Chinese-origin Australian entrepreneurs bring notable economic value

06 September 2020 4 min. read
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A new report reveals that locally established Chinese entrepreneurs in Australia are strong contributors to the economy, generating steady revenues and acting as a bridge between the two economies.

Researchers from KPMG teamed up with the University of Sydney to conduct a first-of-its-kind study of the Chinese entrepreneurship ecosystem in Australia. The study surveyed businesses founded in Australia by Chinese-origin entrepreneurs who had completed Australian tertiary education.

The report is set against the backdrop of a growing migrant workforce in Australia, which is expected to contribute nearly $2 trillion to the economy by 2050. Direct monetary value aside, migrants bring a host of new perspectives from their home countries, and potential collaborative opportunities for the exchange of ideas and technology.

Business size of Chinese enterprises in Australia

Despite facing a roadblock of sorts in recent years, Chinese investments into Australia have always been significant. Add to this the fact that there were more than 1.2 million people of Chinese origin in Australia as of 2016, and the interconnectedness of the two economies becomes apparent.

Many are students, which brings its own share of economic benefits. KPMG reports that many Chinese students from prosperous regions back home tend to stay on and start a business in Australia at a very young age. Most of these end up growing into steady medium-sized businesses, employing anywhere between 20 and 200 individuals.

Average turnover of these businesses also falls broadly in the small and medium sized bracket. More than half of all businesses report an annual turnover of more than $10 million. Of these, about 30% churn out between $10 million and $50 million per year, while nearly a fifth of all businesses actually make in excess of $50 million. While nestling within the small and medium enterprises bracket, the research notes that most aspire to be more than just family businesses, with high ambitions and a low level of succession planning within the family.

Success factors and challenges for Chinese enterprises in Australia

All things considered, Chinese enterprises closely resemble the average small and medium enterprise in Australia. Their success depends on regular market factors, such as the quality of their products and services, the market opportunity, the diligence within the business, and the business model & value proposition, among others. At the same time, there are some factors that make the Chine entrepreneur’s journey unique.

The Chinese edge

Starting a business in a foreign market is always challenging. In addition to the usual tasks of building a customer base, securing funding and finding the right expansion strategy, Chinese entrepreneurs have trouble finding talent and specialised skills for their business, all while managing the underlying cultural divide. At the moment, KPMG notes that Chinese entrepreneurs are in the same boat as everyone else, navigating the Covid-19 induced economic slump.

That being said, Chinese enterprises also experience and generate unique benefits, particularly through having a foot in the door of both economies. As explained by Helen Zhi-Dent, partner at KPMG’s China Business Practice, this is a key position for the economic segment to occupy.

Bridge between Australia and China

“With record bi-lateral trade between China and Australia of $235 billion in the 2018-2019 financial year, Chinese Australian entrepreneurs play an important role in acting as a bridge between business communities at home and abroad. Ethnic community ties remain significant in their business operations,” she said.

“Chinese Australian entrepreneurs say their cross border knowledge is a key reason for their success, as they have an understanding of the norms of doing business in both countries. This makes them ideal partners for Australian businesses looking to enter the Chinese market, as they understand the two cultures,” added Zhi-Dent.

The study points out that 75% of all Chinese entrepreneurs in Australia partner with other Chinese-origin companies, often joining forces to gain “local market access and supply of products, services and capital,” according to Zhi-Dent. More than 30% also use their Chinese network to build a customer base and distribution channels.