'Howzat', the story of how Kerry Packer revolutionized cricket, scored 2 million viewers for Channel 9 on two nights. That was in the 1970s, when men were men and women were sheilas. But cricket, compared to other sporting codes, is looking distinctly seedy.
Several factors need to be considered. First, AFL and of course soccer, have always have a strong strong following in the ethnic communities. Cricket in Australia has yet to produce a true champion of South Asian origin, a natural target market. So many AFL champions have come from non-Anglo Celtic backgrounds that it would take all of this blog and more to list them.
Second, women have always formed one third of all AFL spectators. If you find a woman at the cricket, she is probably reading a book to stave off boredom. The AFL women's competition is said to be the fastest growing female sport in Australia. Women's cricket is overlooked, even though it has had an important role in the development of the sport.
Third, access to major events often requires membership of a club such as the Melbourne Cricket Club (MCC). Now, I have no intention of casting aspersions on the probity of the MCC's membership selection process, but I will say that in the near-on 20 years that I and my children have been on the MCC waiting list I have heard nothing at all from the MCC. When I made a telephone inquiry, all I could find out was that was indeed on the list. The club categorically refused to offer any estimate on when I would be offered membership.
Fourth, a great many people share my memories of cricket -- some lout in the nets throwing a very hard ball at you as fast as he can; sitting in the sun getting third degree burns; looking away as a relief from the aching boredom, only to hear a shout go up as something actually happens for the first time in half an hour. In other words, unless you were brought up in a cricket culture, like the South Asians, cricket is awfully boring. This is not helped by the fact that the Australian Test team is in a slump. Cricket rarely even rates a mention on the TV news any more.
AFL, on the other hand, has bravely struck out where many marketers might fear tread, by launching the Gold Coast Suns and Greater Western Sydney Giants. A very long time ago, I owned shares in a company that was taken over by Qintex Australia, which was controlled by Christopher Skase. After examining the annual report in some bewilderment, the only businesses Qintex Australia appeared to own were a small boatyard and the Brisbane Bears football team. One of my peculiarities is that actually take an interest in the businesses I hold, so when we were holidaying on the Gold Coast I went to Carrara to inspect the Bears' ground. It was in the middle of nowhere and the seating looked distinctly temporary; jerry built, one might say. But the AFL did not give up -- the Bears became the Lions, moved to Brisbane and won three premierships in a row, unmatched in the post-war era. The Suns were recently relaunched on the Gold Coast and on the second last fixture in the home and away round not merely beat, but humbled, the might of Carlton, one of the most successful AFL teams of all time.
As for the Giants, what marketer worth his salt could pass over 2 million people? Sure, it's in Sydney's west in what is coyly called a 'lower socio-economic area' and it's the heartland of rugby league but those people have considerable spending power; if you're offering an advertiser blanket coverage, it's a gap you have to fill. Expectations were perhaps a bit high but membership sales were good. Kevin Sheedy, the Giants' mentor, is a one man walking press release as well as being one of the outstanding coaches of the modern era.
Will Western Sydney be a bridge too far for the AFL's Andrew Demitriou and his marketing department? Every major market now has the requisite two teams. The ACT, the Northern Territory and Tasmania hold promise but are commonly judged to be too small (or poor) to host their own teams. Hawthorn is very popular in Launceston, not least for the business the Hawks draw on their regular visits to northern Tasmania. Do we discern the siren call of foreign shores?
If cricket is danger of missing the cut, the AFL is alive and kicking -- hard.
Tuesday 28 August 2012
Monday 27 August 2012
Industry super fund ads are deceitful
You have probably noticed the advertising campaign being waged on the nation's TV screens in favour of industry superannuation. This campaign is at best deceitful and at worst deliberately misleading.
