Betrayers unite for personal profit - China's mining investment losses in Australia - switch to food

Nationalistic Australian citizens have voiced concern and opposition to selling more national assets to the Chinese despite the tremendous gains and spinoffs from foreign capital inflow. Aussies are not anti-foreigners as long as foreign ownership is exceeded by US (or a western nation) to offset undesirable influences from another state. 

In reality, Chinese state companies have been reformed since the 1980s and behave like private enterprises though the level of accountability is not well established ... not that all non-Chinese corporations are free from rigidity and unethical conduct. 

http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/demystifying-chinese-investment-O-201207.pdf

In most transactions, the buyer and seller stand to gain or else there is no deal. Cash loaded and enthusiastic, China state owned enterprises have been lured and wooed by the opportunistic firms who are keen to sell.  

http://www.theaustralian.com.au/national-affairs/china-investment-elephant-is-well-and-truly-in-the-room/story-fn59niix-1226452825060

http://www.theage.com.au/opinion/political-news/chinese-investment-no-threat-20120422-1xf64.html

http://www.terradaily.com/reports/Chinese_bids_welcomed_in_42_bn_Australian_asset_sale_999.html


Despite investment restrictions, the Chinese have quite successfully bought up many mine shares to feed its mills back home. From hindsight, this is a blotched plan rather than an achievement. It would not be an overstating Chinese losses in the millions if not billions for purchasing overrated companies, changing market conditions, poor performance and unforeseen results. The true picture is probably less rosy than that painted by the buyers and sellers or what is reported in the media. There are good reasons why officials and business managers want to portray it negatively to cover their folly or mistakes. 

Inevitably, the topic of corruption cannot be evaded. Mistakes cannot be attributed mainly to innocent miscalculation, lack of due diligence and market changes as a result of falling production. Surely the Chinese investors are smarter and the Australian sellers would play harder to get. We may never know how much kickbacks were involved. 

Credit must be given to the Chinese for quick thinking and adjustments. Now, Chinese investors have decided that the mining sector is jinx. It is high time that the government directs investors to diversify into other sectors rather than placing all the bets in fading minerals sector. 


http://www.couriermail.com.au/business/chinese-investors-look-to-diversify-beyond-resources-sector/story-fnbdkrr9-1226443327176

Attention is now turned to the next most important resource - food - to feed its billions of people. More Chinese are investing in Australian farms recently. 

KPMG Australia’s China Practice, said that Chinese companies are showing an increasing appetite for investing in Australia’s food sector “from gate to plate” as they seek to meet rising food demand at home and capture more expertise from Australia’s companies and farmers.  

Banks, both domestic and Chinese, are also increasingly interested in financing the sector at a time when many miners and energy producers are struggling to secure financing for new projects in the face of falling commodity prices and concerns of a falloff in demand ...

http://blogs.wsj.com/dealjournalaustralia/2012/08/22/kpmg-sees-more-chinese-investors-buying-aussie-farms/?mod=google_news_blog

Another indication of change is China investing in mines (and others) elsewhere where the government and people may be less hostile to Chinese money.  

http://www.ibtimes.com/articles/374441/20120816/china-gold-rush-africa-supply-barrick.htm

Nevertheless, merely containing the damage will not solve the fundamental problems that has wasted Chinese funds which could be better spent helping its poor and boosting domestic development and consumption. 

Attempts to monitor and penalise corrupt officials venturing overseas have been put in place but with limited success. Reports of arrests have been random and rare, for most have used their positions to amass personal wealth and enrich their cronies at the expense of the nation's benefit with little reprisals. 

http://www.globaltimes.cn/content/728010.shtml

China is a growing domestic market for local businesses and USA exporters with the right strategy and skills

US style stores in China will be a big strategic business mistake. China is not USA. It has a different historical experience and its rising middle class folks are not as wealthy, more frugal, evaluate essential and luxury expenses with a different set of criteria, and expect sellers to understand customer needs and offer good service.

As with past and future failures in transplanting wholesale western economic management, political systems, religious beliefs, culture and frameworks into totally different societies, Chinese and foreign sellers must be able to capture what Chinese consumers really need and willing to spend on. Marketing pitched at customers' priorities and preferences is the principle that works. Success comes to those who could adapt quickly with their offerings. 

Quote :

China is counting on rising domestic demand from this rapidly growing segment. So, too, are Western exporters, faced with anemic growth in Europe and North America.

But China's middle class isn't Charleston's. Western companies have misjudged Chinese shoppers' priorities and clumsily tried to export U.S.-style stores.

The potential buying power of China's middle class is vast. About 247 million Chinese, 18.2% of the population, qualify as middle class, meaning their households spend between $10 and $100 a day on average, according to Brookings Institution economist Homi Kharas.

