Doing Business in China 2022: Australian businesses in China thriving despite challenges

Australian businesses operating in or with China are still thriving and modestly optimistic despite three years of challenges, according to a new research report from the University of Melbourne and the China-Australia Chamber of Commerce (AustCham).

The Doing Business in China Report 2022 details experiences and opinions of Australian organisations operating in and with China. Following surveys in 2017 and 2018, this is the third instalment of a longitudinal study.

The 2022 survey results from executives at 160 Australian companies give insights of a tumultuous business environment for Australian businesses working in and with China.

Key findings include:

  • Pandemic restrictions on peoples’ movement, trade restrictions and ongoing tensions in Sino-Australian relations were perceived as top challenges.
  • Despite those challenges, 58% of respondents indicated China is in their top three priorities for global investment plans over the next three years.
  • The pandemic caused profitability to decrease significantly compared with 2019 levels. 36% of respondents reported a reduction in headcount and 31% a reduction in their investment in China.
  • The survey’s analysis of respondents’ sales, investments and headcounts suggests modest optimism in 2022, with growth forecast following a sharp contraction in 2020 and uncertainty in 2021.

Mr Vaughn Barber, Chair of AustCham China, said the results of the 2022 survey show the resilience and adaptability of Australian companies doing business in and with China.

“Considering the challenging operating environment, the survey results are encouraging and speak to the underlying demand from Australian companies, and their desire to be present in the China market.” said Mr Barber.

“The improvement in the bilateral relationship that we have seen since the Federal Election and the changes to China’s COVID policies that were announced last week are highly welcome by business. These were the top risks impacting future investments in China.”

“It was also encouraging to see the percentage of Australian companies sourcing or producing goods and services in China for the Chinese market has more than doubled to 46%. This trend is bound to continue as companies look to take advantage of emerging opportunities, complementing existing areas of traditional strengths in goods export with emerging opportunities in services and investment,” Barber added.

Lead researcher for the report, Professor Paul Kofman, Dean of the Faculty of Business and Economics, University of Melbourne, said it was a relief to learn businesses remain optimistic about the future of working in and with China.

“The data shows the business outlook remains optimistic regarding long-term growth opportunities. This is partly due to increases in profitability as China’s consumption shifts to higher quality products and services. China’s ambitious low-carbon targets could also lead to opportunities for Australian businesses” said Professor Kofman.

“A significant majority of respondents continue to believe that China remains among the top three markets over the next three years. This is a promising sign for those of us who want to see Australian businesses not just to stay the course in China, but thrive and prosper,” he said.

The report is a joint initiative between the University of Melbourne, China-Australia Chamber of Commerce(AustCham China), Australia China Business Council, Australian Chamber of Commerce in Hong Kong, and Australian Chamber of Commerce in Shanghai.

The report was supported by the National Foundation for Australia-China Relations.

The full report can be downloaded here.