Demystifying
Chinese
Investment
in Australia
April 2016
kpmg.au
The new normal: health, happiness,
lifestyle and services
ISSN 2203-2029
06/04/2016
2Demystifying Chinese Investment in Australia | April 2016Demystifying Chinese Investment in Australia | April 20163
About our reports
KPMG and The University of Sydney formed a strategic relationship to publish research
and insights on doing business with Chinese investors. Our frst report was launched in
September 2011 and this is the eleventh Demystifying Chinese Investment report
in our series. This report examines Chinese investment in Australia for the calendar
year 2015.
The catalyst for our report series is the historic lack of detailed factual information about
the nature and distribution of China’s outbound direct investment (ODI) in Australia.
Without this information, there is misinformation and speculation. Our reports seek to
set the record straight and debunk the myths associated with Chinese investment
in this country.
Methodology
The dataset is compiled jointly by KPMG and The University of Sydney Business
School and covers investments into Australia made by entities from the People’s
Republic of China through M&A and joint venture. Knight Frank has provided
data on real estate transactions. Real estate referred to in this report does not
include residential apartment and home sales. The dataset also tracks Chinese
investment by subsidiaries or special purpose vehicles in Hong Kong, Singapore
and other locations. The data, however, does not include portfolio investments such
as the purchase of stocks and bonds, which do not result in foreign management,
ownership or legal control.
Our database includes direct investments recognised in the year in which parties
enter into legally binding contracts and if necessary, receive mandatory FIRB and
Chinese Government investment approvals. In certain instances, fnal completion
and fnancial settlement may occur in a later year.
For consistency, the geographic distribution is based on the location of the Australian
invested company and not on the physical location of the actual investment project.
Completed deals which are valued below USD 5 million are not included in our
analysis, as such deals consistently lack detailed, reliable information.
Unless otherwise stated, the data referred to throughout this report is sourced from
the KPMG/University of Sydney database, and our previously published reports1.
The University of Sydney and KPMG team obtains raw data on China’s ODI from a
wide variety of public information sources which are verifed, analysed and presented
in a consistent and summarised fashion.
Our data is regularly updated and continually revised when new information becomes
available. In line with international practice, we traditionally record deals using
USD as the base currency. However, for 2014 and 2015 we use Australian dollars
for our detailed analysis given the effect of exchange rate fuctuations.
We believe that the KPMG/University of Sydney dataset contains the most detailed
and up-to-date information on Chinese ODI in Australia.
1 Includes
Australia & China Future Partnership
, September 2011;
The Growing Tide: China ODI in Australia,
November
2011;
Demystifying Chinese Investment,
August 2012;
The Energy Imperative: Australia-China Opportunities,
25
September 2012;
Demystifying Chinese Investment in Australia,
March 2013;
Demystifying Chinese Investment in
Australian Agribusiness,
October 2014;
Demystifying Chinese Investment in Australia,
March 2014;
Demystifying SOE
Investment,
August 2014;
Chinese Investors in Australia Survey,
November 2014;
Demystifying Chinese Investment in
Australia,
May 2015 Update.
4Demystifying Chinese Investment in Australia | April 2016Demystifying Chinese Investment in Australia | April 20165
Chinese investment in Australia in
2015: Ten things you need to know
2015 was the
second highest inow year
recorded in new Chinese ODI,
behind the previous peak
year in 2008.
2015 also saw the largest
number of deals with 65 legally
binding deals announced.
The 2015 sector
prole conrmed the
transition from mining
to new industries,
including health for the
Investment in real estate
continues strongly on
from 2014 to dominate
with AUD 6.85 billion or
45% of total Chinese
ODI in 2015.
NSW remains the top
destination for Chinese
direct investment in 2015,
attracting 49.3% of the total.
The Northern Territory ranked ahead
of South Australia, Tasmania,
and Western Australia for
the rst time.
Chinese
investment rose
very strongly to USD
11.1 billion (AUD 15.09
billion) – a 32.9%
increase in USD
terms, and 59.5%
in AUD terms.
There were
12 agribusiness
sector deals worth
AUD 375.2
million.
Australia maintained its
position as the second largest
recipient country of aggregated
global Chinese direct
investment between 2005
and 2015, behind the
United States.
Chinese private sector
investors are by far the most active.
By number of deals, we
saw private investors
dominate with 78% of
the share.
Chinese global outbound
direct investment in 2015
reached 118 billion USD, a
14.7%
increase from 2014
(MOFCOM, 2016).
Chinese investment is still
driven by a relatively small number
of mega sized deals. In 2015, there
were 7 mega-sized deals of
AUD 500 million or above.
Two major deals constituted
nearly half the Chinese
investment volume
for 2015.
6Demystifying Chinese Investment in Australia | April 2016Demystifying Chinese Investment in Australia | April 20167
Globally Australia remains the
second most favoured country for
accumulated Chinese investment
According to offcial Chinese fgures, Chinese global ODI in 2015 reached
a record USD 118 billion, a 14.7 percent increase from 20142. Based on
our 2015 data, Chinese investment into Australia grew more than twice as
strongly as the global trend.
The American Enterprise Institute’s China Global
Investment Tracker shows that for cumulative
investment from 2005 to 2015, the United States4
ranks frst with USD 99.92 billion, ahead of Australia
with USD 78.68 billion and Canada with USD
43.45 billion.
Rhodium Group fgures from the United States
confrm these growth trends5. Australia has
experienced a similar growth rate (above 30 percent)
and industry sector distribution trend (into services)
to the United States in 2015. Rhodium fgures for
2015 in the United States show a concentration
in real estate, fnancial services, ICT, autos, health
and biotech, and entertainment. Sixty-four percent of
total Chinese investment in the United States was
made into services, compared to 14 percent in 2009.
While there may be differing measurement
methodologies applied by MOFCOM, the American
Enterprise Institute’s China Global Investment
Tracker and Rhodium Group there is no doubting
Chinese investment in Australia continues to play
a strategically important role.
Chinese direct investment in Australia
and other major competitor countries
(USD million)
CountryAccumulated volume2005-2015
USA99,920
Australia78,680
Canada43,450
Brazil33,120
Britain31,240
Russia24,520
Italy18,340
Indonesia14,730
Kazakhstan13,710
Singapore13,680
Source: American Enterprise Institute China Global
Investment Tracker,
https://aei/china-global-
investment-tracker/
2Ministry of Commerce, 2016, http://hzs.mofcom.gov/article/
aa/201601/20160101236264.shtml
3Formerly the Heritage Foundation
4American Enterprise Institute’s