2018 Westpac Australia-china Business Sentiment Survey
2018WESTPACAUSTRALIA-CHINABUSINESS SENTIMENTSURVEYAnalysis by China Skinny
Analysis by China Skinny
LOOK ANDSENTIMENTREVENUE ANDINVESTMENTCHALLENGESAND RISKSMACROINFLUENCESE-COMMERCEDEMOGRAPHICS
PART 1FOREWORD
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS ustralian Chamber Of Commerce ShanghaiChina is the world’s second largest economy and Australia’s largest trading partner. Australia's continued prosperity isincreasingly dependent on its relationship with China. In addition to the vast array of Australian commodities and productsfeeding China’s growth, the country is also Australia's largest source of student and tourism revenue, and a growing destinationfor other services. This trade relationship is attractive for both sides, with Australia becoming the world's second largestrecipient of Chinese investment since 2007, now accounting for 90 billion of accumulated investment.Craig AldousChairman of the BoardAustCham Shanghai is the peak body for Australian business in China - representing more than 400 businesses and individuals.We have partnered with Westpac and China Skinny to capture the sentiment of Australian businesses operating in or with China.Driving this undertaking was the overarching objective to gain insights into the health of the Australia-China economicrelationship from organisations that are deeply embedded in trading with China. This is an important Survey as it not only capturesthe sentiment of the business community at a moment in time, but provides a useful tool for year on year comparisons. Thank youto the 161 respondents who participated in the inaugural Survey.It was encouraging to see that the overwhelming majority of respondents held a positive 12-month outlook for their Chinaoperations. This positivity was no doubt partly fuelled by the fact that Australian businesses’ profitability in China is increasingyear-on-year. Lifted by growing profitability, businesses are also increasing their investment, with over half of respondentsregarding their China operations to be outpacing other markets.Udo DoringCEO and Executive DirectorThe Report offers further interesting findings on the regulatory environment, the challenges to doing business in China, andAustralian organisations’ approach to eCommerce. It is hoped that this Report will serve as a benchmark providing the businesscommunity, policy makers, and our government leaders deeper insights into the complex and ever-changing Australia-Chinabusiness landscape.5-
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS estpac Banking CorporationAs Australia’s first bank with a deep 40 year heritage in the Greater China region, Westpac has traditionally played an importantrole navigating China’s incredible pace of transformation and helping our customers, and Australian businesses of all sizesleverage the opportunities presented by this captivating market.This is a particularly exciting time for Australian businesses in or looking to enter China – where the convergence ofunprecedented demand for quality Australian-made products and China’s world leading e-marketplace presents vastopportunities for engaging with this market. To frame the size, last year its value was expected to surpass 1.13 trillion USD,accounting for around half of the world’s e-commerce sales and 56 times the size of Australia’s online market.Michael CorreaGeneral Manager, Asia PacificDespite volatility in the global trade environment, it is heartening to see that Australian businesses remain captivated by thispotential, and are optimistic about their aspirations in China. More than half of Australian business surveyed in this report (55%)signal to have benefitted from the China-Australia Free Trade Agreement, 79% forecasted profitability for 2018, compared to66% in 2017, and 51% forecasted an increase in their China investment for 2018, compared to 45% in 2017.At the same time, Australian businesses are navigating the pace of change in the regulatory environment and rapidly evolvingtechnology in this mobile first consumer market. It’s worth noting that the majority of Australian businesses surveyed agreed thatinnovation in technology, media and communications will be the number 1 trend shaping businesses in China for the next 3 - 5years, yet only 16% currently have a detailed China e-commerce strategy in place. Leveraging tailored e-commerce strategiesand data analytics will need to be a key focus for Australian businesses to stay competitive in this market.Paul LaiRegional Head and Head ofCorporate & InstitutionalBanking, Greater ChinaNow in our third century, Westpac is proud to continue to support Australian businesses in the important Australia-China corridor.It is our hope that the research in this report equips you with knowledge around the risks and rewards, sheds light on thesentiment of companies on the ground and provides you with insights to propel your business forward.6-
