Core tip: avoiding the policy walls, investment in agriculture between China and Australia is still promising, a common voice from Australia`s goverment executives, business and research institutions. China will play a very important role in Australia`s future agricultural production. What will be the real opportunities in the future and how should we grasp them?. This is what the most authoritative voice says. The innovative business model introduced by Borderless Cattle (, an innovative business model, focuses on wealthy Chinese consumers, high-end restaurants, nutritious food companies and specialized clubs.
Drones will follow the herd above the Australian cattle farm, and local farmers will be able to speak a few words in real time to buyers and customers at the other end of the camera to explain how they look after the cattle.
The head of the company, Yu Wei Siang, a Singapore-born entrepreneur with an Australian education background, says, Borderless Cattle has developed a supporting technology and business operation mechanism that allows Australian farmers to raise and sell cattle. But don`t worry about being criticized for selling farmland.
After the purchase of cattle, Borderless Cattle`s investors can see the health of the cows on a regular basis on their own smart devices, such as their mobile phones, to be culled, processed, and packaged to China, with full chain "source of trace" to safeguard food safety.
Our goal is to create a new beef economy for the Chinese market, Dr., Yu Wei Siang said in an interview with the media.
The concept of cross-border cattle farming is said to be officially launched by Borderless Cattle next month, with the Australian Trade Commission`s (Austrade) involved, initially promoting it on farms in Victoria and Queensland. "the Chinese want to eat healthier and control more of the supply chain and improve overall transparency when getting food," said Dr. Yu, who is currently based in Shanghai. This awareness of a highly awakened healthy and safe diet is particularly evident in large cities. In Shanghai, he said, there are more than a million members of a club focused on ensuring that consumers know the source of their food. As agricultural land touches the country`s core interests, how investment in Australia`s agriculture shunts sensitive minefields, especially by businesses in both countries.
Borderless Cattle`s concept of cross-border cattle farming is a useful exploration to fit the two-way demand.
The agricultural economic exchanges between China and Australia, from the beginning of agricultural trade to investment in processing assets, to investment in infrastructure assets such as land, are gradually heating up. Between 2015 and 2016, The Chinese consortium`s high-profile acquisition of the 100, 000-square-kilometer cattle farm in the Kidman beef empire was rejected by the Australian finance minister, underscoring the resistance to investment in agricultural land, especially farm land.
Australia`s goverment has clear limits on foreign access to agricultural land, with deals above A $15 million subject to scrutiny, and the amount is cumulative, not a single deal.
ACB News (Australia-China Finance online) reports that agricultural investment between China and Australia is still promising, avoiding the high wall of policy. This is the main message from the recent (ACBC) summit of Australia`s China Business Council, "out of Farm: China`s Agricultural Investment in Australia"-that entrepreneurs and investors in both countries should look to broader opportunities.
Speaking at the summit, Zhao Jian, consul general of the Chinese Consulate General in Melbourne, said that China is currently the fastest-growing country in the world and will maintain steady and rapid growth. In the next five years, China is expected to import US $5 trillion of goods, attract US $600 billion of foreign investment, and foreign investment of US $750 billion, which will bring more capital to countries such as Australia. More products and more opportunities.
How will this feast of opportunity between China and Australia be opened, and how will it bloom in the field of agriculture? It is the main topic discussed at the summit.
"out of Farm: China`s Investment in Australian Agriculture" Summit, hosted by ACBC Victoria Branch (ACBC Victoria), was jointly supported by audit tax consultancy BDO, Federal Bank of Australia, (CBA), and the Australian Institute of Certified Public Accountants (CPA). Attracted more than 150 guests from Australian and Chinese businesses to participate.
How can Australian companies take advantage of the opportunities presented by China? ACB News reported that Rob (Andrew Robb), chairman of the ASIALINK Board of Directors and former Australian Minister of Trade, witnessed the signing of the China-Australia free trade agreement and reminded Australian companies in a speech at the summit. The deal brings favorable tariff preferences and market access, but these opportunities will eventually be available to other countries. The implication: we should hurry up. The current external conditions are beneficial to Australian agriculture. Rob said the United States, led by Trump goverment, may continue along the protectionist path, leaving the opportunity to Australia. Australia`s agricultural products can focus on meeting Asian market demand with less competition. If Trump implements his promise of tax cuts that will stimulate and drive global economic growth, the result will be a rise in the dollar and a downward trend in the Australian dollar, which will make Australian products more competitive in the export market.
Rob said Australian brands have a high reputation in the Chinese market and have a clean, green and healthy image. In this case, we should pay more attention to the high quality of the product and uphold the high standard of production.
For Chinese companies to invest in Australia, he suggested focusing on joint ventures in agro-business and services. A local company can receive capital support, but also open the door to the Chinese market. On this point, a lot of speakers on the scene mentioned.
What role China will play in future agricultural production in Australia, ACB News reported that participants mentioned that the export destination market for Australian agricultural products will usually become a source of foreign investment. Overseas investors tend to be patient and willing to take longer to build their portfolios. In the future, Australia will continue to rely on external capital for agricultural development.
In his presentation, (Mick Keogh), president of the Australian Agricultural Research Institute, pointed to one important difference: attitudes towards foreign investment in Australia`s urban and rural areas are not the same, and people in the cities tend to be more resistant to these activities. It was the farmers who took root in the land that needed capital. Agricultural output depends on productivity gains, because the opportunities for agricultural land expansion are limited. In this case, new technologies and increased productivity have a decisive impact on output, and these require capital inputs.
