Food, farming, luxury lead China’s interest
The new “hot sectors” for Chinese overseas investment are agriculture and food, high-end manufacturing, infrastructure and real estate.
These priorities — highlighted in KPMG’s China outlook report for 2015, published yesterday — are handily aligned with the capital needs of many Australian firms, including those seeking bigger markets.
The consultancy says more Chinese companies, especially privately owned enterprises, are investing in more countries and across more sectors, and this helps them move up the value chain in technology, product development, branding and quality.
The China-Australia free trade agreement — likely to come into effect about August — is expected to stimulate Chinese investment further.
The report says that in 2014, China’s outward direct investment narrowly overtook inward investment for the first time, with the Commerce Ministry estimating that capital leaving China reached about $US120 billion ($157bn), 10 per cent above 2013.
It says that destinations are changing as target sectors diversify — “from resource-rich developing countries to developed countries that provide access to advanced technologies, established brands, extensive industry experience and worldwide distribution networks”.
Nine of the top 10 outbound mergers and acquisitions took place in developed countries, compared with just four in 2010. Australia is in both lists, but none of the deals in Australia made the top 10.
KPMG says privatisation programs in many Western countries would provide investors with opportunities — although NSW is now the only state likely to pursue such a program in Australia.
Chinese regulators such as the China Insurance Regulatory Commission, the consultancy notes, are acting as catalysts encouraging overseas financial investment.
State-owned firms will become more flexible overseas, says KPMG, including through being prepared to take minority stakes.
