Business confident in China outlook: survey

Business confident in China outlook: survey

Tue, 17/04/2018 - 10:16
Busy street

Australian business remains confident in China, despite simmering political tension. Photo: Redd Angelo

Recent geopolitical tension between Australia and China has done little to dampen business sentiment, with around 80 per cent of Australian businesses active in China optimistic regarding their prospects for the next 12 months.

However, 40 per cent of them believe doing business in the People’s Republic has become more difficult and complex.

The findings were part of the 2018 Westpac Australia-China Business Sentiment Survey, conducted in collaboration with AustCham Shanghai.

Alongside 78 per cent of respondents that reported a positive sentiment for the next 12 months, 83 per cent of respondents indicated increased positivity for the next five years.

The survey found 66 per cent of respondents were profitable in 2017, while 79 per cent expected to be profitable this year.

Of those that expected losses in the 2017 financial year, 73 per cent indicated optimism for the next 12 months, while 60 per cent of respondents expecting losses in 2018 indicated some level of optimism.

Around 45 per cent of respondents increased their investment in 2017, while 51.2 per cent said they would increase their spend this year.

“It was encouraging to see that the overwhelming majority of respondents held a positive 12-month outlook for their China operations,” AustCham chairman Craig Aldous said in the report.

“This positivity was no doubt partly fuelled by the fact that Australian businesses profitability in China is increasing year-on-year.

“Lifted by growing profitability, businesses are also increasing their investment, with over half of respondents regarding their China operations to be outpacing other markets.”

A total of 161 respondents participated in the survey.

Another key finding was that the majority of those that participated agreed that technological innovation, particularly in media and communications would be the number one trend shaping business in China for the next three to five years, yet only 16 per cent have a China e-commerce strategy.

The biggest challenges for Australian businesses operating in China included retaining top talent, domestic and foreign competition and the Chinese regulatory environment.

“While working for a multinational business used to be the Holy Grail for the Chinese urban population, the rise of credible brands from China and increasing national pride has gradually lessened the appeal,” the report said.

“A new generation of educated Chinese youth, many who have studied and worked abroad are increasing the talent pool.

“However, they are no longer aiming their career aspirations solely at international companies, but rather are being drawn to those organisations, local or foreign, that invest in creating attractive workplaces.”

Around 25 per cent of respondents said unpredictable government policy was the biggest risk to success in China, while 23 per cent identified new competitors or business models as the top risk.