Australia Business Perceptions in China 2012

Australia China
Business Perception Survey
3 December 2012
Background
The Honourable Craig Emerson, Minister for Trade and Competitiveness announced the inaugural Australia China
Business Perceptions Survey during an address in May 2012 to the China International Fair for Trade in Services
(CIFTIS) in Beijing.
This is the first ever such survey of Australian business sentiment in Mainland China. The survey initiative was
prompted by the growing strength of the bilateral trade and investment relationship and the expansion of Australian
business across Mainland China.
The Australian Chambers of Commerce in Beijing, Shanghai, Hong Kong and South China worked with the Australian
Trade Commission (Austrade) to develop the questionnaire.
Objectives
The overall aim of the survey is to understand the current climate for Australian organisations operating in Mainland
China.
The specific objectives of the research are to:
Gather perceptions on business conditions and climate in China (level of optimism, competition, profitability);
Determine business activity within China (likelihood to expand operations);
Profile for any differences by company characteristics (e.g., location of headquarters, ownership, etc.).
Methodology
Respondents completed an online survey programmed and hosted by Sweeney Research. The average survey
length was 15 minutes (outliers of longer than 40 minutes were excluded from calculation of average survey length).
The surveys were completed from November 5 - 20, 2012.
Sweeney supplied each Australian Chamber (AustCham) with an ID and unique link for each member who was then
emailed the invitation for the survey. The process ensured anonymity and confidentiality of responses. Due to
technical difficulties in the email send process for AustCham Beijing, Sweeney assumed responsibility for the mail
sends for AustCham Beijing members.
In all, 1,003 members of AustCham Greater China were invited to take part in the survey. One hundred and fifty-three
surveys were completed giving a response rate of 15 per cent. The response rates for each Chamber are shown in
the table below.
Table 1. Survey Response Rate
Chamber
Contacts Emailed
Completed Surveys
Response Rate
Beijing
263
36
14%
Hong Kong
160
10
6%
Shanghai
400
40
10%
South China
180
67
37%
3 December 2012
Australian Trade Commission Australian Businesses in China 2
TOTAL
1003
153
15%
Generally, respondents to the survey occupied senior positions, with 35 per cent at a CEO level or their direct reports
and a further 22 per cent Director/Senior Manager and 7 per cent occupying positions on the Board.
Notes on Analysis
Where possible, significance testing is conducted to determine differences between subgroups (Chamber
membership, identification as Australian organisation, legal entity, role within organisation, and the proportion of full
time employees in Mainland China, size of organisation and location of headquarters within Greater China).
Significance testing is only conducted for subgroups where n30. For example, when testing for significant
differences by Chamber, the scores for Beijing, Shanghai and South China are tested against the overall average
(including Hong Kong) to identify any significant differences. Hong Kong scores would not be tested against the
overall average as the sample size (n=10) is insufficient for robust significance testing.
3 December 2012
Executive Summary of Key Findings

Sentiment is optimistic Seven in ten Australian businesses in China (69 per cent) are
optimistic about the overall Chinese economy and a similar proportion (66 per cent) are optimistic
about the outlook for their own organisation. Optimism for individual organisations is higher
among Members of AustCham Shanghai and Beijing and lower among Members of AustCham
South China.
Regulatory reform and leadership transition drive optimism expectations are that
regulatory reform currently in process will create new business opportunities and make the
conduct of business easier. There is also a hope that after the Chinese Communist Partys 18 th
Congress, political stability will result in greater economic stability.
Competition has intensified in Mainland China a fifth (20 per cent) report competition
increasing a great deal and a further third (33 per cent) report competition increasing moderately.
The key areas of competitive pressure for Australian businesses are price and client
relationships/customer service, identified by over half of organisations surveyed.
Expansion is likely for many organisations a quarter (24 per cent) are extremely likely and a
further 29 per cent are very likely to expand their physical presence. The key drivers for
expansion are around demand rather than supply side cost savings. Regions most likely to benefit
from expansion are Guangdong (34 per cent) and Shanghai (34 per cent).
Three key challenges for the future are: labour, competition and regulation access to
skilled labour and wage pressures are two of the top three challenges facing organisations.
Increased competition from both Chinese and foreign (non-Chinese) companies are also among
the top challenges, as are several factors relating to regulation such as licensing, lack of
transparency, an unclear regulatory environment and ability to enforce contract terms.
3 December 2012
Detailed Findings from the Survey
3 December 2012
Detailed Findings from the Survey

