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Australia must capitalise on Chinese diaspora

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Chinese national flags are seen as tourists crowd along Nanjing Road, a main shopping area, Shanghai, 4 October 2014. This streetscape was once dominated by four great department stores, owned by Chinese Australians, known as the ‘Australian stores’. (Photo: Reuters/Aly Song).

In Brief

Nanjing Road is arguably one of the most famous shopping strips in Shanghai, the commercial capital of China. In the 1930s four great department stores — Sincere, Wing On, Sun Sun and Sun Company — dominated the streetscape. These towering buildings boasted elaborate window displays and were modelled after Anthony Hordern & Sons in Sydney.

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These four great department stores were known as the ‘Australian stores’ because they were owned by Chinese Australians. Sadly, the entrepreneurs are all but forgotten outside of their families, according to John Fitzgerald, one of Australia’s foremost historians of China.

Chinese Australians made up the largest group of investors in Shanghai before Mao took power in 1949. They contributed as much as one-third of total overseas Chinese investment and also made substantial outlays in Hong Kong, Guangzhou and Tianjin.

This chapter of Australian business history continues today in a different form. One of the most vital but underestimated linkages between Australia and China is the country’s one million-plus Chinese Australian community. This group plays an increasingly important role in facilitating trade and investment flows, as well as promoting science and business innovation.

Its role was officially recognised as early as 1995, when the Department of Foreign Affairs and Trade prepared a report outlining the importance of overseas Chinese business networks in Asia for the government’s standing committee of deputy secretaries on Asia.

The report argued that the diverse and growing Chinese communities in Australia contributed significantly to Australia’s economic wellbeing domestically, regionally and internationally. Australia’s Chinese communities could assist non-Chinese Australian businesses to trade and invest in China, Taiwan, Hong Kong and other regional economies where ethnic Chinese are important suppliers, consumers and financiers.

China-born migrants are the third-largest immigrant group in Australia after people from the United Kingdom and New Zealand, constituting 2 per cent of Australia’s total population. In a recent study, two German economists, Jan Priebe and Robert Rudolf, estimated that between 1970 and 2010, Chinese immigrants across 147 countries boosted trade openness by 31 per cent and increased investment by 18 per cent in their new countries.

As Australia’s exports to China undergo transition from commodities to services, the Chinese diaspora is expected to play an even greater role in facilitating more trade and investment. Chinese-born Australian financier George Wang is an example. He is the chairman of the AIMS Financial Group and he acquired the Asia Pacific Stock Exchange in 2008.

Wang wants the stock exchange to be a bridge between capital-hungry Chinese companies and Australia’s AU$2 trillion superannuation system. In China, small and medium-sized enterprises have to pay usurious interest to secure funding.

In recent years daigou (Chinese personal shoppers) have also become a new force in the China–Australia trade relationship. There are an estimated 40,000 active daigou, which includes students, housewives, young professionals and grandmothers sending parcels from Australia to China. This industry is worth more than US$1 billion, according to a conservative industry estimate.

Daigou have played an important role in helping Australian health care products to expand and brand in China. This army of personal shoppers has already helped a handful of Australian vitamin and baby formula companies — such as Swisse, Bellamy’s and Blackmores — grow to billion-dollar valuations.

The Australian Population and Migration Research Centre at the University of Adelaide finds that Chinese students can play a crucial role in the state’s wine business as it seeks to make inroads into the Chinese market. One medium-sized winery in Adelaide Hills began generating significant sales in China after employing a Chinese student. The student began addressing occasional enquiries from Chinese customers before creating a position for herself as the winery’s lead China strategist.

These examples illustrate just a small part of the growing importance of the Chinese diaspora in fostering bilateral economic ties. Yet the Australian government and business sector is not taking advantage of this vital human asset. A recent report by the Australian Council of Learned Academies (ACOLA) argues that the country should make better use of this talent pool.

‘Australia’s Asian business diasporas are a rich source of innovation, enterprise and entrepreneurialism. Yet they are underutilised,’ the report says. ‘They have significant potential to further enhance Australia’s economic engagement with Asia and help the nation’s economy to thrive, for the benefit of all Australians.’

How should Australia take advantage of the Chinese business diasporas? One suggestion from the ACOLA report is to allow for greater representation of and participation by Chinese and Indian Australians in the development of policies. The council recommends establishing programs aimed at strengthening Australia’s economic, political and cultural relations with Asia.

This underrepresentation is evident across the board from public office to industry councils and business. In corporate Australia, only around 4 per cent of ASX top 200 companies have board directors of Asian descent. The ACOLA report points out that ‘[g]reater recognition needs to be given to the leadership roles that Australians of Asian origins can potentially play in driving more effective engagement with Asia’.

For the foreseeable future, China is likely to be Australia’s most important economic partner, both as an export destination and a provider of capital. The country’s ethnic Chinese population of over one million is a vital part of this bilateral link. Government, business and academic research institutions all need to take advantage of these human links.

Peter Cai is a research fellow at Lowy Institute for International Policy.

This article appeared in the most recent edition of the East Asia Forum Quarterly, ‘Managing China’.

One response to “Australia must capitalise on Chinese diaspora”

  1. Thanks for an informative analysis. I did not know that the Chinese diaspora is so large and potentially significant in Australia.

    One additional factor that might be worth noting: could the Chinese living in Australia promote more travel of PRC citizens to Australia? By making it easier for Chinese tourists to visit, shop, etc in Australia wouldn’t that help the Australian economy as well? I know that Japan has trained its tourist industry and retail sales staff in the Chinese language so as to encourage tourists from the PRC to come. The latter have become a very significant factor in the Japanese economy.

    Please publish more follow up on in the months and years to come.

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