Four of our Perth financial advice team had the opportunity to visit mainland China in the last week. We had our annual Count financial planning conference in Shanghai between 4th-7th May. We then stayed on for 5 days to have a look around.
What we learnt
Our dealer group and fund managers gave us some incredible insight into the China economy. We had the opportunity to also visit seven manufacturing facilities in Shanghai including Baosteel, Volkswagon, Longking, Coca Cola, General Motors, The Urban Planning Centre, and the one I attended Shanghai Zhenhua Industrial Co (ZPMC). A production scale I’ve never seen before in my life. ZPMC manufacturers 70% of the world’s port container facilities, plus ship cranes and bridges. Their facility at the Shanghai port is 5 kms long ! They own 22 ships which they recently used to build a bridge for San Francisco and prefabricated it in China and shipped it across for assembly!
There is clearly a booming economy where a sky scraper is being completed every 5 days. Of the 1.3b people, 350m of them are being relocated to the cities in the coming years. Capital cities have a population larger than the whole of Australia. An economy set to grow larger than the US officially by 2015.
What we did
We also had the opportunity to stay on for a tour with an English speaking guide who took us to Xian and Beijing. Again the scale of property and manufacturing development is unprecedented. Then a day in Hong Kong on the trip home.
Tips for Aussie businesses
Clearly there is huge supply chain opportunities for importers of products to Australia as competition increases the quality will increase. For exporters from Australia it will be a case of finding a niche product(s), particularly for domestic consumption.
The communist Chinese government seem to be opening the paths for Westerners to establish shop there. But caution needs to be made as corruption is still an issue.
Growth Industries the Chinese are pursuing are – tourism (own domestic and foreign), financial services, professional services, education, agriculture/food, biotech, healthcare and technology.
Other Asian destinations are sharing in the growth in the region.
The quest for the acquisition of agricultural land and securing of resources to fuel the Chinese economy is an opportunity for Australian businesses.
China is experiencing 7.5% growth rates and the rumour is they will ease, but this is an average as we have cities that are in 10-15% growth mode. However the volume of high-rise residential towers, currently far in excess of what the take up can manage will be something to watch. The middle class will move on up into this space but one wonders on the investment return for so many similar apartments. The experience in Sydney and The Gold Coast in Australia which led to a housing bubble bursting.
A panel of successful local business operators were asked what were the main tips for doing business in China and the answers were – hard work, relationship building, controlling your business and being aware of government policy.
Visiting the Great Wall of China was a highlight amongst many other things. The Western world is really only now beginning to see more of an Asian country that has come under communist rule.
If pursing opportunities in the region is something that interests you and you’d like to chat please contact us.