Firms say getting ahead in China ‘extremely difficult’

Only 10 per cent of firms in a survey say they find the Chinese business climate easy.

More than two thirds of Australian companies that operate in or with China report in a new survey that doing such business is either somewhat or extremely difficult.

Only 10 per cent of those surveyed say they find the Chinese business climate easy.

This is a key finding of the report on business conditions from more than 100 members of the Australian Chamber of Commerce in Beijing, south and west China, and of the Australian China Business Council in Victoria, with support from KPMG and Melbourne University.

Most of the respondents are producing goods and services in China or sourcing them from China, where only 10 per cent operate in joint ventures. About a quarter of the companies are described as large (some are global) and the rest, some of whose principals and founders live in China, are small.

Finding suitable local partners is the top challenge for the Australian firms. Rising labour costs in China are a concern for 65 per cent of them. Chinese protectionism worries some and 90 per cent of education sector firms are bothered by heavy-handed internet regulation.

The survey classifies the companies into four major categories: agribusiness, financial services, education and resources. The former two find the going harder in China than the latter two.

They report their key competitors are other Australian and foreign-owned companies.

More than 90 per cent believe good relations between Australia and China are important for the growth of their business.

Almost half rank China as their top priority for investment globally and 38 per cent put it in the top three. Forty six per cent view China’s environment for inbound investment as improving and 32 per cent rate it as static.

Rowan Callick