Let's look at some of the claims. They say, for example, that they have eliminated ingoing commissions and forced private super funds to eliminate theirs. It's a fact of life that private sector funds have to pay their agents somewhere along the way, otherwise they may as well go and volunteer to serve those suffering in Darkest Africa. We all have to make a living. Anyone who believes differently is living in La La Land. The reason the industry funds can get away with paying no commissions is called default super. Fair Work Australia (FWA) is its so called 'modern' super nominates a default fund or funds. That is, all employees who do not nominate a super fund are channeled into the default fund. Between those who take the default option and those who join the union fund (often encouraged by their employer), it is common for 70 percent of employees covered by that award to join the default fund. Nice work if you can get it for the industry super board members.
Note, I did not say 'union members'. Australia's 'modern awards' are modern in the sense that the horse carts that carry tourists around some cities are 'modern'. In our lunatic, archaic industrial relations system, just about all workers are covered by an award that determines their wages and conditions. But only 13 percent of workers in the private sector are\unionists. Thus, default super covers all workers regardless of whether they are union members or not -- and they are usually not. It's a new riff on the old closed shop. The industry funds don't need to recruit members or pay commissions -- FWA does it for them.
The second item I wish to examine is the oft repeated claim that industry funds outperform private funds. Vanguard in the US have a well-known slogan 'In Passive We're Massive'. In other words, match the market. It's a proven fact that most active fund managers won't even match the market. In the Australian context, the bulk of most portfolios have been no brainers -- Rio, BHP and the four major banks make up about 70 percent of the market. If you had invested in them long term, you would have done enough to keep your members happy. But any financial product offered to retail investors must have a disclaimer (legally required by the Australian Securities and Investments Commission)-- 'past performance is an unreliable guide to performance in the medium or long term'. Now, unless you're investing with Warren Buffett, the Sage of Omaha, this is very good advice. Portfolio management is far beyond my abilities as an amateur stock picker, but in essence active portfolio management can be boiled down to 'what goes up must come down.'
Referring to the the direction of stocks listed on the ASX, the AFR's Chanticleer column (14 July 2012) comments 'The majority of Australians in default superannuation funds will have a high exposure to resources and will be vulnerable to a China slowdown. In fact, those with the typical default fund\ should brace themselves for negative super returns for he year to June 2012 of between 5 and 7 per cent simply because of their exposure to companies such as BHP Billiton and Rio Tinto. ' It's worth bearing in mind the old market saying 'anyone can be a genius in a bull market.'
Thus, the implication that industry super funds they will continue to outperform private funds in the medium to long run is at best deceitful and at worst verges on being unlawful.
Let's look at some of the claims. They say, for example, that they have eliminated ingoing commissions and forced private super funds to eliminate theirs. It's a fact of life that private sector funds have to pay their agents somewhere along the way, otherwise they may as well go and volunteer to serve those suffering in Darkest Africa. We all have to make a living. Anyone who believes differently is living in La La Land. The reason the industry funds can get away with paying no commissions is called default super. Fair Work Australia (FWA) is its so called 'modern' super nominates a default fund or funds. That is, all employees who do not nominate a super fund are channeled into the default fund. Between those who take the default option and those who join the union fund (often encouraged by their employer), it is common for 70 percent of employees covered by that award to join the default fund. Nice work if you can get it for the industry super board members.
Note, I did not say 'union members'. Australia's 'modern awards' are modern in the sense that the horse carts that carry tourists around some cities are 'modern'. In our lunatic, archaic industrial relations system, just about all workers are covered by an award that determines their wages and conditions. But only 13 percent of workers in the private sector are\unionists. Thus, default super covers all workers regardless of whether they are union members or not -- and they are usually not. It's a new riff on the old closed shop. The industry funds don't need to recruit members or pay commissions -- FWA does it for them.