PART 2EXECUTIVE SUMMARY
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS xecutive SummaryThe survey uncovered the following insights into the sentiments and state of Australian businesses in China.78%reported a positivesentiment for the next 12months66%profitable in 2017(F)79%83%profitable in 2018(F)indicated sentimentincreased when lookingtowards the next 5 years#1Year-on-year financial performanceprofitability increasesThe n 1 trend for the next3-5 years is Innovations inTechnology, Media andCommunicationsInvestment is increasing year-on-year45.4%increased investmentin 201751.2%of investments are increasingin 2018Only 16%have a detailed digital/e-commerce strategy in placeThose who have ane-commerce plan are (compared to the average): 11.7%more likely to state that Chinawould outpace other 18.1% revenuemarketsmore optimistic about the 12 11.6% month outlookmore profitable between2016-2018(F)58%regard China to be leading ormore advanced intechnology compared totheir other markets8-
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS xecutive Summary Continued39%state that doing business in China hasbecome more complex in the last 12 months54.7%have benefited in some way fromChina-Australia Free TradeAgreement43%report the Belt and Road Initiative tobe a positive driver for their ChinaStrategy57.7%70.8%use RMB in their trade activities report the regulatory environmentto not be transparent9-
PART 3OUTLOOK AND SENTIMENT
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDThe business outlook and sentiment forms astrong indicator for the overall health and sustainabledevelopment of Australian businesses in China. Itprovides perspective for businesses to assess theirperformance in-market and identify areas to becommended and those that need improvement.China is a buoyant market for Australian businesses,evident by the overwhelming majority (78.4%) holdinga positive sentiment for the next 12 months,citing 'Growth Potential', 'Relationships with Clients'and 'Strong Demand' as the key factors contributingto this positive sentiment.The potential for growth is largely stimulated byChina’s rising middle class which in turn isdriving consumer demand in most sectors.Optimism has increased 8% since 8%EXECUTIVESUMMARYOUTLOOK &SENTIMENTCHALLENGES,RISKS &COMPETITIONREVENUE at is your overall view on the outlook for yourorganisation, over the next 12 29.8%30%Top 3 Reasons for Optimistic Outlook*GrowthRelationshipStrongPotentialwith clientsdemand88.9%58.7%54%AustCham/Austrade measuredbusiness sentiment in their 2013'Australia-China BusinessPerception Survey'.*Respondents could select more than one option11-
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS ontinued from the previous page.Professional& Business ServicesManufacturing200% 18.2% 11.5%150%Average100%50%0%The most pessimisticsector compared to the average100%150%-13.3%Construction,Property & Real Estate200%The most optimistic sectorscompared to the average50%The Construction, Property & Real Estate sector reportedto be less optimistic in its sentiment. This sector has beenimpacted by the tightening of capital available in Chinadomestically, increased competition, new limits on gettingmoney out of China and weakening demand.Sectors & Sentiment0%The strengthening of the bilateral relationship has had apositive impact on business relations and helps to supportAustralian business relationships with their clients.This has resulted in a particularly optimistic Professional &Business Services sector that is capitalising on overallgrowth in demand for services in China and the need forsmart solutions to manage the increasingly complex Chinamarket. Manufacturers are also showing more optimismcompared to the average, buoyed by growth in demand formanufactured product exports globally, as well asimprovements to infrastructure, technology and qualitycontrol standards in China.12-