Keo believes future industrial development will require integration of small farms, with people willing to embrace new technologies and adapt to new, more intensive production systems.
China is currently Australia`s largest export market for agricultural products. The United States, which ranks second, is only about half as important as China. Mr Keo warned Chinese investors that a long-term strategy was needed to invest in Australian agriculture, and that "fast-forward, fast-moving" was not desirable. Australia`s agricultural production system is different from the rest of the world. A key success factor is the management skills and experience of the Australian corporate management team. Those successful agricultural investments are willing to rely on the results of the local management team.
In line with Rob`s views, Mr Kiao is also keen to endorse the form of joint venture partnership, which is less risky and combines supply channels with localized management techniques.
What do Chinese companies want to invest in Australia?
The image of Australian agricultural products in China, in addition to clean, green, healthy, but also represents the pursuit of quality of life, these are Australia`s food and agricultural products presented in front of the Chinese middle class four valuable characteristics.
Australia has plenty of room to use and develop its skills and experience in business operations and financial management, to take advantage of its intellectual property rights, processing processes and technologies. The location near Asia also brings great comparative advantage.
Dorian (Nick Dowling), managing director and president of New Hope Group Australia and New Zealand, said Asia`s middle-class population was 525 million in 2011 and is expected to grow to 3.2 billion by 2030. Growth in consumer spending will be driven by China and India.
Australia`s Asian opportunities are mainly grain exports, but in the future, exports of animal protein, processed food and branded food will grow and generate huge profits. Changes in Asian diet and consumption habits can boost demand for products such as beef. Australia must compete with other exporters. To win, it is important to provide a good, efficient investment environment and strengthen trade advantages. "
FRIB president: Australia`s current foreign investment landscape ACB News reports that there are many sensitive topics when it comes to foreign investment, such as key infrastructure, agricultural land, residential real estate and so on. The Australian Foreign Investment Council (FIRB) exercises its responsibilities in accordance with national interests and ensures that any external investment does not run counter to national interests.
Recently, the FIRB adjusted the threshold for investment in agricultural land and agribusiness, which is A $15 million and 55 million for agribusiness investment. Transactions above that amount are subject to review.
Wilson (Brian Wilson), chairman of FIRB`s board, said much of Australia`s agriculture had to come from abroad because Australians themselves were not ready to invest in many areas.
In reviewing agricultural deals, in addition to national interests, there are many areas of public and FIRB concern, including transparency in pricing, openness to critical infrastructure, and the impact on local communities.
Over the past two decades, FIRB has reviewed 500 transactions a year, and only five applications have been rejected during the period. However, the media have given far more attention to cases that have not been tried.
Half of the population thinks Australia`s level of foreign investment is too high. A small number of people even believe that foreign investment should be banned. Wilson believes this is an emotional response that does not take into account the economic facts.
The aim of the FIRB is to review investment proposals based on a range of criteria, such as economic and social impacts, national security and market competition, and others on legitimate compliance and the reputation of investors.
Wilson believes the Australian public needs to make informed decisions based on sufficient information. Over time, they will become more familiar and receptive to foreign investment, provided foreign companies operate transparently.
Australian public`s "true attitude" to Chinese investment in Australia reported that Lauren (James Laurenceson), associate director of the Institute of Australian-China Relations at Sydney University of Science and Technology, explained that according to the findings, It is true that some members of the public have expressed resistance to Chinese investment, but the situation is not as bad as the media has suggested. It is clear that, regardless of the country from which investment, people are most concerned about foreign ownership ratio. From this point of view, the joint venture partnership has not only commercial significance, but also public relations significance.
At present, Chinese investment in Australia`s agricultural land accounts for only a small proportion of all such foreign investment, about 5%, but the growth is very rapid.
Not surprisingly, agriculture tops the list of areas where foreign investment is the least supported, the Roy Institute has investigated. Australia`s agriculture needs investment, foreign investment wants to come in, and the public is very opposed to how to explain to people the positive impact that an investment is expected to have, and thus to build public confidence.
How to do a good job in Public Relations for Foreign-funded Enterprises
At the summit, Howard (Lyall Howard), head of goverment relations at health-care group Ajiapo, shared with guests how foreign investors handled goverment`s relationship with the community. First, he stressed that Australia has always been dependent on foreign investment, and that domestic investment opportunities far outweigh those available at home. For example, the iron ore industry in Pilbara, Western Australia, was first funded by Americans. Australia has plenty of resources, but it doesn`t have the capital to build infrastructure such as mines, railways and airports.
"this demand for foreign investment will not change, but the execution of foreign transactions requires complex communication with the goverment." In many cases, professionals are required to manage all levels of goverment relationships and maintain smooth communication.
Howard mentioned several "practical" suggestions:
First of all, local enterprises and foreign investment negotiations do not cover up. Because usually the media will be the first to reveal, this is a hot topic of public concern.
In addition, when submitting investment proposals to the goverment sector, it is important to go above the ministerial level. The back seat of the Senate is very important, and of course, it has to be a member of the Senate in the corresponding constituency.
Members of Congress represent the community behind them, and foreign companies should understand Australia`s community politics and Canberra`s situation.
The audience of rural communities is more concentrated, and foreign-funded enterprises should understand the audience they are facing. Only 11% of people in rural areas are born overseas (26% in cities), while rural real estate transactions are less than in cities, which means they have a heavy attachment to the land and communities they live in under their feet.
