Xian – wealth out West

I initially had business dealings with Xian in 2005. A Taiwanese developer was seeking FDI for a new real estate project - that is another story with a unique lesson. The West in China, is commonly spoken about as a vast region that is lagging behind the Eastern regions (Bohai, Yangtze and Pearl River Deltas)_yet, Xian, the ancient capital of China is in need of no assistance. Xian is 1400 kms west of Shanghai. A nine million population with a GDP/capita of only USD 7k, however, a city that is booming. The Hurun Report in 2011 states that Xian has 7,000 USD millionaires, including 300 citizens over the USD 16m threshold. Xian was the capital of China 2,200 years ago when the first Emperor to unite all of China, Qin Shi Huang, ruled. Qin Shi Huang outshone beyond China by his Terracotta Warriors.In 2009 we visited Xian again, the circumstances of these trips were more profitable. It is certainly interesting watching the locals creatively use their guangxi. This was one 'guangxi scenario' in Xian, it involved the head of the local Aerospace Development Corporation. A Ms Qiu (architect) wanted to do business with a Mr Y from the Aerospace company. To get an introduction she called her old classmate (a strong connection in China). The husband of said wife worked with Mr Y. The husband, prior to the first meeting (the dinner we attended in Xian) contacted a Professor friend from his old university. The Professor contacted my colleague and another Professor at his university. A couple of taps of the magic wand and we all appear a couple of weeks later in Xian. Why these associations? (I'm there as the token white man). Mr Y wants some "assistance' with his English paper; an English Professor appears from Shanghai. The original Professor wants to do business in Xian and brings my colleague to explore commercialising and taking the Aerospace technology to other cities in China. So behind the Maotai, the incessant toasting, the bruised livers and the never-ending cuisine, the evening continues. One of the meals was up in the nearby mountains; visiting a fish farm and restaurant for more drinking, toasting and food. Those evenings expanded into reciprocal Shanghai visits by all parties and further discussions. Downtown Xian has this marvellous wall marching around the rectangular heart of the CBD, it manages to mesh and not be overshadowed by the sprawling commercial developments. The 14 km long, 1400 year old wall replete with watch towers is stunning. On one visit we met with a Xian Town Planner who was recreating a modern version of ancient Xian as part of massive developments in Qujiang District on the outskirts of Xian. He had been so impressed with a visit to Christchurch he decided to emulate that NZ city's layout and of course hired an Australian Architect to recreate the design back in Xian (work that one out).

From Bricks ‘n Mortar:

China has an abundant supply of r2riches studies. Mr W was born in a village two hours out of Shanghai. His family was large; money scarce. With only an elementary-school education, Mr W aged 14 started working as an apprentice mason. He soon became a foreman. In the early '80's, aged 21, Mr W, formed his own construction team and began bidding for projects. Twenty years later, his booming company had become one of the top private companies in China. Nine years ago, looking for a sunrise industry, Mr W by then in his early 40's, with a USD 25m investment, leapt into new media. Leveraging local Government support and attracting young talent from all over China, Mr W is now declaring that in five years, half his company's turnover (USD 1.2 B) will come from his new media venture. When Mr W decides to undertake a project, he doesn't procrastinate. And he's not afraid to take risks. His long-term goal is not only to be dominant in China, but to become one of the largest new media companies in the world. His second platform is subsumed by the third, with his latest venture; building a massive theme park in China, with an investment of USD 500m. Not yet 50, Mr W's star continues to rise, unrestrained by his beginnings as an apprentice mason with no formal education beyond elementary school. Mr Wu has stringent goals for his new venture - a focus on creativity; a unique cultural style. The number of visitors, boundless creativity; the return on investment has to be better than foreign benchmarks and achieved more quickly. This is the man now looking at investment in Australia. Will it be new media, commercial projects, mining or infrastructure development; all options are on the table.

Increasing interest in Fixed Assets

If we look at investments reported in Australia by Chinese companies - both state owned and private, these invested a total of $3.2 billion in Australia in 2011, an 86 per cent increase from 2010. A senior trade official from the Chinese Embassy, Shi Ziming, was reported recently saying, "Chinese private companies were likely to lead the next wave of Chinese investment abroad despite the present dominance of state-owned enterprises. Private companies accounted for more than 50 per cent of Chinese investment abroad last year. Private enterprises will definitely play a more and more important role in the process of the nation's outbound investment activities." This is certainly our experience. If we look at the significant clients coming to us over the last 15 - 18 months via our Shanghai office, they are predominantly company owners representing a range of manufacturing, medical, IT, service and property development sectors. They are anxious to make investments in real assets in Australia. Chinese private investment in Australia is still to develop real momentum, despite what is happening in other western economies. With an eye on Chinese overseas real estate investment - compare Sydney or Melbourne with the activity in London. In 2011 Chinese buyers accounted for 28% of all prime London property sales and 54% by sales value in the prime central London area, where houses go for 5 million pounds ($8 million) on average, according to a recent report by Savills research. “If the money from China were to start flowing into London at the same rate it does from billionaires in other countries, we would expect the value of ultra-prime London properties to grow by as much as 15%,” Yolande Barnes, head of Savills residential research told China Daily. Putting the billionaires to one side - China's middle-class population (defined as those with annual income of at least US$17,000) has reached more than 100 million as of 2011, while the number of HNWI's worth more than 10 million yuan (US$1.5 million) is estimated to be 825,000, according to Hurun Report (2011). Classifications come and go, but the wealth marches on. In recent visits our clients have shown great interest in real assets in Australia. The real assets attracting particular interest include commercial and residential real estate, agricultural land and to a much lesser extent, precious metals and commodities. They are buying selectively and typically have a long term view.