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYDespite almost 80% of businesses being optimistic,38.6% believe that doing business in Chinahas become more difficult and complex.FOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS ow has business developed in the past 12 months?22%22.2%Challenges in the Agriculture, Food &Beverage industry represent the overall complexitiesof doing business in China.These have been driven by:-Regulatory changes-A progressively dynamic marketing sales ecosystem-Changing consumer preferences-Regional variances-Complex web of distributors and importers 22%It has becomeeasier38%38.6%About thesame29%It has become moredifficult & complex39.2%39%What are the top 3 competitive advantagesfor your organisation in China?*The Agriculture, Food & Beveragesector were 22% more likely than theQualityClientBrandaverage to say business had becomeof ProductRelationshipReputation74.5%56.5%54%more difficult or complex.*Respondents could select more than one option13 -
018WESTPACAUSTRALIA-CHINABUSINESS BUSINESSSENTIMENT SURVEYAustralian businesses, however, become slightly morepositive ( 5.6%) when considering their five yearbusiness outlook. Consistent with the 12 monthbusiness outlook, Manufacturing and Professional &Business Services remains one of the most optimisticsectors on a more projected five year basis.Similarly the Construction, Property and RealEstate sector remains one of the most pessimisticindustries even on a longer five year business outlookbasis, now joined by the Leisure, Tourism and Hospitalityindustry who share an equally pessimistic outlook .EXECUTIVEFOREWORDSUMMARYCHALLENGES,OUTLOOK & OUTLOOKREVENUEEXECUTIVE& &REVENUERISKS&&SENTIMENT SINFLUENCESINFLUENCESPART 1How would you describe your 5-year businessoutlook in sticPessimisticTop 3 Reasons for Optimistic Outlook*83%of Australian businesses areoptimistic about theirfive-year outlook in China.GrowthRelationshipStrongPotentialwith clientsdemand85.9%58.5%53.3%*Respondents could select more than one option14 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDOUTLOOK &SENTIMENTEXECUTIVESUMMARYCHALLENGES,RISKS &COMPETITIONREVENUE er the next 3-5 years what do you believe will be the top 3 trends inChina, in terms of their importance to your industry?*Innovations in Technology, Media & Communications600%450%300%150%55.3%Consumer Behaviour Changes50.9%Chinese Companies Going Global44.7%What are the 3 most important opportunities for yourbusiness in China?*0%Growth in Domestic Consumption / Rising Middle Class800%600%400%200%The average Shanghai consumer is bombarded with fourtimes more advertising than the average Australianconsumer*, highlighting how contested higher tier citieshave become with both imported and domestic brandsseeking the same consumer.0%Although innovations in technology, media andcommunications are presenting new exciting ways tomarket and sell in China, they are ever-changing andhave become competitive and costly. However, anincreasing number of brands are taking an innovativeapproach to their media and communications activityand are therefore likely to enjoy greater marketing reachand consumer engagement.77.6%Globalisation of Chinese Companies and Increased Outbound Investment47.8%Digital Technologies & E-commerce41.6%*source: China Skinny analysis using JWT data*Respondents could select more than one option15 -
PART 4REVENUE AND INVESTMENT
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYThe positive outlook reported by Australianbusinesses in China is understandable in light ofthe year-on-year growth experienced by most ofthese businesses. Since 2016, the performance ofAustralian businesses has presented a gradualincline in China. In 2017, only 11.4% of Australianbusinesses were forecasted to make a loss inChina, and in 2018, this percentage dropped to3.8%. Thus signifying that the Chinese marketcontinues to offer huge potential for OK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS &COMPETITIONE-COMMERCEDEMOGRAPHICSFinancial Performance: 2016 - 2018(F)201655.2%23.2%21.6%ProfitableBreak INFLUENCES17.4%3.8%of businesses expect to turn aprofit in 2018, up from 65% ofbusinesses in 2017.17 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDThere are however, sectors which are significantlyless profitable, such as the Agriculture, Food &Beverage sector which only forecasted 29% growth in2017, versus the average and expected growth of53%.EXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS ver/Under Performing Sectors: 2017(F) Profitability80%8072%66%New competitors and business models are having animpact, as are challenges being faced within theregulatory environment including compliancerequirements.6053% Average4029%20039%of the Professional & BusinessServices sector forecasted 2018Professional& e,& HRFood andBeveragerevenue to be higher than the2017 forecast by 20-50%.2017 (F) Profit18 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS onsistent with the overall improvements to profitability amongst Australian businesses