Walking around outside my office in the southern end of Sydney’s CBD, it’s hard not to notice the growing numbers of Chinese tourists, migrants and students. Australia’s relationship with China is one of our oldest, with the earliest recorded Chinese migrants arriving in Australia during the Gold Rush of the mid-1800s when around 40,000 Chinese migrants flocked to the gold fields, representing 3.3% of the Australian population at the time – the most it has ever represented! Whilst the ‘White Australia’ Policy halted Chinese immigration for a number of years, Chinese arrivals in Australia have been growing exponentially over the past two decades and represent an important and vibrant part of the Australian community.
Whilst there has been much progress and focus on the opening up of China to Australian exporters, the wave of inbound students, tourists, migrants, entrepreneurs and investors is expected to provide an immense opportunity for Australian businesses, organisations and institutions.
However, we believe there is still a long way to go for Australian businesses to fully embrace this opportunity.
The explosion in the number of Chinese tourists has gained much media attention over the past two years. In the year ending November 2015, Australia received just over 1 million tourists, a milestone that Tourism Australia predicted to be reached in 2020. It is now anticipated that by 2020, Australia will receive 3 million tourists each year; that’s around the equivalent of the populations of Perth and Adelaide combined.
Chinese tourists are also spending more than ever before. By May 2015, Chinese tourists generated AUD$6.4 billion in revenue, up from AUD$5.7 billion at the end of 2014. And it’s predicted that by 2020 they will generate more than double this to $13 billion. Chinese international students have also flocked to Australia in large numbers – in 2015 around 150,000 Chinese international students were enrolled at Australian universities.
The Chinese community in Australia has also experienced similar growth. According to the Australian Bureau of Statistics, the number of Chinese-born Australians has doubled over the past 10 years to reach 480,000 and represents around 2% of Australia’s population with 650,000 Australians speaking Chinese as their first language.
Despite the end of the mining boom, which brought in a record USD$16 billion in 2008 alone, Chinese investment and business has been propped up by a growing interest in our property development, healthcare and education industries and as widely reported, purchases of off-the-plan units in apartment blocks. In 2015, the University of Sydney and KPMG recorded that Australia received USD$11.1 billion in investment, up 30% over the previous 12 months, which mostly consisted of transactions in real estate, healthcare and renewable energy. Investment isn’t expected to slow either – China’s Ministry of Finance and Commerce (MOFCOM) has announced that their global foreign direct investment will grow by 10% each year.
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 provides an effective testing ground for Australian products before exporting to China. And businesses may not actually need to export their products as the ‘daigou’ phenomenon has seen hundreds of Chinese nationals and international students opening their own ‘export businesses’ by purchasing and shipping Australian products back to China. 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 their 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 interest from Chinese tourists.
There is still some way to go…
Despite the opportunities in exporting and selling Australian products and services, the local Chinese community are still not fully engaged by Australian businesses. In 2014 the Diversity Council of Australia released a report 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. If Australian companies continue this pattern, they are in danger of creating a precedence which locks Chinese people out of senior management positions, disincentivising staff to pursue leadership opportunities or even migration opportunities. 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. Chinese migrants, entrepreneurs, students and tourists come with connections through family, friends and colleagues to open the door to invaluable business and investment opportunities in China, without needing to book a plane ticket!