Outlook
Outlook for the Economy
Respondents are overwhelmingly positive on the outlook for the Chinese economy in the next 12 months, with seven
in ten (69 per cent) either optimistic or slightly optimistic about the overall outlook for the Chinese economy.
Figure 1. Outlook for the Chinese Economy (percentage of respondents)
Slightly
pessimistic
5
Pessimistic
3
Optimistic
32
Neutral
24
Slightly optimistic
37
Q15. What is your overall view on the outlook for the Chinese economy in the next 12 months?
Base: All respondents, n=153
Optimism is significantly higher among members of AustCham Shanghai, with 83 per cent viewing the economy with
either optimism or slight optimism, and lower among members of AustCham South China, where only 58 per cent
view the next 12 months with optimism.
Of Hong Kongs ten members, three are optimistic, two slightly optimistic and five neutral about the next 12 months.
3 December 2012
Figure 2. Outlook for the Chinese Economy by Chamber (percentage of respondents)
Beijing (n=36)
47
Shanghai (n=40)
South China (n=67)
38
21
ALL ORGANISATIONS (n=153)
Optimistic
31
45
37
15
37
Neutral
36
31
32
Slightly optimistic
14
9 1
24
Slightly pessimistic
53
Pessimistic
Q15. What is your overall view on the outlook for the Chinese economy in the next 12 months? by Chamber
Base varies by Chamber as shown, Hong Kong not charted due to low sample size
Organisations with 10 per cent or fewer of their full-time employees based in Mainland China are more bullish about
the economy, with 81 per cent optimistic about the economy.
Figure 3. Outlook for the Chinese Economy by Employee Breakdown (percentage of respondents)
Proportion of Company Staff in Mainland China

0-10% (n=36)
36
44
11-50% (n=33)
27
33
51-90% (n=33)
27
33
91-100% (n=43)
33
32
Optimistic
Slightly optimistic
36
27
33
37
Neutral
14
3
12
26
24
7 2
53
Pessimistic
Q15. What is your overall view on the outlook for the Chinese economy in the next 12 months? by Q6. What proportion of your organisations total
full time employees are in Mainland China?
Base varies by employee breakdown as shown
3 December 2012
Organisational Outlook
The outlook for individual organisations is also positive, with a third optimistic and a further third slightly optimistic.
Organisations responses to their own outlook were largely in line with their responses to the outlook for the Chinese
economy.
Figure 4. Organisational Outlook (percentage of respondents)
Slightly
pessimistic
9
Pessimistic
3
Optimistic
33
Neutral
22
Slightly optimistic
33
Q17. What is your overall view on the outlook for your organisation in Mainland China in the next 12 months?
Members of the AustCham Beijing and Shanghai Chambers are more optimistic than those from South China, with 81
per cent of AustCham Beijing Members and 80 per cent of AustCham Shanghai Members either optimistic or slightly
optimistic compared to half (52 per cent) of AustCham South China Members. Among the ten AustCham Hong Kong
members, two were optimistic, two slightly optimistic, five neutral and one slightly pessimistic.
3 December 2012
Figure 5. Organisational Outlook by Chamber (percentage of respondents)
Beijing (n=36)
44
36
8 6 6
Shanghai (n=40)
43
38
13
South China (n=67)
22
Optimistic
30
31
33
Slightly optimistic
33
Neutral
53
13 3
22
9 3
Pessimistic
Q17. What is your overall view on the outlook for your organisation in Mainland China in the next 12 months? by Chamber
Base varies by Chamber as shown
Organisations headquartered in Beijing are more optimistic, with 88 per cent either optimistic or slightly optimistic
about the outlook for their organisation, as shown in Figure 6.
Figure 6. Organisational Outlook by Location of Headquarters (percentage of respondents)
Shanghai (n=46)
Hong Kong (n=45)
35
27
Beijing (n=32)
Optimistic
Slightly optimistic
37
31
27
47
33
7 2
11 4
41
33
Neutral
20
6 33
22
9 3
Pessimistic
Base varies by location as shown, locations n<30 not charted
3 December 2012
Small organisations are more optimistic about their outlook, as shown in Figure 7 below, with 52 per cent optimistic
about the outlook in the next 12 months compared to 27 per cent of medium organisations and 26 per cent of large
organisations.
Figure 7. Organisational Outlook by Organisation Size (percentage of respondents)
Small
(10 employees or less, n=31)
52
Medium
(11-100 employees, n=67)
27
Large
(100 or more employees, n=50)
26
ALL ORGANISATIONS
(n=153)
Optimistic
Slightly optimistic
26
37
42
33
33
Neutral
19
03
28
61
22
6 4
22
9 3
Pessimistic
Base varies by organisation size as shown
3 December 2012
Reasons for Optimism

Four clear themes emerged from the analysis of the reasons for optimism for individual organisations:
Regulatory reform is creating business opportunities;
The completion of the leadership transition is expected to improve economic stability;
While the rate of gross domestic product (GDP) growth might not continue to increase, internal demand should
keep GDP growth well above the United States and European Union;
Continuing strong interest in investing in Australia across a range of sectors.
These are demonstrated in the following open-ended responses