in China, Australianbusinesses generally have an optimistic view on their business outlook both in the short (12 months) and long term(five years). Interestingly, of the businesses that made a loss in 2017, an overwhelming 73% still showed some levelof optimism regarding their business’ 12-month outlook. The results reflect that the larger patterns of growth areleading businesses to believe that the future holds increased opportunities and in turn increased profits for theirbusiness in China.However, there are still some factors which are impacting profitability. One such factor is the duration of which thebusiness has already been established in China. The results show that the longer a business was in China, the morelikely they were to make a profit. In addition to a company’s tenure, Australian businesses with larger global revenuewere also more likely to be profitable. This reflects two key areas that are pertinent to success in China—localinsight and reputation. Firstly, businesses with larger revenue can afford to invest more resources into understanding73%60%of businesses that forcasted a lossthe Chinese market, whether it be through engaging market consulting firms, or local employees, all of which arein 2017 were still showing someimperative given the market unfamiliarity. Secondly, Chinese consumers still place a significant premium onlevel of optimism towards the 12businesses that are well-known and reputable, which often aligns with companies with a higher global revenue.month outlook.of businesses that are forecastinga loss in 2018 were still showingsome level of optimism in their 12 TENUREPROFITABILITY VS AVERAGEKEY TAKE OUTS10 years in China: 11% more profitableThe longer businesses are in China, the 5 years in China: 12% less profitablemore likely they were to make a profit. AU 5 million: 7% less profitableThe higher the global revenue, theAU 50-100 million: 7% more profitablemore likely China operations were AU 100 million: 13% more profitableprofitable.month outlook.GLOBALREVENUE19 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTCHALLENGES,RISKS &COMPETITIONREVENUE st Australian businesses report seeing a greater rate of revenue increase in China than other global markets.Large businesses, specifically those with more than one hundred employees, are the most likely to have greaterprofit growth in China than elsewhere with 69.9% seeing faster growth versus 57.9% across all businessessurveyed. This reinforces the previous point that the size and duration of business in China is positivelycorrelated with profit and revenue growth.The scale and speed of China’s growth and subsequent opportunities are unlike anything the world has seenbefore. Average income in China has more than doubled over the past 8 years*, allowing hundreds of millions ofconsumers to make discretionary purchases and trade up to premium Australian goods and services. Australianbusinesses have been assertive about capitalising on this rise, which is reflected in Chinese revenue growthoutpacing other global markets for most respondents.China Revenue vs Other Markets**OutpaceMatchLag Behind57.9%28.1%14%* source: China Ministry of Human Resources and Social Security Data (2009-2017)**Respondents could select more than one option20 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYREVENUE &INVESTMENTCHALLENGES,RISKS hange to 2017 Investment400300200100 50% increase12.5%26-50% increase10.8%13.3%16-25% increase1-15% increase20.3%No change35.2%1-15% decrease4.7%16-25% decrease0.8%26-50% decrease0.8% 50% decrease1.6%Change to 2018 Investment14.2%1-15% increase29.9%32.3%No change26-50% decrease3507.1%16-25% increase16-25% decrease28014.2%25-50% increase1-15% decrease210 50% increase140700When compared to a similar survey of Americanbusinesses, 37% of Australian businesses whoincreased their investment in 2017 did so by morethan 15%. Whereas just 30% of American businesseswho raised their investment increased by over 10%according to the Amcham 2018 Business ClimateSurvey. While Australia certainly enjoys a regionaladvantage, this result reflects the maturity,confidence and commitment of Australian businessesto the ever-important Chinese market.OUTLOOK &SENTIMENT0In line with widespread optimism, Australianbusinesses are also investing relatively heavily inChina. 65.3% of Australian businesses plan toincrease their investment in 2018, up from 56.9% in2017. The amount of businesses decreasinginvestment also falls from one year to the next, withthe rate dramatically changing from 7.9% in 2017 to2.4% in 2018. The increasing investment supportsthe overall optimism in the Chinese market andgrowing -
