ACE upbeat on China biz going forward

Despite headwinds in the global marketplace, Australian companies' interest in investing in China has swung up as China and Australia celebrate the 50th anniversary of diplomatic relations this year.

According to a report jointly released by the China-Australia Chamber of Commerce and the University of Melbourne in early December, 66 percent of the 160 polled Australian organizations operating in or doing business with China said they plan to return to or exceed pre-COVID investment levels in China in the coming years. For 58 percent of respondents, China is either the leading or one of the top three priorities for global investment plans over the next three years.

Australian Capital Equity, a Perth-based private company with extensive investments in media and entertainment, resources, energy, property and industrial activities in Australia, is one of them.

Joe He, managing director and China CEO of ACE, said that China's efforts to advance high-quality development over the past few years have churned out noticeable investment opportunities.

China's advanced manufacturing sector is one great example, as it is armed with complete industrial and supply chains. The country's accelerated development in smart, digital and green manufacturing has pointed to investment potential in safe, highly efficient and precise manufacturing, said He.

First entering China in 1997 by setting up an office in Shanghai, ACE's investment portfolio in China includes Shanghai Oriental Pearl Mobile Television Ltd, farm-to-table e-commerce system MeiCai and Agricultural Bank of China, among others.

Over time, Chinese telecommunication companies, new energy companies, and digital and smart solutions providers have already taken the lead worldwide in terms of technological development, application and costs. These are the fields where China and Australia can strengthen their cooperation, said He.

Innovation-driven industries in China, including artificial intelligence, telecommunications and biomedicine, have also demonstrated much investment value, added He.

"The investment rule in China is that the targeted company or project should address the current pain points widely found within the industry. It should be able to improve production efficiency and coincide with the development direction that the Chinese government has encouraged," he said.

As He understands things, ACE's investment strategy in China has proved valid especially over the past three years, when the market is more frequently disrupted by "black swan" or "gray rhino" events such as geopolitical tensions or inflation. The major reason is the global competitiveness that the invested Chinese companies have built over the past few years.

"We have valued more the long-term investment value of the targeted project or company amid recent market volatility. The ones with true investment value can weather the economic cycles and guard against external risks," said He.

Amid the market adjustment caused by various uncertainties and complexities, ACE has seized the time window to invest in more private equities in China over the past three years, according to He.

"The economic downturn that most parts of the world are undergoing now has somehow squeezed out the bubbles created when the market was overheated," he said.

"More important, the Chinese capital market has become increasingly mature amid various arrangements such as the launch of the technology-focused STAR Market and the introduction of the registration-based initial public offering mechanism. The Chinese capital market will be more open in the next economic cycle. More foreign capital will be willing to participate in the yuan-denominated market," he added.