We believe that after Chinese Communist Party's 18th Congress, overall political stability will be restored
and the new government needs to show that they are capable to manage the economy recovering and to lead
the nation to go forward. So more aggressive approaches will be adopted.
(AustCham South China, optimistic)
Post NPC we hope that projects that have been delayed will start and that reform in key sectors of
financial services and telco will open up for more foreign participation.
(AustCham Beijing, optimistic)
Although slowed down, there is still an upward trend of the Chinese economy. Opportunities in new areas
to be dug out
(AustCham South China, slightly optimistic)
Foreign investment and expansion remains high. Our services are in demand and corollary to FDI to
China mainland. For the next 12 months the environment looks stable to positive. However, longer term more than 5 years from now - there are potential issues with China's reforms and continued growth.
(AustCham Shanghai, optimistic)
Outgoing investment interest in Australia in resources, agribusiness, real estate and other sectors is very
positive. New visa arrangements in Australia will lead to work assisting Chinese parties in that space,
acquire organisations and other interests, and comply with the rules. Inbound work interest from Australian
and other companies in market studies and market entry are increasing
(AustCham Beijing, optimistic)
A handful of members are pessimistic about the economy, as shown by these responses below
Slowing economy and general feeling that the new government will not take the hard decisions on
economic reform.
(AustCham Beijing, pessimistic)
China is becoming very unpredictable and more self-sufficient.
(AustCham Shanghai, neutral)
More operation and sourcing activities will move to other low cost countries, such as Indonesia and
Vietnam.
(AustCham South China, slightly pessimistic)
3 December 2012
Expansion
Optimism is also reflected in a strong likelihood for organisations to expand their physical presence in Mainland
China, with a quarter (24 per cent) of organisations extremely likely and a further 29 per cent very likely to expand
their footprint.
Figure 8. Likelihood to Expand Physical Presence in Mainland China (percentage of respondents)
Not likely at all

7
Slightly likely
19
Extremely likely
24
Moderately likely
21
Very likely
29
Q21. Based on current trends, how likely is your organisation to expand or grow its physical presence in Mainland China (e.g. additional offices,
additional locations)?
Base: Know likelihood of expansion (dont know excluded), n=141
3 December 2012
Members of the Shanghai Chamber are more likely to expand their presence, with 36 per cent extremely likely to
expand while South China Members are less likely to expand, with only 10 per cent extremely likely to expand. Of the
nine Hong Kong Members who could estimate the likelihood of expansion, three are extremely likely, one very likely,
two moderately likely, two slightly likely and one not likely at all.
Figure 9. Likelihood to Expand Physical Presence in Mainland China by Chamber (percentage of respondents)
Beijing (n=34)
32
Shanghai (n=39)
South China (n=59)
36
10
Extremely likely
29
Very likely
36
27
24
12
15
29
29
Moderately likely
24
8 5
24
21
10
19
Slightly likely
Not likely at all
additional locations)? by Chamber
Base: Know likelihood of expansion (dont know excluded), base varies by Chamber as shown, Chambers n<30 not charted
3 December 2012
Medium-sized organisations are less likely to expand their physical presence, with only 15 per cent extremely likely to
expand, as shown in Figure 10 below.
Figure 10. Likelihood to Expand Physical Presence in Mainland China by Organisation Size (percentage of respondents)
Small organisation (10 employees or less,

n=28)
Medium organisation (11-100 employees,

n=65)
Large organisation (100 or more employees,

n=47)
ALL ORGANISATIONS
(n=141)
Extremely likely
Very likely
32
15
36
31
32
24
Moderately likely
18
23
23
29
7 7
25
19
19
21
19
Slightly likely
Not likely at all
additional locations)? by organisation size
Base: Know likelihood of expansion (dont know excluded); base varies by organisation size as shown
3 December 2012
Of those organisations at least slightly likely to expand, a third (32 per cent) expect this to be within the next financial
year, as shown in Figure 11 below.
Figure 11. Timeframe for Expansion (percentage of respondents)
Longer than next