FOREWORD2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS or those businesses increasing their investment, how much are theyincreasing by?Sectors seeing the largest investment changes ( 26%) in 2017compared to the averageOf those who are increasing (2017) :400300200100020Professional & Business Services 16.1%19.1%Manufacturing16-25% increase29%23.4% 13.1%1-15% increase35.6%Sectors seeing the largest investment changes ( 26%) in 2018compared to the averageOf those who are increasing (2018) :5003752501250 50% increase21.7%302010.9%10Professional & Business Services 25.9%016-25% increase15 19.4%29%26-50% increase526-50% increase10Agriculture and F&B21.9%0 50% increaseAgriculture and F&B 14.8%Manufacturing21.7% 11.1%1-15% increase45.7%22 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS lackmores shares the optimistic sentiment of Australianbusinesses in China, with their industry directly benefitingfrom China’s expanding middle class. The ASX listed companyis responding to these shifts via innovative collaborations.THERE IS A NATURAL ALIGNMENT WITH OUR CATEGORY AND CHINA’SMIDDLE CLASS. AS IT EXPANDS, SO TOO DOES CHINESE CONSUMERINTEREST IN HEALTH SUPPLEMENTS TO SUPPORT THEIR CHANGINGLIFESTYLES.CaseStudy: BlackmoresBlackmores is one of Australia's best-knownmanufacturers and distributors of vitamins,minerals, and nutritional supplements. Foundedin the 1930s, the company has strong brandawareness and sales in China.– PETER OSBORNE MANAGING DIRECTOR, ASIA.As an active player in the Chinese market for 6 years, Blackmoreshas been ideally positioned to observe and respond to the variedways in which the middle class is affecting consumption. This wasidentified by 7 in 10 of respondents in the sentiment surveyidentified as the number one opportunity for their business inChina. On the one hand, Blackmores has seen consumer demandfor supplements rise to offset the increased consumption ofconvenient and processed food which goes hand in handwith China's expanding middle class. Conversely, the market hasalso seen a significant spike in health and fitness, with the numberof annual marathons growing from 22 to more than 400 in 6 years.With this, so too does demand for health supplements to supportmuscles and joints, such as glucosamine.Spending on health and wellness in China has experiencedconsiderable growth over the past ten years; a trend showing nosigns of abating, with the market forecast to reach nearly 70billion by 2020, spurred by rising incomes and growing awarenessabout healthy living across the middle and upper classes*.THE CHINESE ARE PURSUING HEALTHIERLIFESTYLES AND STARTING TO DEVELOP AGREATER APPRECIATION AROUND THEBENEFITS OF FOCUSING ON PREVENTIONOVER CURE. THESE TRENDS BODE VERYWELL FOR OUR CATEGORY.23 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS espite Blackmores remaining agile in the face of an ever-changingonline environment, citing the ‘digitisation of healthcare’ being a trendwhich will continue to change the landscape of their category, it istheir innovations in the offline space which are particularlynoteworthy.One in two respondents in the survey regarded ‘Innovations intechnology, media and telecommunications’ as being the number onetrend set to impact their business in the next 3-5 years, andBlackmores is responding to this trend via a unique collaboration.CaseStudy: BlackmoresTOGETHER WITH TSINGHUAUNIVERSITY'S INTERNATIONALCOMMUNICATION CENTER, WEHAVE EMBARKED ON A PROGRAMCOMMENCING IN MARCH 2018,WHICH WILL EDUCATEJOURNALISTS IN THIS FIELD ABOUTPREVENTATIVE MEDICINE,ENABLING MORE ROBUST ANDDISCERNING REPORTING FOR OURCATEGORY.Identifying a knowledge gap amongst journalists regardingpreventative medicine, and therefore potential missed opportunitiesfor building consumer awareness via the media, Blackmores havepartnered with Tsinghua University on a program aimed at improvingeducation in this area.With the focus and discussion regarding the China market all toooften centred on the online space, it is encouraging to see examplessuch as this which display a proactive and innovative approach toaddressing a gap, to best respond to a market opportunity.KEY TAKE OUTS123The Chinese health care sector is having to adapt to the growing affluence of its people, their changing diets andhabits, as well as an increasingly important online environment.Innovation in technology, media and telecommunications is the most important trend that will impact a business’success over the next 3-5 years, and businesses across every category should stay abreast of theseinnovations and incorporate them into their strategies where appropriate.Less traditional marketing and PR initiatives can have significant impact when combined with a broader marketingstrategy.45-24
