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FTA to increase investment Down Under

Cai Xiao
Updated: Jun 18,2015 10:01 AM     China Daily

The Sino-Australian free trade agreement signed on June 17 will encourage more Chinese companies to make investments in the continent, according to experts.

Under the agreement, the two nations will grant each other most-favored-nation treatment.

Australia said it will lower threshold for Chinese companies making investments there and increase market entry opportunities and transparency.

“The FTA will make the investment environment for Chinese companies in Australia better, so more will seek opportunities there,” said George Lu, a transaction services partner at PricewaterhouseCoopers China.

Besides the mining sector, Lu said Chinese investors have also looked at opportunities in Australia’s entertainment, media and education sectors.

He said Chinese investors have often been more careful than others about investing abroad, including in Australia, but still urged them to make sure they pay close attention to the country’s business rules.

Yi Ming, chief executive officer of Yonghong Food Co Ltd, said the agreement will reduce investment limits previously imposed by the Australian government, but Chinese investors should never ignore the importance of working with industry associations.

“Chinese companies should try and deal closely with local industry associations when making any investments there, as they can help the Chinese firms understand local business culture,” said Yi.

The agreement may also make Australian companies less willing to be bought in future, said Yi, as it will make it easier for them to enter the Chinese market.

Under the agreement, 85.4 percent of goods traded between China and Australia will have import tariffs cut to zero immediately.

China is now, for the first time, the largest source of foreign investment in Australia, which was worth A$27.7 billion ($21.3 billion) in 2013-14, according to figures released by the country’s Foreign Investment Review Board in April.

Economic Daily quoted Brian Wilson, the board’s chairman, as saying that Australia remains attractive to foreign investors as the Australian dollar is depreciating.

He said major Chinese enterprises have become increasingly adaptive to Australia’s investment environment and regulatory system.

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