Since Advance Australia Fair was confirmed as the country’s national anthem in 1984 it has been trumpeted out pretty frequently at scenes of Aussie sporting triumph.
But lyrics that boast of a land abounding in natural gifts and golden soil appear more appropriate in the commercial context this week, especially on news that the first of a series of proposed investments by Chinese companies in Australian resource firms has been waved through.
Opponents of the deals are concerned that too much influence in the country’s core commodity sectors is being given up. In Canberra Prime Minister Kevin Rudd is facing criticism for a stance that some say is not patriotic enough, with opposition leader Malcolm Turnbull telling him to remember that he is not “a roving ambassador for the People’s Republic of China” and “has to put our national interest first.” Wags in the domestic press have even taken to referring to Rudd as the “Manchurian Candidate”.
Away from the brickbats, there are three major approaches for Australian companies on the table. Hunan Valin Iron & Steel received official permission this week to purchase up to 17.55% of iron ore producer Fortescue for $438 million.
OZ Minerals – another mining firm – is reshaping a deal to sell the bulk of its assets to China Minmetals, following an initial ruling last week that blocked the sale on national security grounds. Canberra was concerned that a south Australian mine included in the transaction was too close to a militarily sensitive weapons-testing area. Analysts expect a revised $1.2 billion deal (without the mine in question) to go through. OZ Minerals says it will probably go into receivership if the deal falls through.
The largest deal of the three – Chinalco’s proposed $19.5 billion investment in Rio Tinto – continues to be scrutinised by the Foreign Investment Review Board.
Depressed prices on global stock markets mean that the timing looks good for Chinese bidders. But the global downturn also means that they have to contend with rising protectionist sentiment.
Despite public protestations to the contrary, a variety of international leaders seem to be bowing to protectionist pressures. Increases in import duties and export subsidies, nascent “buy national” campaigns and toughened visa restrictions have figured in a range of legislative programmes.
How long will opposition to Chinese acquisitions of overseas companies last? Presumably much will depend on the length and depth of the current recession, as well perhaps on how quickly Chinese firms learn to better structure and communicate their acquisition efforts.
Ambition for overseas adventure seems undimmed by some of the current hold ups. A report from accountancy firm Deloitte reported in the UK’s Daily Telegraph reckons that a third of the Chinese executives surveyed were planning “large strategic acquisitions” in Britain in the coming months. Low share prices and sterling’s weakness offer genuine opportunities to those keen on acquiring recognised brands or technological expertise, Deloitte says.
Back in Australia, the major focus is on natural resources. But, wherever the potential acquisition, Chinese buyers feeling discouraged might want to refer to another verse from Advance Australia Fair. A burst of “For those who’ve come across the seas, we’ve boundless plains to share” might seem a little self-serving in current circumstances. But Beijing may need to think creatively to get some of the proposed deals across the finishing line.
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