The second item I wish to examine is the oft repeated claim that industry funds outperform private funds. Vanguard in the US have a well-known slogan 'In Passive We're Massive'. In other words, match the market. It's a proven fact that most active fund managers won't even match the market. In the Australian context, the bulk of most portfolios have been no brainers -- Rio, BHP and the four major banks make up about 70 percent of the market. If you had invested in them long term, you would have done enough to keep your members happy. But any financial product offered to retail investors must have a disclaimer (legally required by the Australian Securities and Investments Commission)-- 'past performance is an unreliable guide to performance in the medium or long term'. Now, unless you're investing with Warren Buffett, the Sage of Omaha, this is very good advice. Portfolio management is far beyond my abilities as an amateur stock picker, but in essence active portfolio management can be boiled down to 'what goes up must come down.'
Referring to the the direction of stocks listed on the ASX, the AFR's Chanticleer column (14 July 2012) comments 'The majority of Australians in default superannuation funds will have a high exposure to resources and will be vulnerable to a China slowdown. In fact, those with the typical default fund\ should brace themselves for negative super returns for he year to June 2012 of between 5 and 7 per cent simply because of their exposure to companies such as BHP Billiton and Rio Tinto. ' It's worth bearing in mind the old market saying 'anyone can be a genius in a bull market.'
Thus, the implication that industry super funds they will continue to outperform private funds in the medium to long run is at best deceitful and at worst verges on being unlawful.
Wednesday 15 August 2012
The Chinese sense of humor
It takes some time to appreciate Chinese humor, but the Chinese have a sense of humor that is as rich and idiosyncratic as any other nation.
Take for example the armed guards, dour, flint faced and ramrod straight you find at Chinese airports. I quite often walk up to them and say in Chinese 'Boring, isn't it?' After he overcomes his initial surprise at a foreign devil speaking the language of the Han people, the guard will invariably burst out laughing and say 'Yes, you're exactly right, it's very boring.'
One favourite form of Chinese humor is 'cross-talk'. Two men, usually elderly, sit on a stage and trade quips. To be honest, understanding cross talk requires a level of competence in Chinese far beyond my modest abilities, but if you listen to it on the radio it's evident the audience think its hilarious.
Sometimes just why some things are funny is hard for outsiders to appreciate. One of my teenage pupils in Taipei said he had a very funny nickname -- it was Slow Ox. I asked him how he got the nickname and why it was funny and he said his friends gave it to him because they thought he was a bit dim.
Jackie Chan is popular all over China. Most mainland Chinese movies are so boring and the ticket prices are so expensive (and the counterfeiters are so diligent) that even the Chinese won't pay to see Chinese films. However, Hong Kong films are beloved throughout the Chinese disapora. My nephew Bruce, who is a martial arts exponent as well as a professor of sports physics at one of Taiwan's most prestigious universities, says Jackie Chan 's mastery of martial kung fu is very impressive. He is also funny. For movie industry insiders, he has a different reputation -- that some cast member gets killed on every movie he makes.
On my visit to Shaoshan, Mao Zedong's birthplace in Hunan Province, the favourite butt of jokes was 'Mr Shandong', a member of our tour group who was regarded as a clumsy, ignorant and credulous peasant. Peasants, no matter how long the Communists idealised them, remain one favorite material for humor.
I learned long ago, however, that Chinese do not understand the Australian sense of humor and I do not tell jokes to Chinese unless they have native speaker level English. I would probably go further and say no-one understands the Australian sense of humor except Australians. The vicious insults, character assassination, foul language that is said to compose Australian' humor' quite frankly does not appeal to me. I find this form of linguistic jingoism to be one of the most unattractive elements of the Australian national character.
Chinese humor is often subversive. One cartoonist during the martial law period in Taiwan infuriated Generalissimo Chiang Kai-shek so much that he was imprisoned on Green Island, the penal settlement off Taiwan's east coast. Understanding Chinese humor, with its word plays and tonal inversions, is often beyond all but those with an expert command of the language.
Chinese people are friendly, talkative and helpful. They have a robust sense of humor, whether it be cross-talk or Jackie Chan's slapstick. Unfortunately, getting the joke is often beyond all but the most expert linguists. Often, your Chinese friend will help you out by adding after a statement 'kai wan xiao' -- 'I was only joking.'
