One of the opportunities available to delegates to the Asian Financial Forum in Hong Kong on 20 January 2015 was to participate in a "Deal Flow" or business matching session either arranged by the conference organisers or independently between participants.
The matching was done off the back of a delegate profile completed well before the conference where your needs could be articulated - seeking to invest debt or equity, seeking the investment of debt or equity or being a service intermediary (accountant, investment banker, lawyer etc) to assist in such transactions.
There was also the opportunity to pitch/present ideas and proposals to delegates who wished to participate and I have included a selection of photos of how these interactions looked.
Whilst I did not directly participate in the Deal Flow sessions, I took a keen interest in the process and subsequently talked with a number of my fellow delegates as to their experience.
Based upon my own observations and the various discussions, I drew the following conclusions insofar as to the considerations underpinning possible deals:
- Significant Investor Visa - the Australian Significant Investor Visa is quite an attractive drawcard for Chinese investors provided they have a minimum of $AUD 5 million to invest and are prepared to invest for at least 4 years. However, if the primary motivation of the investor is to obtain the visa , and not the potential return on investment, the Chinese investor may choose to just invest in the bare minimum complying investments and not take a stake in a private business (Complying investments include state or Territory government bonds, managed funds regulated by the Australian Securities and Investment Commission (ASIC) and/or direct investment into Australian companies not listed on a stock exchange where that company operates a qualifying business.)
- Employment sponsorship - a number of delegates who thought they were being introduced to potential investment partners in fact had resumes presented by local Chinese keen to secure an employer sponsored visa into Australia. This obviously requires a definite employment need in Australia and meeting the various Australian visa restrictions
- Ownership of businesses or property - we were advised that Chinese often prefer to own outright a business or property for both control and status purposes - and therefore, a passive investment (debt or equity) may not be as desired, unless it is designed to ensure food or resource supply security
- The importance of relationships, status and "face" - an earlier post on "Inside the Chinese Mind" covered the various concepts that are important in undertaking business with the Chinese people. An Australian expectation of a "quick deal" off the back of one meeting is likely to be unrealistic as is the securing of a passive investment - unless one or more of these criteria can be met.
The conclusion on all this was that there are significant opportunities to do deals between Australia and China but needs to recognise the various unique cultural and legislative requirements of each country - and requires patience, relationships and as with any deal between any two parties, a win-win approach.
PB
Copyright: Peter Black 2015
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