australia business perceptions in china 2012

8/10/2019 Australia Business Perceptions in China 2012

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3 December 2012 Australian Trade Commission Australian Businesses in China 2

Background

The Honourable Craig Emerson, Minister for Trade and Competitiveness announced the inaugural Australia China

Business Perceptions Survey during an address in May 2012 to the China International Fair for Trade in Services

(CIFTIS) in Beijing.

This is the first ever such survey of Australian business sentiment in Mainland China. The survey initiative was

prompted by the growing strength of the bilateral trade and investment relationship and the expansion of Australian

business across Mainland China.

The Australian Chambers of Commerce in Beijing, Shanghai, Hong Kong and South China worked with the Australian

Trade Commission (Austrade) to develop the questionnaire.

Objectives

The overall aim of the survey is to understand the current climate for Australian organisations operating in Mainland

China.

The specific objectives of the research are to:

Gather perceptions on business conditions and climate in China (level of optimism, competition, profitability);

Determine business activity within China (likelihood to expand operations);

Profile for any differences by company characteristics (e.g., location of headquarters, ownership, etc.).

Methodology

Respondents completed an online survey programmed and hosted by Sweeney Research. The average survey

length was 15 minutes (outliers of longer than 40 minutes were excluded from calculation of average survey length).The surveys were completed from November 5 - 20, 2012.

Sweeney supplied each Australian Chamber (AustCham) with an ID and unique link for each member who was then

emailed the invitation for the survey. The process ensured anonymity and confidentiality of responses. Due to

technical difficulties in the email send process for AustCham Beijing, Sweeney assumed responsibility for the mail

sends for AustCham Beijing members.

In all, 1,003 members of AustCham Greater China were invited to take part in the survey. One hundred and fifty-three

surveys were completed giving a response rate of 15 per cent. The response rates for each Chamber are shown in

the table below.

Table 1. Survey Response Rate

Chamber Contacts Emailed Completed Surveys Response Rate

Beijing 263 36 14%

Hong Kong 160 10 6%

Shanghai 400 40 10%

South China 180 67 37%


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TOTAL 1003 153 15%

Generally, respondents to the survey occupied senior positions, with 35 per cent at a CEO level or their direct reports

and a further 22 per cent Director/Senior Manager and 7 per cent occupying positions on the Board.

Notes on Analysis

Where possible, significance testing is conducted to determine differences between subgroups (Chamber

membership, identification as Australian organisation, legal entity, role within organisation, and the proportion of full

time employees in Mainland China, size of organisation and location of headquarters within Greater China).

Significance testing is only conducted for subgroups where n30. For example, when testing for significant

differences by Chamber, the scores for Beijing, Shanghai and South China are tested against the overall average

(including Hong Kong) to identify any significant differences. Hong Kong scores would not be tested against the

overall average as the sample size (n=10) is insufficient for robust significance testing.


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Executive Summary of Key Findings

Sentiment is optimistic Sevenin ten Australian businesses in China (69 per cent) are

optimistic about the overall Chinese economy and a similar proportion (66 per cent) are optimisticabout the outlook for their own organisation. Optimism for individual organisations is higheramong Members of AustCham Shanghai and Beijing and lower among Members of AustChamSouth China.

Regulatory reform and leadership transition drive optimism expectations are thatregulatory reform currently in process will create new business opportunities and make theconduct of business easier. There is also a hope that after the Chinese Communist Partys 18thCongress, political stability will result in greater economic stability.

Competition has intensified in Mainland China a fifth (20 per cent) report competitionincreasing a great deal and a further third (33 per cent) report competition increasing moderately.The key areas of competitive pressure for Australian businesses are price and clientrelationships/customer service, identified by over half of organisations surveyed.

Expansion is likely for many organisationsa quarter (24 per cent) are extremely likely and afurther 29 per cent are very likely to expand their physical presence. The key drivers forexpansion are around demand rather than supply side cost savings. Regions most likely to benefit

from expansion are Guangdong (34 per cent) and Shanghai (34 per cent).