Take for example the armed guards, dour, flint faced and ramrod straight you find at Chinese airports. I quite often walk up to them and say in Chinese 'Boring, isn't it?' After he overcomes his initial surprise at a foreign devil speaking the language of the Han people, the guard will invariably burst out laughing and say 'Yes, you're exactly right, it's very boring.'
One favourite form of Chinese humor is 'cross-talk'. Two men, usually elderly, sit on a stage and trade quips. To be honest, understanding cross talk requires a level of competence in Chinese far beyond my modest abilities, but if you listen to it on the radio it's evident the audience think its hilarious.
Sometimes just why some things are funny is hard for outsiders to appreciate. One of my teenage pupils in Taipei said he had a very funny nickname -- it was Slow Ox. I asked him how he got the nickname and why it was funny and he said his friends gave it to him because they thought he was a bit dim.
Jackie Chan is popular all over China. Most mainland Chinese movies are so boring and the ticket prices are so expensive (and the counterfeiters are so diligent) that even the Chinese won't pay to see Chinese films. However, Hong Kong films are beloved throughout the Chinese disapora. My nephew Bruce, who is a martial arts exponent as well as a professor of sports physics at one of Taiwan's most prestigious universities, says Jackie Chan 's mastery of martial kung fu is very impressive. He is also funny. For movie industry insiders, he has a different reputation -- that some cast member gets killed on every movie he makes.
On my visit to Shaoshan, Mao Zedong's birthplace in Hunan Province, the favourite butt of jokes was 'Mr Shandong', a member of our tour group who was regarded as a clumsy, ignorant and credulous peasant. Peasants, no matter how long the Communists idealised them, remain one favorite material for humor.
I learned long ago, however, that Chinese do not understand the Australian sense of humor and I do not tell jokes to Chinese unless they have native speaker level English. I would probably go further and say no-one understands the Australian sense of humor except Australians. The vicious insults, character assassination, foul language that is said to compose Australian' humor' quite frankly does not appeal to me. I find this form of linguistic jingoism to be one of the most unattractive elements of the Australian national character.
Chinese humor is often subversive. One cartoonist during the martial law period in Taiwan infuriated Generalissimo Chiang Kai-shek so much that he was imprisoned on Green Island, the penal settlement off Taiwan's east coast. Understanding Chinese humor, with its word plays and tonal inversions, is often beyond all but those with an expert command of the language.
Chinese people are friendly, talkative and helpful. They have a robust sense of humor, whether it be cross-talk or Jackie Chan's slapstick. Unfortunately, getting the joke is often beyond all but the most expert linguists. Often, your Chinese friend will help you out by adding after a statement 'kai wan xiao' -- 'I was only joking.'
Friday 10 August 2012
Qantas is likely to survive -- just
Qantas is likely to survive, but only if it takes drastic action to staunch the red ink gushing from its international operations.
To understand Qantas, you must understand the origins of the airline industry. Qantas is known as a legacy airline. That is, it was owned by the Australian government and it was known as Australia's flag carrier. Other similar flag carriers were the UK's BOAC and KLM Royal Dutch Airlines. They were thought to be essential to national prestige. The de facto flag carrier for the US was Pan American World Airlines, better known as Pan Am. Pan Am was listed on the stock exchange. The US regulated the airline industry by granting rights to routes, both domestic and overseas. For many years, Pan Am was excluded from flying internal US routes, which eventually killed it off.
Qantas. as the Australian flag carrier, was also denied domestic routes for many years. It had a fierce rivalry with Trans Australian Airlines (TAA), the government-owned domestic airline, which was eventually resolved when Qantas absorbed TAA. Qantas was privatised in March 1993.
