11 Feb 2014
Words Tim Admin

China Set For Significant Investment

“HUAN YING” … IT MEANS WE ARE “PLEASED TO WELCOME YOU” Recently returned from a major Government-led delegation to China and Hong Kong, Resort Brokers Australia is preparing for the rising tide of Chinese interest in Australian tourism. That interest will come not only from tourists themselves, but from those seeking tourism business and investment opportunities. The rising middle class of the world’s most populous country, now enjoying increasing freedom and wealth, has given Australia its fastest growing and most valuable overseas tourism market. In 2011, China was Australia’s third largest inbound market for visitor arrivals, but it was the largest market for total expenditure and visitor nights. China delivered us more than 540,000 visitors (up 19.4% on 2010) and A$3.8 billion (up 15%) in spending. Tourism Australia now believes the China market has the potential to be worth up to A$9 billion per annum by 2020. Queensland welcomed 203,000 of those Chinese visitors last year, and they spent $422 million, an increase of 25% on the previous year. Tourism Queensland says those figures could double in five years to 429,000 visitors spending $829 million. Little wonder Governments and the private sector are courting the Chinese market. Resort Brokers Australia had the privilege of being invited to join a recent trade mission led by Queensland Tourism, Major Events, Small Business and Commonwealth Games Minister, Jann Stuckey, visiting Guangzhou, Shanghai, Beijing and Hong Kong. “Resort Brokers was the only tourism business and property broker in the delegation which included representatives from Accor (operator of hotel brands Sofitel, Grand Mercure, Mercure, Novotel, Ibis and Motel 6 in Australia), tourism promoters and developers of projects in along the Queensland coast,” said managing director, Ian Crooks. “The clear message was ‘we are open for business’ and it was a tremendous exercise in building relationships, identifying opportunities and opening lines of communication. “We met with several companies, including Shanghai Greenland Group, a Fortune Global 500 list company and one of China’s premier property developers. There is no doubt the Chinese have a great desire to come to and invest in Australia.” Immediately after the mission came the announcement that China Southern Airlines will increase daily services between Guangzhou and Brisbane. A month earlier, China Eastern Airlines’ had announced three direct flights a week from Shanghai to Cairns. “Trade missions such as this highlight there are excellent investment opportunities available, not just in areas such as mining and agriculture, but in a mix of industries, and in particular tourism,” Mr Crooks said. A Chinese Ministry of Commerce spokesman recently told Queensland’s Courier Mail that Chinese investors were looking to diversify beyond the resources sector. KPMG Brisbane-based partner and President of the Queensland arm of the Australia-China Business Council described this as “definitely good news for tourism.” “There is certainly interest in property projects. There is interest in the Gold Coast, in Brisbane, but also some of the regional areas as well. “I think that’s a wonderful message for Queensland because it means other key industries can seek access to capital through the Chinese.” There is certainly evidence of China’s rising interest in tourism assets. Earlier this year, Chinese-linked White Horse purchased Lindeman Island on the Great Barrier Reef for a sum reported to be close to $12 million. On the Gold Coast, Ridong is set to go ahead with its ‘Jewel’ development, a $1 billion six-star international resort project on a 1.13-hectare beachfront site at the southern end of Surfers Paradise. Riyu Li, founder of Ridong, shelled out $81.8 million for the site in 2009. Ian Crooks believes a new Federal Government visa-linked scheme is set to open up widespread opportunities in the more accessible $5–10 million investment bracket. “The new Significant Investor Visa will help Australia compete more effectively to attract overseas investment, making it easier for investors coming to Australia by offering some concessions on visa requirements,” he said. The Significant Investor Visa initiative, expected to be implemented later this year as part of the new Business Innovation and Investment Program, will target migrants who make an investment of at least A$5 million in Australia. “It will attract investment that contributes to the Australian economy, targeting high net worth immigrants who create innovation and job opportunities,” Mr Crooks said. And, according to many respected economic and foreign affairs experts, Australia should encourage more Chinese investment in domestic industries and reap the benefits of China’s vast capital reserves. “We have always needed foreign capital to help develop our industries and unlock our potential,” Department of Foreign Affairs and Trade