5 years
1%
Next 4-5
years
8%
Next 3 years
26%
Within the next

financial year
32%
Next 2 years
33%
Q22. In what timeframe is your organisation likely to expand or grow its physical presence in Mainland China?
Base: At least slightly likely to expand, n=128
There were several significant differences in timeframe for expansion by profile of organisations. Those more likely to
expand within next financial year were organisations that do not consider themselves Australian (45 per cent
compared to 25 per cent of self-identified Australian organisations) and large-sized organisations (45 per cent). Those
less likely to expand within the next financial year were Members of the South China Chamber (13 per cent) and
medium-sized organisations (22 per cent).
3 December 2012
Guangdong and Shanghai are leading regions for expansion, in the plans for expansion for a third (34 per cent) of
organisations.
Figure 12. Region for Expansion (percentage of respondents)
Guangdong
34
Shanghai
34
Beijing
25
Sichuan
22
Chongqing
18
Zhejiang
18
Jiangsu
Shandong
12
11
Fujian
10
Tianjin
10
Q23. Into which region(s) is your organisation likely to expand or grow its operations?
Base: At least slightly likely to expand, n=128 Provinces/cities<10 per cent not charted
3 December 2012
The key driver of expansion for organisations is demand, with 60 per cent citing demand for products/services and 29
per cent access to emerging markets/higher growth areas, as shown in Figure 13 below. Supply side advantages
appear to be lower order drivers of expansion, with lower operating costs a factor for only 8 per cent of organisations
and cheaper labour a factor for 7 per cent of organisations.
Figure 13. Drivers of Expansion (percentage of respondents)
Demand for organisation's products/services
60
Access to emerging markets/higher growth

areas
29
Ability to find the right customers
27
Access to skilled labour
24
Acting ahead of competitors
23
Chinese partnering
22
Expanding nature of operations in China
14
Preferential tax rates
12
Regulatory changes favourable to the

organisation
12
More efficient transport/logistics
Shifting to region with lower operating costs

(property prices, etc)
Access to cheaper labour
Other
Q24. Which of these factors most influence your organisations decision to expand or grow?
3 December 2012
Organisational Performance
Organisations in general had a more successful year this year compared to last year, with half (47 per cent) of
organisations more profitable compared to under a quarter (22 per cent) less profitable.
Figure 14. Financial Performance Compared to Last Year (percentage of respondents)
Much less
profitable
3
Much more
profitable
8
Less profitable
19
About the same

31
More profitable
39
Q16. How would you rate your organisations financial performance this year compared to last year?
3 December 2012
Organisations with over 90 per cent of their full-time employees based in Mainland China were less successful this
year, with 35 per cent less profitable compared to last year.
Organisations with 11-50 per cent of their full-time employees based in Mainland China were more likely to show
steady performance compared to last year, with only six per cent reporting they were less profitable compared to last
year and nearly half (48 per cent) with financial performance about the same.
Figure 15. Financial Performance by Employee Breakdown (percentage of respondents)
0-10% (n=36)
14
11-50% (n=33)
31
36
45
51-90% (n=33)
15
19
48
30
91-100% (n=43)
44
39
Much more profitable
More profitable
Less profitable
Much less profitable
30
14
31
18
30
19
About the same
Q16. How would you rate your organisations financial performance this year compared to last year? by Q6. What proportion of your organisations
total full time employees are in Mainland China?
Base varies by employee breakdown as shown
3 December 2012
Medium-sized organisations were less likely to report they were less profitable (10 per cent), while large organisations
were more likely to report they were less profitable this year compared to last year (34 per cent).
Figure 7. Financial Performance by Organisation Size (percentage of respondents)
Small (10 employees or less,

n=31)
Medium (11-100 employees,

n=67)
12
32
35
40
19 6
37
91
Much more profitable

More profitable
About the same
Large (100 or more employees,

6
n=50)
ALL ORGANISATIONS
(n=153)
Less profitable
40
39
20
31
32
Much less profitable
19 3
Q16. How would you rate your organisations financial performance this year compared to last year? by Q6. What proportion of your organisations
total full time employees are in Mainland China?
Base varies by organisation size as shown
3 December 2012
Challenges
Access to and the cost of labour pose key challenges for organisations operating in Mainland China, with 41 per cent
reporting that access to skilled labour has either an extremely high or high impact and 38 per cent reporting an
extremely high/high impact of wage pressures. Regulation with licensing, lack of transparency, ability to enforce
contract terms and an unclear regulatory environment also all rated among the key challenges having a high level of
impact on organisations. Increasing competition from both foreign and Chinese companies also increasingly poses a
challenge for Australian businesses.
Figure 17. Challenges (percentage of respondents)
Skilled labour access