Two things need to be said about legacy airlines. First, they often have intractable and expensive cost structures, as a result of their origins as protected state owned enterprises (SOEs). The protracted industrial battle Qantas has had to force its unions to face reality is reflected in other countries, including the US. Many US investors will not touch airline stocks because they are so heavily unionised. Legacy airlines' cost structures handicap them when competing against new entrants. Their workforces have proved resistant to change.
Second, until recently, the masses weren't encouraged to fly. Airline travel was the preserve of the elite. Women passengers wore nice frocks and men dressed in a suit and tie. The disproportionate number of male stewards employed by Qantas, said to date from the time when the Qantas fleet had many flying boats, was a standing joke for Australians. Only when the airline industry was deregulated were people encouraged to fly. Service standards were often not high. Given a choice between between flying Qantas, as they were supposed to, and bending the rules and flying Singapore Airlines, some senior political figure invariably opted for SIA. I can still remember the kerfuffle when a 'meal' -- in fact, a box of sandwiches -- were introduced on east-west flights, an innovation which, we were told, would bankrupt to airline industry. In private, Qantas management admitted they could not match the service standards of the Asian airlines.
Qantas, all things considered, has done well. On domestic routes, it has seen off Ansett, Compass I and Compass II, Impulse and now looks set to give Virgin a hiding. Virgin needs to assure the most profitable Qantas customers, business travelers, that it has the services and facilities that make traveling more productive. Virgin has made the sensible move of preventing its cabin crew from referring to passengers as 'mate' unless they make request to be addressed as such. Being the cabin crews' 'mate' might appeal to a fly-in, fly-out tyre fitter but is unlikely to be acceptable to a CEO who is accustomed to a degree of deference. JetStar has found a niche, it doesn't pretend to be any more than it is -- as the no frills, low cost offshoot of Qantas..
Every economist abhors cross subsidisation. I think Qantas International is a good service, especially since Singapore Airlines selected me, apparently at random, for an excess baggage fee of $250 when I was 5 kg overweight leaving Beijing the last time I was there. However, the rest of the company can't carry the Qantas international division, said to be bleeding $450 million a year. Somehow, they will have to turn it around. Sure, when it comes to Middle East airlines it isn't a level playing field, but the airline industry never was. And when you've been away for a while, it's still good to fly an airline 'that still calls Australia home.'
To understand Qantas, you must understand the origins of the airline industry. Qantas is known as a legacy airline. That is, it was owned by the Australian government and it was known as Australia's flag carrier. Other similar flag carriers were the UK's BOAC and KLM Royal Dutch Airlines. They were thought to be essential to national prestige. The de facto flag carrier for the US was Pan American World Airlines, better known as Pan Am. Pan Am was listed on the stock exchange. The US regulated the airline industry by granting rights to routes, both domestic and overseas. For many years, Pan Am was excluded from flying internal US routes, which eventually killed it off.
Qantas. as the Australian flag carrier, was also denied domestic routes for many years. It had a fierce rivalry with Trans Australian Airlines (TAA), the government-owned domestic airline, which was eventually resolved when Qantas absorbed TAA. Qantas was privatised in March 1993.
Two things need to be said about legacy airlines. First, they often have intractable and expensive cost structures, as a result of their origins as protected state owned enterprises (SOEs). The protracted industrial battle Qantas has had to force its unions to face reality is reflected in other countries, including the US. Many US investors will not touch airline stocks because they are so heavily unionised. Legacy airlines' cost structures handicap them when competing against new entrants. Their workforces have proved resistant to change.
Second, until recently, the masses weren't encouraged to fly. Airline travel was the preserve of the elite. Women passengers wore nice frocks and men dressed in a suit and tie. The disproportionate number of male stewards employed by Qantas, said to date from the time when the Qantas fleet had many flying boats, was a standing joke for Australians. Only when the airline industry was deregulated were people encouraged to fly. Service standards were often not high. Given a choice between between flying Qantas, as they were supposed to, and bending the rules and flying Singapore Airlines, some senior political figure invariably opted for SIA. I can still remember the kerfuffle when a 'meal' -- in fact, a box of sandwiches -- were introduced on east-west flights, an innovation which, we were told, would bankrupt to airline industry. In private, Qantas management admitted they could not match the service standards of the Asian airlines.