Secretary Dennis Richardson recently told a conference in Canberra. “Foreign investment creates Australian jobs, boosts household incomes, encourages innovation and new technologies.” While there has been some discussion lately around the question of whether Australians are comfortable with increasing levels of Chinese investment, history shows we are ultimately accepting of foreign investment. And the Chinese are certainly not new to our shores. The Victorian and New South Wales gold rushes of the mid-1800s first saw Chinese people arrive in Australia in significant numbers. Chinatowns developed across Australia and, as gold and other minerals were discovered in Queensland, the Northern Territory and Tasmania, Chinese miners followed. Later, as mining became less profitable, Chinese entrepreneurial flair blossomed – in market gardening, storekeeping, importing and exporting, hospitality, manufacture, fishing and pearl diving. According to Professor of Tourism at Victoria University, Brian King, Australia’s tourism relationship with China has also been relatively long-standing. We actually had a head start on attracting the Chinese travel market, he says. In 1999, Australia (with New Zealand) was the first western country to receive “approved destination status” – allowing Chinese citizens to undertake group-based leisure travel down under. “It (the status) indicates that China’s government trusts the partner and promotes business and diplomacy,” Prof. King wrote in a series “Australia in the Asian Century”. But perhaps we have been a little slow to wake up to just how significant China’s now booming travel market would be. Other western countries have since been granted ‘approved status’, and there is increasingly intense competition for the Chinese tourist. Federal Tourism Minister Martin Ferguson recently warned Australia’s tourism operators that huge infrastructure investments had to be made if Australia was to reach its 2020 visitor target of one million arrivals a year from China. Tourism Australia managing director Andrew McEvoy chimed in, saying increasing numbers of visitors from China were “neither inevitable nor guaranteed.” He explained that reaping the benefits of the ‘Asian Century’ required being “China ready”. “You can build all the demand you want through compelling ads, but if the actual experience fails to deliver on the promise, you end up doing more harm than good.” With the Chinese trade mission fresh in his mind, Ian Crooks understands the point. “Chinese visitors to Australia see us as a destination offering great natural beauty, unique experiences, and iconic attractions, but awareness beyond this is limited, and our product is seen as dated. “Our natural environment is very important, but Chinese tourists also expect a certain level of development, comfort, quality facilities and services,” Mr Crooks said. “To grow the Chinese tourism sector we need to expand the facilities on offer – shopping, casinos, quality accommodation – and existing operators need to make a concerted effort to meet the needs of the Chinese market. “Accor, for example, is developing a specific strategy to make Chinese visitors more comfortable – Chinese dishes on the menus, access to Chinese media, and special training to equip staff to better serve Chinese guests. “If you doubt the importance of implementing such initiatives, consider the value of even a tiny slice of the immense Chinese market,” Mr Crooks said. “When China’s 8000 Amway representatives visited New South Wales for five days last year, they injected more than $40 million into the local economy through accommodation, travel, sightseeing and shopping. “I’m told they paid an average room rate of $350 a night and pushed Sydney city hotel occupancy to 95%.” From an investment perspective, Australia has several key advantages, he said. “Our stable government, 20 years of continuous growth and, perhaps most importantly our time zone, make Australia very appealing. “The east coast of Australia is just two hours different to Beijing, whereas Europe and the USA are in completely different time zones, making them incredibly difficult to manage.” Following the successful trade mission, Resort Brokers Australia has already teed up meetings with prospective buyers of Queensland tourist businesses and will take part, with buyers, in a two-day conference explaining the new Significant Investment Visa. “We are also looking forward to attending HICAP 2012 in Hong Kong in October,” Mr Crooks said.“It is Asia Pacific’s premier hotel investment conference where the region’s preeminent players and executives gather to meet, network, explore opportunities, exchange ideas and learn.” Mr Crooks said the Chinese contribution to Australia country as business pioneers was long proven. “The catalyst for Chinese migration to Australia has always been economic opportunity, and so it will be again. “And as it has always been, the opportunities hold great mutual promise and benefit.”