KPMG Australia has worked in partnership with the China-Australia Chamber of Commerce (AustCham), the Australia China Business Council (ACBC) and the University of Melbourne to produce the second edition of the Doing Business in China report highlighting the experiences and opinions of Australian companies operating in China.

The research, which polled executives from 165 Australian companies operating in or doing business with China, shows an encouraging level of optimism despite new challenges which have emerged. It indicates that companies are overall expansionary, though future success is conditional upon the ability for taking long term perspectives while displaying short term agility in China’s rapidly evolving market.

• As well as two thirds of companies continuing to increase their investments in China, 60 percent are expecting to increase their headcount in the near term.
• Profitability remains strong as does the outlook for the next two years with less than 20 percent of respondents having a negative outlook.
• Key growth opportunities identified were the rise of the middle class, sustained economic growth and the Belt and Road Initiative.
• Just under half of respondents have seen an increase in attention or engagement by Chinese authorities, as China remains a challenging place for 72 percent of respondents to conduct their business.
• 83 percent of respondents flagged human resources a top cost concern when doing business in or with China.
• Tensions in Sino-Australian relations emerged as the largest risk going forward, with 75 percent believing media reporting had an adverse effect on relations and over 50 percent indicating their business had been negatively affected. 28 percent said that the US/China trade sanctions have negatively impacted their business with only 12 percent saying it has had a positive impact.
• 66 percent of businesses believe that the China Australia Free Trade Agreement (ChAFTA) has had a positive impact on Australian businesses in China.

The report also provides top tips for business success for Australian companies operating in China and identifies 10 key questions that Boards should consider asking executives operating in China.

The 2018 Doing Business in China report follows the survey of members of the China-Australia Chamber of Commerce (AustCham) and the Australian China Business Council (ACBC) and was conducted in Q3 2018. The respondents comprised Australian businesses operating in or doing business with China and responses were received from 165 companies across a range of sectors.

The report is a joint research initiative of AustCham China, Australia China Business Council, KPMG Australia and the University of Melbourne.