PART 5CHALLENGES AND RISKS
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDThere are some pervasive challenges for Australianbusinesses operating in China. In line with results fromthe AustCham/Austrade 2013 ‘Australia-ChinaBusiness Perceptions Survey’, the top three concernsamongst Australian businesses are 'retaining toptalent' (49.7%), 'domestic & foreign competition'(47%) and the 'Chinese regulatory environment'(36%).EXECUTIVESUMMARYOUTLOOK t challenges have hindered your organisation'sgrowth in China?*DomesticTalent& Foreign& 7%36%Which drivers will have the biggest impact in improvinginnovation in China ?2520151050While working for a multinational business used to bethe Holy Grail for the Chinese urban population, the riseof credible brands from China and increasing nationalpride has gradually lessened the appeal. A newgeneration of educated Chinese youth, many whohave studied and worked abroad are increasing thetalent pool. However, they are no longer aiming theircareer aspirations solely at international companies,but rather are being drawn to those organisations,local or foreign, that invest in creating attractiveworkplaces.CHALLENGES,RISKS &COMPETITIONREVENUE &INVESTMENT1st2.5Government funding and support for entrepreneurst-2nd2.5Education focus on innovationt-2nd1.9Private sector investment in R&D and talentt-4th1.9Increasing IPR protection and enforcementt-4th1.5Government policies'Respondents ranking of drivers were averaged with the higher the number, the bigger the impact26 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYCHALLENGES,RISKS &COMPETITIONREVENUE p risks to success in China*250%200%Unpredictable Government Policy150%100%50%0%Combined with these challenges, it was almost neckneck between which factors Australian businessesregarded the number one risk to their success in China,with 24.2% ranking Unpredictable Government Policy,closely followed by 23.1% for NewCompetitors/Business models as the top risk.FOREWORDOUTLOOK &SENTIMENTEXECUTIVESUMMARY24.2%New Competitors / Business Models23.1%Slow Market Growth11.8%*Respondents could select more than one option27 -
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYChina is like no other market on the planet. Basicassumptions on consumer behaviours that can bemade in other markets are often misleading inChina. Therefore, it was not surprising to see that60.7% of businesses stated that understandingChinese consumers was their number oneinformation gap.OUTLOOK &SENTIMENTCHALLENGES,RISKS &COMPETITIONREVENUE at do you believe are the top 3 information gaps which couldassist Australian organisations with decision making in ding &their consumers'Regulatory & Policy’Positioning'Sources of increased competition over the past 12 months550%Private Chinese Entreprises440%330%220%110%0%The survey reflected an overall trend ofincreasingly savvy local businesses providinggreater competition. Private Chinese entreprisesare investing more in quality control, branding,marketing and research & development, supportedby stronger sales and distribution networks.FOREWORDEXECUTIVESUMMARY58%Foreign Entreprises50.6%State Owned Entreprises14%*Respondents could select more than one option28-
2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEYFOREWORDEXECUTIVESUMMARYOUTLOOK &SENTIMENTREVENUE &INVESTMENTCHALLENGES,RISKS espite a forced step change for Sanitarium’s leading product inChina, this company remains optimistic about their future in thismarket. Their focus is on increasing their agility to best respond tochanges in the macro environment.CaseStudy: SanitariumSanitarium is a 120-year old health-relatedbusiness producing a large range of breakfastcereals and vegetarian products. It is the largesthealth food company that is 100% Australianowned. Its flagship product Weetbix is a topselling cereal in Australia and New Zealand.Soaring sales of Sanitarium’s Weet-Bix, following its inclusion in a majorChinese TV show, was one of the most talked about topics amongst theAustralian Fast Moving Consumer Goods (FMCG) export fraternity inrecent years. However, this success was followed by
6 - OUTLOOK & SENTIMENT REVENUE & INVESTMENT CHALLENGES, RISKS & COMPETITION MACRO INFLUENCES EXECUTIVE E-COMMERCE 2018 WESTPAC AUSTRALIA-CHINA BUSINESS SENTIMENT SURVEY FOREWORD SUMMARY DEMOGRAPHICS As Australia's first bank with a deep 40 year heritage in the Greater China region, Westpac has traditionally played an important
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