Qantas, all things considered, has done well. On domestic routes, it has seen off Ansett, Compass I and Compass II, Impulse and now looks set to give Virgin a hiding. Virgin needs to assure the most profitable Qantas customers, business travelers, that it has the services and facilities that make traveling more productive. Virgin has made the sensible move of preventing its cabin crew from referring to passengers as 'mate' unless they make request to be addressed as such. Being the cabin crews' 'mate' might appeal to a fly-in, fly-out tyre fitter but is unlikely to be acceptable to a CEO who is accustomed to a degree of deference. JetStar has found a niche, it doesn't pretend to be any more than it is -- as the no frills, low cost offshoot of Qantas..
Every economist abhors cross subsidisation. I think Qantas International is a good service, especially since Singapore Airlines selected me, apparently at random, for an excess baggage fee of $250 when I was 5 kg overweight leaving Beijing the last time I was there. However, the rest of the company can't carry the Qantas international division, said to be bleeding $450 million a year. Somehow, they will have to turn it around. Sure, when it comes to Middle East airlines it isn't a level playing field, but the airline industry never was. And when you've been away for a while, it's still good to fly an airline 'that still calls Australia home.'
Thursday 2 August 2012
All Chinese firms are controlled by the Party
No, I did not say all Chinese firms are owned by the Communist Party; I said they are controlled by the Communist Party. Anyone who knows anything about China will tell you this. Take for example a recent episode of China: Triumph and Turmoil, hosted by one of the world's best known economic historians, Niall Ferguson. A one-man barber shop had changed hands in a small village somewhere in the back blocks of China and who was there to welcome the new owner? The local cadre, just to make sure the new owner 'understands' the rules and regulations, no doubt including the requisite 'hong bao' or 'red envelope' with some lucky money inside.
Every Chinese company, especially the major companies, have a Party structure to 'advise' the management. Some companies, for example Haier, one of the world's largest appliance manufacturers, is controlled by a trust -- and no-one knows who controls the trust. The cause of Haier's near miraculous rise from nothing to dominating China's appliance market in the space of a decade has been attributed to many factors -- none of which provide a satisfactory explanation.
In major companies, cadres will be rotated through senior management as part of their work experience in the Party, business and government. Most cadres are grossly incompetent businessmen but so what? One day they will rule China. Thus, when dealing with China, the distinction between privately owned firms and state ownede enterprises (SOEs) is meaningless. Indeed, the idea that a private business would refuse to comply with a 'request' from the Party or government is laughable.
Economics is the management of scarcity. There is never enough of anything to go around. That includes investment capital. Australia has always been a capital importer -- first from Britain, then from the United States, then from Japan. They are countries with which we are allied. The Chinese are anxious to invest in Australia. According to KPMG in the last six years, Chinese enterprises have invested $45 billion in Australian enterprises Ninety-five percent of those deals have involved SOEs. Over 90 percent of those deals have involved the resource sector. The Chinese have trillions of dollars in foreign reserves that are effectively doing nothing. Many countries, including Australia, would be grateful recipients of even a small portion of those reserves.
China wants to spread its investment in Australia. On Monday, 30 July 2012, China's deputy ambassador to Australia said 'We need to expand the relationship beyond resources to finance, infrastructure and agriculture". It is noteworthy that the Chinese spokesman refers specifically to the finance sector, the first time a senior diplomat has done so to my knowledge.
For a discussion on China's aims in the finance sector, see my previous post on 'China eyes ANZ Bank. The deputy ambassador has confirmed my position that China is looking for finance investments in Australia and that over a long term, the ANZ Bank is a very likely target.
