Australia has a golden opportunity. A historic chance to be a global trade leader when the very concept is under strain in many parts of the world. China is at an unprecedented phase of outbound investment. For Australia, this is big news. As the Foreign Investment Review Board reports, Chinese investment planned $46 Billion of investment into Australia in 2015, twice that of 2014. Australian companies in the property, agribusiness, energy and healthcare sectors among many others have a unique chance to benefit for many years from this new phase of China’s development. But Australia must not fall into the trap of being enticed by numbers like these without realising the changes required to successfully attract Chinese clients.
Most companies tend to overestimate the short term and underestimate the long term when it comes to doing business with China. Dazzling market potential figures spur on China Strategies, which are too often eventually withdrawn for many reasons – frustrated shareholders, confusing business practices, ever-changing rules. It’s no surprise that many major companies give up ambitions on growing business in the country.
So what chance do Australian businesses have in engaging with China as they invest globally? Thankfully, the task is easier than it looks. There are three things that Australian businesses need to do:
- Sell Expertise, Not Products
- Manage Pipelines
- See A Bigger Picture
1. Sell Expertise, Not Products
The real value that Australian companies are selling is not the product or service they provide. They are selling “Doing Business in Australia”. Doing business in China is a huge challenge – working in a completely foreign environment can be disorientating. By the same token, incoming Chinese investors have limited knowledge of the rules, regulations and processes that would seem perfectly normal to Australians.
My Chinese clients have entered Australia only in the past three to four years – some only within the last year. When I took away assumptions of what they knew about doing business here, I was in a position to teach them something valuable. Explaining how my industry worked in Australia and providing them with unique insights helped them to understand why certain things happened here, and what they needed to change in their approach.
The best part is that Chinese investors are eager to learn, and are very good listeners. Australian businesses can therefore become a valued partner from the start of new Chinese clients’ journey outward. This should be considered in their initial approaches – invite Chinese clients to seminars in their field, present research pieces, foster introductions to industry heavyweights. All these things will prove that companies have something greater to sell.
2. Manage The Pipeline
Decision making processes at Chinese companies are usually consensus driven. A chain of stakeholders within many horizontal divisions of a company must be engaged before a decision is reached.
Chinese companies investing in Australia have even more stakeholders to satisfy – the divisional teams in China headquarters and their local subsidiaries in Australia.
My first step when engaging Chinese companies is to understand concisely what the process is at a target company. This has varied from firm to firm, depending on whether the company is private, public or state-owned. To achieve this I have relied upon active representation in China, who have not only has informed me of the company’s decision making process, but also reported on changes regularly within the company.
At a recent Q&A Session of the Australia China Business Council, Chinese business experts from agencies Fluid, Protocol and The China Way stressed that the Chinese market changes drastically every six months. They prescribe that current representation in China is critical to conduct business with Chinese companies.
Australian businesses must build an infrastructure to accommodate this. Having touch points and regular communications between the deal source in China and the target country representatives will minimise lost opportunities.
3. See A Bigger Picture
This all may seem a tall order for an Australian companies. All of this requires a lot of work, co-ordination and unique new skills to effectively engage this segment. It may be easier to stick to current expertise with existing clients, where results are more predictable.
But would they be turning back on a single investment opportunity or something much bigger? My Chinese clients have huge projects they are planning, and incredible ambitions in Australia. They are at their infancy in their foray into foreign markets, and this is the start of a long term series of investments. For me, this is too big an opportunity to miss.
Australian businesses should map out precisely what the target company’s ambitions are. This is often not self-evident – it will come only once trust is built with the client. More often than not, the ambitions will be very impressive and lead to greater opportunities. Being at the start of the journey with Chinese companies and providing value beyond products and services will be remembered.
By using simple virtues of patience and understanding, Australian businesses can not only capitalise but rise to a greater purpose in the world. Australia is one of the top destinations of Chinese outbound investment. Let’s not waste the opportunity.
Charlie McDonald is a Business Development Manager, focusing on outbound Chinese companies and investors. He can be reached at firstname.lastname@example.org