Westpac sees 'fantastic opportunity' investing in Chinese market

SYDNEY - Westpac Banking Corporation sees a "fantastic opportunity" investing in the Chinese market as the governments of Australia and China prepare to sign the China-Australia Free Trade Agreement (FTA).

Westpac, one of the four largest institutional and retail banks in Australia, has been operating in China for over 40 years in what they call the "China corridor," facilitating investment, capital and people flows.

Westpac's Greater China Director, Andrew McKenzie, said there is fantastic opportunity in the Chinese market, however Australian businesses looking to take advantage of the China-Australia FTA must not look at China holistically and take a more targeted approach.

"China has 1.3 billion people, it's a large number of different provinces. Each province has its own language dialect," McKenzie said. "Be very focused and look at the different demographics of the different cities and different provinces."

"The statistic that I have to keep reminding myself is that when you think about the population of Shanghai, it is exactly the same as the population of the whole of Australia. So if someone was looking to say, for arguments sake, to export a dairy product from Australia and just export it to Shanghai, they've all of a sudden replicated the same size market as they have here in Australia. You don't need to be spreading yourself all over China."

Market analysts are growing concerned at the slowing down of the Chinese economy to a predicted 7 percent of GDP growth, particularly for Australia's commodity exporters. However, McKenzie said 7 percent GDP growth is still very strong.

"As China continues to emerge and develop, particularly as it starts to move towards a consumption led economy, there's more reliance on the services sector," McKenzie said. "In China, there are certain sectors certainly above 7 percent, and there is obviously certain sectors growing below 7 percent. So, I think its just part of the evolution and the growth of China."

McKenzie said the amount of trade between Australia and China is expected to significantly increase as tariffs start to reduce over time.

"You only need to look at the increase in trade that New Zealand was able to achieve when it entered into its free trade agreement in 2008 with China. In that situation you saw 44 percent year on year increase in growth. So we expect to see a similar sort of increase in the trade flows."

However, it's Australia's service sector that McKenzie said will have the most benefit.