Competition from Chinese companies
Wage pressures
Cost pressures other than wage pressures
Licensing (obtaining required licences to do
business)
Competition from foreign (non-Chinese)
companies
12
29
32
13
25
31
26
28
17
16
21 3
29
12
19
32
Unclear regulatory environment
10
20
36
21
28
10 18
29
19
Exchange rate fluctuations
20
41
Lack of transparency in organisation practices
Visa/work permits
29
19 5
24
Ability to enforce contract terms with partners,

customers, etc.
38
10
Cultural differences
20
18
34
19
27
23
14
24
22
10
20
30
28
24
35
13
22
30
10
International trade restrictions/border controls
7 16
30
Local/city/provincial/national trade restrictions
8 14
35
24
19
Protection of IP (intellectual property rights)
6 16
32
27
19
Restrictions on repatriation of profit
6 15
27
Quality of infrastructure 3 16
Property ownership 4 9
Extremely high impact
High impact
Slight impact
No impact at all
23
30
37
24
24
28
24
23
20
35
Moderate impact
Q20. Please indicate the level of impact the following challenges have on your organisation in Mainland China.
3 December 2012
In terms of regional differences, skilled labour access poses a significantly greater challenge in Shanghai, with 62 per
cent of organisations rating it as having an extremely high or high impact on their operations. In South China, only 29
per cent of organisations rate skilled labour access as having a high impact.
Cost pressures (other than wage pressures) also have a significantly higher impact in Shanghai (54 per cent rating it
as having a high impact) and significantly lower in Beijing (20 per cent).
Property ownership has a significantly higher impact in South China, with 22 per cent rating this as having a high
impact compared to 14 per cent overall.
Figure 18. Challenges (Extremely High/High Impact %) by Chamber (percentage of respondents)
39
Skilled labour access
31
35
42
Competition from Chinese companies
35
30
Wage pressures
54
31
Licensing (obtaining required licences to do

business)
Competition from foreign (non-Chinese)
companies
Lack of transparency in organisation
practices
36
25
23
44
40
36
25
32
40
29
33
27
Cultural differences
Unclear regulatory environment
25
Ability to enforce contract terms with

partners, customers, etc.
34
32
28
38
23
Visa/work permits
32
26
27
Exchange rate fluctuations
31
26
22
18
International trade restrictions/border controls
29
26
21
24
22
Local/city/provincial/national trade restrictions
18
26
20
Protection of IP (intellectual property rights)
21
21
19
Restrictions on repatriation of profit

12
Quality of infrastructure
Beijing
49
20
Cost pressures other than wage pressures
Property ownership
62
29
6
5
Shanghai
21
24
22
South China
Q20. Please indicate the level of impact the following challenges have on your organisation in Mainland China by Chamber
Base: Beijing, n=36: Shanghai, n=40: South China, n=67
3 December 2012
The following survey comments illustrate the challenges for Australian businesses in mainland China
Regulation and China's capital gate and currency controls. Lack of reciprocity - our Chinese competitors
are allowed to do far more in Australia than we are allowed to do in China.
(AustCham Shanghai)
Bureaucracy is a major headache - from visas for staff, to frequent policy changes (e.g., tax, social
welfare, etc.), to difficulties transferring money via local banks mired in bureaucracy, etc. Retaining good,
experienced staff is also a challenge, despite us giving pay rises to staff every year. Prices / costs are also
rising steadily.
(AustCham Beijing)
Government - they choose to implement law or restrictions as and when it suits them which can be a real
challenge to closing transactions and therefore forecasting revenue; rising labour costs particularly in East
China, lack of suitably trained/experienced labour in the service sector, inflation.
(AustCham Shanghai)
Complexity of Government Sector. Recognition of need for performance improvement to public services:
Health, transport, FM. Corruption.
(AustCham Hong Kong)
Availability of good staff - heavy handed government controls - regulatory environment distorted in heavy
favour of local competitors.
(AustCham Shanghai)
Lack of legal accountability overall. For example, for suppliers/contractors means one constantly needs to
check one gets what one pays for as quite often one does not! Until China has a strong legal framework it
is difficult to see how they can ever reach the quality and reliability levels seen in the western world.
(AustCham Shanghai)
Rising wages, and an increase in general costs. Tighter labour market, more labour regulation.
Availability of skilled labour. Constant changing of regulations creating uncertainty. Non-level playing field
for foreign owned enterprises. Increasing competition, leading to lower margins.
(AustCham Shanghai)
3 December 2012
Competition
The level of competition within Mainland China has intensified with a fifth (20 per cent) reporting that it has increased
a great deal and a further third (33 per cent) reporting it has increased moderately in the last 12 months.
Figure 8. Level of Competition (percentage of respondents)
Decreased
slightly
4
Decreased
moderately
3
Stayed about the

same
21
Increased slightly
19
Decreased a
great deal
0
Increased a great
deal
20
Increased
moderately
33
Q27. How has the level of competition within Mainland China changed in the last 12 months?
3 December 2012
Organisations that are Members of AustCham South China were significantly more likely to experience a decline in
competition, with 7 per cent reporting a slight decrease and a further six per cent reporting a moderate decrease in
competition in the last 12 months. No organisations surveyed from the other Chambers report a decrease in
competition. Of the ten organisations from Hong Kong, four report competition increased a great deal, one increased
moderately, three increased slightly and two stayed about the same.
Figure 20. Level of Competition by Chamber (percentage of respondents)
Beijing (n=36)
22
Shanghai (n=40)
23
South China (n=67)
15
44
11
38
28
13
25
22
25
18
7 6
Increased a great deal
Increased moderately
Increased slightly
Stayed about the same
Decreased slightly
Decreased moderately
Decreased a great deal