Three key challenges for the future are: labour, competition and regulation access toskilled labour and wage pressures are two of the top three challenges facing organisations.Increased competition from both Chinese and foreign (non-Chinese) companies are also amongthe top challenges, as are several factors relating to regulation such as licensing, lack oftransparency, an unclear regulatory environment and ability to enforce contract terms.


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Detailed Findings from the Survey


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Detailed Findings from the Survey

Outlook

Outlook for the Economy

Respondents are overwhelmingly positive on the outlook for the Chinese economy in the next 12 months, with seven

in ten (69 per cent) either optimistic or slightly optimistic about the overall outlook for the Chinese economy.

Figure 1. Outlook for the Chinese Economy (percentage of respondents)

Q15. What is your overall view on the outlook for the Chinese economy in the next 12 months?Base: All respondents, n=153

Optimism is significantly higher among members of AustCham Shanghai, with 83 per cent viewing the economy with

either optimism or slight optimism, and lower among members of AustCham South China, where only 58 per cent

view the next 12 months with optimism.

Of Hong Kongs ten members, three are optimistic, two slightly optimistic and five neutral about the next 12 months.

Optimistic32

Slightly optimistic37

Neutral24

Slightlypessimistic

5

Pessimistic3


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Organisational Outlook

The outlook for individual organisations is also positive, with a third optimistic and a further third slightly optimistic.

Organisations responses to their own outlook were largely in line with their responses to the outlook for the Chinese

economy.

Figure 4. Organisational Outlook (percentage of respondents)

Q17. What is your overall view on the outlook for your organisation in Mainland China in the next 12 months?

Base: All respondents, n=153

Members of the AustCham Beijing and Shanghai Chambers are more optimistic than those from South China, with 81

per cent of AustCham Beijing Members and 80 per cent of AustCham Shanghai Members either optimistic or slightly

optimistic compared to half (52 per cent) of AustCham South China Members. Among the ten AustCham Hong Kong

members, two were optimistic, two slightly optimistic, five neutral and one slightly pessimistic.

Optimistic33

Slightly optimistic33

Neutral22

Slightlypessimistic

9

Pessimistic3


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Figure 5. Organisational Outlook by Chamber (percentage of respondents)

Q17. What is your overall view on the outlook for your organisation in Mainland China in the next 12 months? by ChamberBase: All respondents, n=153Base varies by Chamber as shown

Organisations headquartered in Beijing are more optimistic, with 88 per cent either optimistic or slightly optimistic

about the outlook for their organisation, as shown inFigure 6.

Figure 6. Organisational Outlook by Location of Headquarters (percentage of respondents)

Q17. What is your overall view on the outlook for your organisation in Mainland China in the next 12 months? by ChamberBase: All respondents, n=153Base varies by location as shown, locations n


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Small organisations are more optimistic about their outlook, as shown inFigure 7 below, with 52 per cent optimistic

about the outlook in the next 12 months compared to 27 per cent of medium organisations and 26 per cent of large

organisations.

Figure 7. Organisational Outlook by Organisation Size (percentage of respondents)

Q17. What is your overall view on the outlook for your organisation in Mainland China in the next 12 months? by ChamberBase: All respondents, n=153Base varies by organisation size as shown

52

27

26

33

26

37

42

33

19

28

22

22

0

6

6

9

3

1

4

3

Small(10 employees or less, n=31)

Medium(11-100 employees, n=67)

Large

(100 or more employees, n=50)

ALL ORGANISATIONS(n=153)

Optimistic Slightly optimistic Neutral Slightly pessimistic Pessimistic


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Reasons for Optimism

Four clear themes emerged from the analysis of the reasons for optimism for individual organisations:

Regulatory reform is creating business opportunities;

The completion of the leadership transition is expected to improve economic stability;

While the rate of gross domestic product (GDP) growth might not continue to increase, internal demand should

keep GDP growth well above the United States and European Union;

Continuing strong interest in investing in Australia across a range of sectors.

These are demonstrated in the following open-ended responses

We believe that after Chinese Communist Party's 18th Congress, overall political stability will be restored

and the new government needs to show that they are capable to manage the economy recovering and to lead

the nation to go forward. So more aggressive approaches will be adopted.