If current patterns continue, the number will soar to 607 million by 2020, and spending by China's middle class will rival that of the U.S., after adjusting for inflation and purchasing power.

The trend has the potential to remake China. With export markets weakening in Europe and the U.S., economists say, Beijing needs to lift spending by its own middle class or risk that growth will slow sharply. Steady middle-class growth also could help China's trading partners, bolstering a market for computers, cars and trendy clothing, as well as for commodities such as copper, oil and cotton.

China already is the world's largest market for some middle-class emblems, including cars, personal computers and smartphones. And multinational companies show no signs of taking their feet off the gas.

Growing sophistication among some Chinese middle-class customers has led Five Star to upgrade in some cities. The Qingdao store has higher-priced electronics than older outlets—for example, cameras and high-definition video equipment for a first voyage overseas or a road trip across China.

With brighter lighting, additional seating and customer-assistance stations, the store in this port city of 8.4 million people also has more of the trappings of a stateside Best Buy.

Following its parent's lead, Five Star opened a small research department last year to conduct consumer surveys. When it learned that some customers considered the chain stodgy, Five Star developed a new icon: cartoon characters that appear to be drawn by Hollywood animators.

http://online.wsj.com/article/SB10001424052702303444204577460693377819420.html?mod=e2tw&mod%3D=e2tw

Australia taking China for granted

The world's greatest power (military and economic) as most see it at present has not missed any opportunity to show its contentions with its next arch rival China.  China has reached maturity in economic reforms and is looking ahead for more comprehensive governance. It has not dedicated sufficient time in addressing concerns of declared enemies and cold friends. This game willbenefit  neither China nor the West. 


Differences cannot be swept under the carpet. They must been talked about and resolved amicably. Concerns over Chinese acquisition of advanced technology has deprived the US of increasing export and close the chronic trade deficit problem. 
Similarly, Australia has also ruled out investments from Huawei on national security grounds. However, such issues have largely been ironed out or overlooked with such US investors. 


http://www.afr.com/p/technology/fortescue_chief_dragged_into_huawei_AF7FO9wwz63UedD664v2sO


On the other hand, America's good friend across the Pacific Ocean Australia has been ignoring China, given up business opportunities and learning, to its detriment, for the last 10 years and many years into the future.  Says Andrew Forrest who owns a notable mining conglomerate Fortescue Metals.  

http://www.perthnow.com.au/business/local-business/australia-taking-china-for-granted-andrew-forrest/story-e6frg2s3-1226330681528

Mr Forrest says Australia is not engaging with China ``anywhere near enough'', citing a lack of senior ministerial representation at what Boao Forum for Asia meetings.

``I see other countries with their senior ministers and prime ministers out there selling their own countries and I look around and say where is my country,'' Mr Forrest told reporters after speaking at a business lunch in Sydney on Tuesday.

``Now people don't need our legal services, they can get them elsewhere.

``They don't need our investment banking services, they can get them elsewhere.

``They don't need our resources, our energy. They can get them elsewhere, so let's not take it for granted,'' Mr Forrest said.

Mr Forrest's comments follow those of Department of Foreign Affairs and Trade Secretary Dennis Richardson, who said last year that Australia's footprint in China was lagging behind comparable Western nations.

``If you go back 15 or 20 years, we were leading the pack in terms of representation. We've now fallen off the pack,'' Mr Richardson said in October.

Risks of Doing Business in China - avoiding pitfalls and horrors : Contract Law 101

Do your homework : due diligence is crucial in any business venture, especially the legal protection and liability of doing business in a foreign country.

China: Contract Management – Avoiding the Horror Stories

20 December 2011

Article by Matthew McKee

Source : Mondaq : Corporate / Company Law

There are very many stories about doing business in China – some exceptionally successful, others diabolical failures. These include foreign companies entering into contracts with Chinese companies that do not exist or the joint venture partner who was a "friend" that appropriates all the assets; unknowingly the joint venture was setup in a way to leave the foreign company with no legal recourse.

Our experience is that what makes these disaster stories worse is that they are usually easily avoidable. Whilst some fear that the enforcement of legal rights in China is somewhat of a hopeless endeavour, our experience is that in reality obtaining a just result is very achievable.

Practice Point 1 – Know who you are contracting with.

Practice Point 2 – Obtaining judgment in an Australian court may be worthless

Practice Point 3 – Avoiding Chinese Courts

Practice Point 4 – Be aware of limitation periods

Practice Point 5 – Proper documentation

http://www.mondaq.com/x/158312/Contract+Law/China+Contract+Management+Avoiding+the+Horror+Stories