Demystifying Chinese Investment in Australia

Demystifying Chinese Investment in AustraliaApril 2016kpmg.com.auThe new normal: health, happiness, lifestyle and servicesISSN 2203-2037 11/04/2016 2 Demystifying Chinese Investment in Australia | April 2016© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Demystifying Chinese Investment in Australia | April 2016 3© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), afiSwiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.About our reportsKPMG and The University of Sydney formed a strategic relationship to publish research and insights on doing business with Chinese investors. Our first 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. MethodologyThe 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, final completion and financial 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 verified, 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 fluctuations. 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. 4 Demystifying Chinese Investment in Australia | April 2016© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.Chinese investment in Australia in 2015: Ten things you need to know2015 was the second