Q27. How has the level of competition within Mainland China changed in the last 12 months?
3 December 2012
Organisations face a high degree of local competition, with three-quarters (73 per cent) of organisations facing
competition from organisations based in China and Hong Kong, as shown in Figure 21 below. Foreign competition is
largely from North America and Europe, with over a third (37 per cent) of organisations competing with organisations
based in those regions.
Figure 21. Competitor Location (percentage of respondents)
China/Hong Kong
73
North America
37
Europe
37
Oceania
23
Southern Asia
21
ASEAN region
20
Northern Asia
17
Western Asia
14
Central and Southern America
13
Middle East
12
Africa
Dont know/not sure
10
2
Q25. Where are your key competitors based?

3 December 2012
Price and client relationships/customer service are the key competitive factors in Mainland China, identified by over
half of organisations (59 per cent and 53 per cent, respectively).
Figure 22. Key Competitive Factors in Mainland China (percentage of respondents)
Price
59
Client relationships/customer service
53
Quality
46
Relationships with government
37
Innovation
31
Alliance with local partners
27
Availability
27
Expanding into growth areas within China
19
Range
Other
16
5
Q26. What are the key competitive factors in Mainland China?

3 December 2012
Among Members of AustCham Beijing, relationships are a more important competitive factor, with both relationships
with local government (56 per cent compared to 37 per cent overall) and alliance with local partners (42 per cent
compared to 27 per cent overall) higher order factors.
In Shanghai, price is the dominant competitive factor (85 per cent compared to 59 per cent overall), while client
relationships/customer service (68% compared to 53% overall) and availability (43 per cent compared to 27 per cent
overall) are also higher order factors.
In South China, innovation is a higher order factor (42 per cent compared to 31 per cent overall), while price (43 per
cent compared to 59 per cent overall), client relationships/customer service (40 per cent compared to 53 per cent
overall) and availability (18 per cent compared to 27 per cent overall) play a lesser role.
Figure 23. Key Competitive Factors in Mainland China by Chamber (percentage of respondents)
58
Price
85
43
64
68
Client relationships/customer service

40
42
Quality
55
43
56
Relationships with government
Innovation
28
31
19
30
42
Alliance with local partners
42
23
21
28
Availability
43
18
Expanding into growth areas within China
19
18
16
Range
14
20
16
Beijing
Shanghai
South China
Q26. What are the key competitive factors in Mainland China? by Chamber
Base: Beijing, n=36: Shanghai, n=40: South China, n=67
3 December 2012
Appendix
3 December 2012
Appendix
The profile of the organisations involved in the research is shown in the following charts.
Generally, respondents to the survey occupied senior positions with organisations, with 35 per cent at a CEO level or
their direct reports, a further 22 per cent Director/Senior Manager and 7 per cent occupying positions on the Board, as
shown in Figure 24 below. Eight per cent of respondents gave a response of Other, which included positions such
as partner in a law firm, sales manager, corporate affairs manager and team leader.
Figure 24. Role Within Organisation (percentage of respondents)
Board Director
Executive (Chief Executive Officer or

equivalent and their direct reports)
35
Director/Senior manager (2-3 levels below

CEO or equivalent)
22
Country/Region Manager
14
Marketing or Business Development Manager
Other
14
Q1. Which of these best describes your role within your organisation?
Almost half of organisations surveyed (44 per cent) are wholly foreign-owned enterprises. Of those who responded
other, organisation types included law firms, Chinese state-owned enterprises and Chinese companies.
3 December 2012
Figure 25. Legal Entity (percentage of respondents)
Wholly foreign-owned enterprise
44
Representative or branch office
24
Joint venture
18
Holding company
Other
Don't know/not sure
12
Q2. What sort of legal entity does your organisation have in Mainland China?
Almost two-thirds of respondents identified as an Australian organisation operating in China.