Investment in agricultural land by foreign owners raises hackles in the bush. According to the head of DFAT, Dennis Richardson, there is no evidence China is buying up the farm. Official data shows ownership of foreign owned farmland had grown from 5.9 percent in 1984 to 6 percent in 2010. But as a political issue, it obviously has legs.
Tony Abbott, Leader of the Opposition, in his address to the Australian Chamber of Commerce in Beijing on Tuesday 22 July 2012 said 'Chinese investment is complicated by the prevalence of SOEs. It would be rarely in Australia's national interest to allow a foreign government or its agencies to control an\ Australian business. That's because we don't support the nationalization of business by the Australian government, let alone by a foreign one.'
This is a very long stretch of political imagination, especially as it's a very artificial distinction and one that is effectively meaningless in China's case. I would be very surprised if there weren't a great many agencies of foreign goverments operating in Australia -- think airlines, for example. Tony Abbott, like a lot of other politicians, will likely suffer a miraculous conversion on the trip to the Lodge he'll almost certainly make in a year or so.
Every Chinese company, especially the major companies, have a Party structure to 'advise' the management. Some companies, for example Haier, one of the world's largest appliance manufacturers, is controlled by a trust -- and no-one knows who controls the trust. The cause of Haier's near miraculous rise from nothing to dominating China's appliance market in the space of a decade has been attributed to many factors -- none of which provide a satisfactory explanation.
In major companies, cadres will be rotated through senior management as part of their work experience in the Party, business and government. Most cadres are grossly incompetent businessmen but so what? One day they will rule China. Thus, when dealing with China, the distinction between privately owned firms and state ownede enterprises (SOEs) is meaningless. Indeed, the idea that a private business would refuse to comply with a 'request' from the Party or government is laughable.
Economics is the management of scarcity. There is never enough of anything to go around. That includes investment capital. Australia has always been a capital importer -- first from Britain, then from the United States, then from Japan. They are countries with which we are allied. The Chinese are anxious to invest in Australia. According to KPMG in the last six years, Chinese enterprises have invested $45 billion in Australian enterprises Ninety-five percent of those deals have involved SOEs. Over 90 percent of those deals have involved the resource sector. The Chinese have trillions of dollars in foreign reserves that are effectively doing nothing. Many countries, including Australia, would be grateful recipients of even a small portion of those reserves.
China wants to spread its investment in Australia. On Monday, 30 July 2012, China's deputy ambassador to Australia said 'We need to expand the relationship beyond resources to finance, infrastructure and agriculture". It is noteworthy that the Chinese spokesman refers specifically to the finance sector, the first time a senior diplomat has done so to my knowledge.
For a discussion on China's aims in the finance sector, see my previous post on 'China eyes ANZ Bank. The deputy ambassador has confirmed my position that China is looking for finance investments in Australia and that over a long term, the ANZ Bank is a very likely target.
Investment in agricultural land by foreign owners raises hackles in the bush. According to the head of DFAT, Dennis Richardson, there is no evidence China is buying up the farm. Official data shows ownership of foreign owned farmland had grown from 5.9 percent in 1984 to 6 percent in 2010. But as a political issue, it obviously has legs.
Tony Abbott, Leader of the Opposition, in his address to the Australian Chamber of Commerce in Beijing on Tuesday 22 July 2012 said 'Chinese investment is complicated by the prevalence of SOEs. It would be rarely in Australia's national interest to allow a foreign government or its agencies to control an\ Australian business. That's because we don't support the nationalization of business by the Australian government, let alone by a foreign one.'
This is a very long stretch of political imagination, especially as it's a very artificial distinction and one that is effectively meaningless in China's case. I would be very surprised if there weren't a great many agencies of foreign goverments operating in Australia -- think airlines, for example. Tony Abbott, like a lot of other politicians, will likely suffer a miraculous conversion on the trip to the Lodge he'll almost certainly make in a year or so.
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