Xian – wealth out West

I initially had business dealings with Xian in 2005. A Taiwanese developer was seeking FDI for a new real estate project - that is another story with a unique lesson. The West in China, is commonly spoken about as a vast region that is lagging behind the Eastern regions (Bohai, Yangtze and Pearl River Deltas)_yet, Xian, the ancient capital of China is in need of no assistance. Xian is 1400 kms west of Shanghai. A nine million population with a GDP/capita of only USD 7k, however, a city that is booming. The Hurun Report in 2011 states that Xian has 7,000 USD millionaires, including 300 citizens over the USD 16m threshold. Xian was the capital of China 2,200 years ago when the first Emperor to unite all of China, Qin Shi Huang, ruled. Qin Shi Huang outshone beyond China by his Terracotta Warriors.In 2009 we visited Xian again, the circumstances of these trips were more profitable. It is certainly interesting watching the locals creatively use their guangxi. This was one 'guangxi scenario' in Xian, it involved the head of the local Aerospace Development Corporation. A Ms Qiu (architect) wanted to do business with a Mr Y from the Aerospace company. To get an introduction she called her old classmate (a strong connection in China). The husband of said wife worked with Mr Y. The husband, prior to the first meeting (the dinner we attended in Xian) contacted a Professor friend from his old university. The Professor contacted my colleague and another Professor at his university. A couple of taps of the magic wand and we all appear a couple of weeks later in Xian. Why these associations? (I'm there as the token white man). Mr Y wants some "assistance' with his English paper; an English Professor appears from Shanghai. The original Professor wants to do business in Xian and brings my colleague to explore commercialising and taking the Aerospace technology to other cities in China. So behind the Maotai, the incessant toasting, the bruised livers and the never-ending cuisine, the evening continues. One of the meals was up in the nearby mountains; visiting a fish farm and restaurant for more drinking, toasting and food. Those evenings expanded into reciprocal Shanghai visits by all parties and further discussions. Downtown Xian has this marvellous wall marching around the rectangular heart of the CBD, it manages to mesh and not be overshadowed by the sprawling commercial developments. The 14 km long, 1400 year old wall replete with watch towers is stunning. On one visit we met with a Xian Town Planner who was recreating a modern version of ancient Xian as part of massive developments in Qujiang District on the outskirts of Xian. He had been so impressed with a visit to Christchurch he decided to emulate that NZ city's layout and of course hired an Australian Architect to recreate the design back in Xian (work that one out).

From Bricks ‘n Mortar:

China has an abundant supply of r2riches studies. Mr W was born in a village two hours out of Shanghai. His family was large; money scarce. With only an elementary-school education, Mr W aged 14 started working as an apprentice mason. He soon became a foreman. In the early '80's, aged 21, Mr W, formed his own construction team and began bidding for projects. Twenty years later, his booming company had become one of the top private companies in China. Nine years ago, looking for a sunrise industry, Mr W by then in his early 40's, with a USD 25m investment, leapt into new media. Leveraging local Government support and attracting young talent from all over China, Mr W is now declaring that in five years, half his company's turnover (USD 1.2 B) will come from his new media venture. When Mr W decides to undertake a project, he doesn't procrastinate. And he's not afraid to take risks. His long-term goal is not only to be dominant in China, but to become one of the largest new media companies in the world. His second platform is subsumed by the third, with his latest venture; building a massive theme park in China, with an investment of USD 500m. Not yet 50, Mr W's star continues to rise, unrestrained by his beginnings as an apprentice mason with no formal education beyond elementary school. Mr Wu has stringent goals for his new venture - a focus on creativity; a unique cultural style. The number of visitors, boundless creativity; the return on investment has to be better than foreign benchmarks and achieved more quickly. This is the man now looking at investment in Australia. Will it be new media, commercial projects, mining or infrastructure development; all options are on the table.

Increasing interest in Fixed Assets

If we look at investments reported in Australia by Chinese companies - both state owned and private, these invested a total of $3.2 billion in Australia in 2011, an 86 per cent increase from 2010. A senior trade official from the Chinese Embassy, Shi Ziming, was reported recently saying, "Chinese private companies were likely to lead the next wave of Chinese investment abroad despite the present dominance of state-owned enterprises. Private companies accounted for more than 50 per cent of Chinese investment abroad last year. Private enterprises will definitely play a more and more important role in the process of the nation's outbound investment activities." This is certainly our experience. If we look at the significant clients coming to us over the last 15 - 18 months via our Shanghai office, they are predominantly company owners representing a range of manufacturing, medical, IT, service and property development sectors. They are anxious to make investments in real assets in Australia. Chinese private investment in Australia is still to develop real momentum, despite what is happening in other western economies. With an eye on Chinese overseas real estate investment - compare Sydney or Melbourne with the activity in London. In 2011 Chinese buyers accounted for 28% of all prime London property sales and 54% by sales value in the prime central London area, where houses go for 5 million pounds ($8 million) on average, according to a recent report by Savills research. “If the money from China were to start flowing into London at the same rate it does from billionaires in other countries, we would expect the value of ultra-prime London properties to grow by as much as 15%,” Yolande Barnes, head of Savills residential research told China Daily. Putting the billionaires to one side - China's middle-class population (defined as those with annual income of at least US$17,000) has reached more than 100 million as of 2011, while the number of HNWI's worth more than 10 million yuan (US$1.5 million) is estimated to be 825,000, according to Hurun Report (2011). Classifications come and go, but the wealth marches on. In recent visits our clients have shown great interest in real assets in Australia. The real assets attracting particular interest include commercial and residential real estate, agricultural land and to a much lesser extent, precious metals and commodities. They are buying selectively and typically have a long term view.