Figure 26. Identification as an Australian organisation (percentage of respondents)
No
37
Yes
63
Q3. Would you regard your organisation as an Australian organisation operating in China (e.g. organisations majority ownership is Australian,
organisations main headquarters are in Australia, etc.)?
Over a quarter (27 per cent) of organisations surveyed had more than 15 years of operation in Mainland China.
3 December 2012
Figure 27. Years in Operation in Mainland China (percentage of respondents)
One year or less
2 - 5 years
20
6 - 10 years
30
11 - 15 years
16
16 - 20 years
13
Over 20 years
Don't know
14
1
Q4. How long has your organisation had a physical presence in Mainland China?
A fifth (20 per cent) of organisations surveyed were small (10 employees or less), 44 per cent were medium-sized
(11-100 employees) and a third (33 per cent) were large (100 employees or more).
Figure 28. Full-time Employees in Mainland China (percentage of respondents)
10 employees or less
20
11-20
12
21-50
14
51-100
18
100-500
14
More than 500

Don't know/Can't say
19
3
Q5. How many full time employees does your organisation have in Mainland China?
3 December 2012
Organisations surveyed tended to be polarised in their employee breakdown, with a quarter (24 per cent) having only
10 per cent or fewer of their full-time employees based in Mainland China and a quarter (28 per cent) having over 90
per cent based in China.
Figure 29. Proportion of Full-Time Employees in Mainland China (percentage of respondents)
0-10%
24
11-20%
21-30%
31-40%
41-50%
51-60%
6
3
61-70%
71-80%
81-90%
91-100%
28
Q6. What proportion of your organisations total full time employees are in Mainland China?
3 December 2012
Local Chinese employees generally made up the majority of full-time employees in Mainland China for the
organisations surveyed, as shown in Figure 30 below. For nearly two-thirds of organisations (63 per cent), local
Chinese employees made up at least 90 per cent of the full-time workforce in Mainland China.
Figure 30. Proportion of Full-Time Employees of Local Chinese Nationality (percentage of respondents)
Less than 50%
50-89%
10
27
90% or over
63
Q7. And what proportion of your organisations full time employees in Mainland China are?
Base: Able to estimate breakdown of local Chinese employed, n=137
3 December 2012
A broad range of industries were captured in the survey, as shown in Figure 31 below.
Figure 31. Industry (percentage of respondents)
Financial and Insurance Services

Consulting Services
Education and Training
Transport, Postal and Warehousing
Business Support Services
Information Technology, Media and Telecommunications
Construction
Manufacturing
Advertising, Communications and PR
Legal Services
Accommodation and Food Services
Architecture and Engineering Services
Hospitality
Retail Trade
Arts and Recreation Services
Health Care and Social Assistance
Mining
Government, Public Administration and Safety
Rental, Hiring and Real Estate Services
Wholesale Trade
Agriculture, Forestry and Fishing
Electricity, Gas, Water and Waste Services
Other Industry
10
10
9
7
7
6
5
5
5
5
4
4
4
4
3
3
3
2
2
2
1
0
1
Q8. Which of these best describes the industry in which your organisation operates?
3 December 2012
As with industry, there was a broad range of products and services provided by organisations surveyed.
Figure 32. Products/Services Provided by Organisations (percentage of respondents)
Consulting services
27
Financial services
16
Elaborately transformed manufactures
15
Business Support services
14
Education and Training
14
Advertising, Communications and PR services
11
Transport services
10
Information technology & telecommunication services
10
Processed food
Simply transformed manufactures
Construction services
Legal services
Travel services
Health Care and Social Assistance
Minerals
Hospitality services
Product design/Research and Development (R&D)
Unprocessed food
Fuels
Insurance & pension services
Government, Public Administration and Safety
Arts and Recreation services
Q9. Which of these describes the product or services your organisation provides?
3 December 2012
Organisations were asked about what operations they conduct anywhere in the world, not just in Mainland China.
The majority of organisations are involved in consulting or professional service provision, as shown in Figure 33
below. Product manufacture is only conducted by a fifth of organisations (18 per cent).
Figure 33. Operations Conducted by Organisation (percentage of respondents)
Consulting/Professional service provision
51
Sales
42
Corporate office(s)
27
Organisation support services (e.g. IT, HR, Admin)
27
Service outlets/Branch
19
Product manufacture
18
Distribution of goods
18
Sourcing of raw materials
12
Construction
Refinement of raw materials

Product sourcing
Other operations
5
2
6
Q10. Which of the following operations does your organisation conduct? For this question, please think about operations your organisation
conducts anywhere in the world, not just in Mainland China
3 December 2012
As shown in Figure 34, operations are conducted across several regions. In terms of supply chain, of the 27
organisations involved in product manufacture, eight (30 per cent) solely manufactured products in China.
Figure 34. Location of Operations (percentage of respondents)
Consulting/Professional service provision (n=74)
49
51
Sales (n=64)
55
Organisation support services (n=41)

27
Corporate office (n=40)
Service outlet/Branch (n=29)
45
48
China
Australia
26
ASEAN
71
73
90
59
64
39
39
Product manufacture (n=27)
59
53
33
33
Distribution of goods (n=28)
80
77
54
34
44
89
72
79
78
33
Other Country
Q11. Where does your organisation conduct each of the following operations?
Base varies by operation, n as shown Note operations n<20 not charted
3 December 2012
A third (34 per cent) of organisations were financed by retained earnings.

