The ‘China Opportunity’ in Australia

Walking around Sydney’s CBD, it is hard not to notice the ever-growing Chinese population. Whether they are students, tourists or migrants, the numbers of Chinese arrivals in Australia have been growing exponentially over the past decade. Whilst there has been some progress and focus on opening up China to Australian exporters through the various tariff reductions introduced by the China-Australia Free Trade Agreement, China’s inbound activity into Australia is expected to provide even more opportunities in the short-term for Australian businesses of all sizes. However, we believe there is still a long way to go for Australian businesses to fully realise this opportunity.

The numbers

At the end of 2014, there were 859,500 visitors to Australia from China, but in just 5 months, this number shot up to 921,800 visitors. Three years ago, it was predicted that there would be 1 million Chinese visitors to Australia by 2020, however, with the current trajectory; we may actually reach that number by the end of 2016! Chinese tourists are also spending more than before. By May 2015, Chinese tourists generated A$6.4 billion in revenue, up from A$5.7 billion at the end of 2014.

The Chinese community in Australia has also experienced similar growth. The number of Chinese-born Australians has doubled over the past 10 years to reach 450,000 and is still growing. And last year, our Australian universities recorded over 150,000 enrolled Chinese international students. 

The opportunities

With this kind of growth, Australian businesses are in a unique position to engage in the ‘China opportunity’ without actually leaving Australia. As an example, luxury hotels, retailers and high-end food and beverage providers can expect a boom in business since Australia overtook France as the number 1 international luxury destination for Chinese tourists at the end of 2014. The Chinese community also provide an effective testing ground for Australian products before exporting to China. And businesses may not need actually need to export their products as tourists and international students are sending more and more Australian products back home to friends and family. As you may have read in the news, many local Chinese people are purchasing infant formula from Australian supermarkets and bringing it into China with them to give to their family and friends. In the services space, small and micro businesses can develop tailor-made services targeting the wealthy Chinese in Australia. I recently met with the owner of a small family-run beautician in Sydney which was providing specific skin treatments to the wealthy Chinese living in the local area. Similarly, I also came across a small restaurant in Sydney which had developed a website hosted in China to advertise their business after they saw a rise in Chinese customers.

There is still some way to go…

Despite the opportunities in exporting and selling Australian products and services, the local Chinese community are not fully engaged by Australian businesses. In 2014 the Diversity Council of Australia released a report in which found that whilst the Australian labour force is 9.3% Asian born, only 4.9% make it to senior executive level. In ASX 200 companies, only 1.9% of executives have Asian heritage. These percentages would be even smaller if we just looked at those with Chinese heritage. Australian companies are also very reluctant to hire Chinese international students as interns and to recruit and sponsor them after graduating.

We predict that the Chinese community in Australia will eventually become the bridge for Australian businesses wanting to engage fully with the Chinese market. However, businesses need to realise that China’s inbound activities in Australia do not only present an opportunity for selling and exporting products and services. By hiring a Chinese intern or full-time employee, the worst thing that can happen is that you will have a hard-working, diligent and talented person working for you in your office. The best thing that can happen, however, is that they could use their connections through family, friends and colleagues to open the door to invaluable business opportunities with China.