life and you understand why companies want to invest in Australia.
As of 31 December 2008, the stock of inward FDI in Australia was A$392.9 billion. The top four source countries were the United States, the United Kingdom, Japan and the Netherlands. (Source:Austrade)
Australia’s top exports are minerals and resources, and given our location adjacent to Asia Pacific we’ve become a provider of choice for iron ore and other commodities. We are more competitive in terms of shipping times than Canada or Brazil, two significant resource competitors.
Notably absent from the listing of top countries investing in Australia is China. That said there has been no shortage of investments from China, particularly from resource companies. Austrade’s fact sheet on how it helped inward investment into resources has six case studies - four are from China.
This weekend Aquila Resources announced a $285.6 investment by China’s biggest steelmaker, Baosteel. This follows on the heels from the failed investment bid by Chinalco for US$19.5 billion in Rio Tinto. And while is is reassuring to see nearly $300 million invested by Baosteel, the scale of the failed US$19 billion deal is overwhelming.
It appears small deals are acceptable - but major transactions flounder. Why? Probably because it is not politically acceptable for the Government of Australia to approve large-scale investments by state-run enterprises from China. Australians are scared of China and don’t want their politicians to approve these transactions.
For China the road forward is a long one - but an easy journey is possible. There have always been massive differences between the East and the West. Yet through assimilation and education these differences are better understood. Generally we do not fear what we understand.
While China made a great start with the 2008 Olympics, a wide-scale education and cultural exchange program will help in Australia. That would include the standards of scholarships, cultural exchanges and trade delegations. But the heartland of Australia is large - and not likely to travel to the National Gallery for an exhibition of clay soldiers. Instead greater use of mass media would help - whether it’s the reality series of “Wife Swap” between families in Sichuan and Sylvania Waters or “Super Nanny” takes on spoiled boys in Foshan.
We need to see that the daily struggles and challenges faced by families in Australia and China are the same. Then we can cheer the progress made by the new-found celebrity families from China as they get together to grill bean curd or corn cobs on an Aussie barbecue. Then we’ll know and accept and adore China all the more.