Figure 35. Financing Arrangement (percentage of respondents)
Retained earnings
34
Intercompany loans and guarantees
12
Terms of trade/supply chain arrangements
Debt facility from overseas financial institution
Venture capital
Debt facility from Australian financial institution
Informal loans and guarantees from family members/

associates
High net worth individual
Issuing shares
Other
Don't know / Can't say
16
Q12. How does your organisation principally finance its operations in Mainland China?
Three-quarters of respondents (74 per cent) work for organisations operating in more than one city in Mainland China.
Four organisations surveyed (3 per cent) had no operations in Mainland Chinese cities.
Figure 36. Number of Cities Operating in Mainland China (percentage of respondents)
23
22
22
11
5 or more
19
Q13. In which Mainland Chinese provinces/cities does your organisation have offices/operations?
3 December 2012
As shown in Figure 37, Shanghai (63 per cent), Beijing (56 per cent) and Guangdong (55 per cent) are strong centres
for organisations to have offices or operations in.
Figure 37. Provinces/Cities with Offices/Operations (percentage of respondents)
Shanghai
63
Beijing
56
Guangdong
55
Zhejiang
17
Sichuan
16
Shandong
14
Tianjin
14
Chongqing
13
Jiangsu
13
Heilongjiang
12
Fujian
12
Q13. In which Mainland Chinese provinces/cities does your organisation have offices/operations?
Base: All respondents, n=153 Provinces/cities<ten per cent not charted
Headquarters for organisations were almost exclusively in either Shanghai (30 per cent), Hong Kong (29 per cent),
Beijing (21 per cent) or Guangdong (16 per cent), as shown in Figure 38 below, with no other province or city being
the headquarters for more than 2 per cent of organisations.
Figure 38. Location of Headquarters (percentage of respondents)
Shanghai
30
Hong Kong
29
Beijing
Guangdong
21
16
Q14. In Greater China, where is your organisation headquartered?

Base: All respondents, n=153 Provinces/cities<three per cent not charted
3 December 2012

Australia Business Perceptions in China 2012

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Australia Business Perceptions in China 2012

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Australia China

Business Perception Survey

Determine business activity within China (likelihood to expand operations);

Australian Trade Commission Australian Businesses in China 2

Australian Trade Commission Australian Businesses in China 3

Executive Summary of Key Findings

Australian Trade Commission Australian Businesses in China 4

Detailed Findings from the Survey

Australian Trade Commission Australian Businesses in China 5

Detailed Findings from the Survey

Australian Trade Commission Australian Businesses in China 6

Figure 2. Outlook for the Chinese Economy by Chamber (percentage of respondents)

South China (n=67)

ALL ORGANISATIONS (n=153)

Proportion of Company Staff in Mainland China

ALL ORGANISATIONS (n=153)

Australian Trade Commission Australian Businesses in China 7

Australian Trade Commission Australian Businesses in China 8

Figure 5. Organisational Outlook by Chamber (percentage of respondents)

South China (n=67)

ALL ORGANISATIONS (n=153)

Hong Kong (n=45)

ALL ORGANISATIONS (n=153)

Australian Trade Commission Australian Businesses in China 9

Australian Trade Commission Australian Businesses in China 10

Reasons for Optimism

Regulatory reform is creating business opportunities;

The completion of the leadership transition is expected to improve economic stability;

Continuing strong interest in investing in Australia across a range of sectors.

These are demonstrated in the following open-ended responses

Australian Trade Commission Australian Businesses in China 11

Not likely at all

Australian Trade Commission Australian Businesses in China 12

South China (n=59)

ALL ORGANISATIONS (n=141)

Not likely at all

Australian Trade Commission Australian Businesses in China 13

Small organisation (10 employees or less,

Medium organisation (11-100 employees,

Large organisation (100 or more employees,

Not likely at all

Australian Trade Commission Australian Businesses in China 14

Longer than next

Within the next

Australian Trade Commission Australian Businesses in China 15

Australian Trade Commission Australian Businesses in China 16

Demand for organisation's products/services

Access to emerging markets/higher growth

Ability to find the right customers

Access to skilled labour

Acting ahead of competitors

Expanding nature of operations in China

Preferential tax rates

Regulatory changes favourable to the

More efficient transport/logistics

Shifting to region with lower operating costs

Access to cheaper labour

Australian Trade Commission Australian Businesses in China 17

About the same

Australian Trade Commission Australian Businesses in China 18

ALL ORGANISATIONS (n=153)

Much more profitable

Much less profitable

About the same