(AustCham South China, optimistic)

Post NPC we hope that projects that have been delayed will start and that reform in key sectors of

financial services and telco will open up for more foreign participation.

(AustCham Beijing, optimistic)

Although slowed down, there is still an upward trend of the Chinese economy. Opportunities in new areas

to be dug out

(AustCham South China, slightly optimistic)

Foreign investment and expansion remains high. Our services are in demand and corollary to FDI to

China mainland. For the next 12 months the environment looks stable to positive. However, longer term -

more than 5 years from now - there are potential issues with China's reforms and continued growth.

(AustCham Shanghai, optimistic)

Outgoing investment interest in Australia in resources, agribusiness, real estate and other sectors is very

positive. New visa arrangements in Australia will lead to work assisting Chinese parties in that space,

acquire organisations and other interests, and comply with the rules. Inbound work interest from Australian

and other companies in market studies and market entry are increasing

(AustCham Beijing, optimistic)

A handful of members are pessimistic about the economy, as shown by these responses below

Slowing economy and general feeling that the new government will not take the hard decisions oneconomic reform.

(AustCham Beijing, pessimistic)

China is becoming very unpredictable and more self-sufficient.

(AustCham Shanghai, neutral)

More operation and sourcing activities will move to other low cost countries, such as Indonesia and

Vietnam.

(AustCham South China, slightly pessimistic)


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Expansion

Optimism is also reflected in a strong likelihood for organisations to expand their physical presence in Mainland

China, with a quarter (24 per cent) of organisations extremely likely and a further 29 per cent very likely to expand

their footprint.

Figure 8. Likelihood to Expand Physical Presence in Mainland China (percentage of respondents)

Q21. Based on current trends, how likely is your organisation to expand or grow its physical presence in Mainland China (e.g. additional offices,

additional locations)?Base: Know likelihood of expansion (dont know excluded), n=141

Extremely likely24

Very likely29

Moderately likely21

Slightly likely19

Not likely at all7


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Members of the Shanghai Chamber are more likely to expand their presence, with 36 per cent extremely likely to

expand while South China Members are less likely to expand, with only 10 per cent extremely likely to expand. Of the

nine Hong Kong Members who could estimate the likelihood of expansion, three are extremely likely, one very likely,

two moderately likely, two slightly likely and one not likely at all.

Figure 9. Likelihood to Expand Physical Presence in Mainland China by Chamber (percentage of respondents)

Q21. Based on current trends, how likely is your organisation to expand or grow its physical presence in Mainland China (e.g. additional offices,additional locations)? by ChamberBase: Know likelihood of expansion (dont know excluded), base varies by Chamber as shown, Chambers n


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Medium-sized organisations are less likely to expand their physical presence, with only 15 per cent extremely likely to

expand, as shown inFigure 10 below.

Figure 10. Likelihood to Expand Physical Presence in Mainland China by Organisation Size (percentage of respondents)

Q21. Based on current trends, how likely is your organisation to expand or grow its physical presence in Mainland China (e.g. additional offices,additional locations)? by organisation sizeBase: Know likelihood of expansion (dont know excluded); base varies by organisation size as shown

32

15

32

24

36

31

23

29

18

23

19

21

7

25

19

19

7

6

6

7

Small organisation (10 employees or less,n=28)

Medium organisation (11-100 employees,n=65)

Large organisation (100 or more employees,n=47)


Extremely likely Very likely Moderately likely Slightly likely Not likely at all


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Of those organisations at least slightly likely to expand, a third (32 per cent) expect this to be within the next financial

year, as shown inFigure 11 below.

Figure 11. Timeframe for Expansion (percentage of respondents)

Q22. In what timeframe is your organisation likely to expand or grow its physical presence in Mainland China?Base: At least slightly likely to expand, n=128

There were several significant differences in timeframe for expansion by profile of organisations. Those more likely to

expand within next financial year were organisations that do not consider themselves Australian (45 per centcompared to 25 per cent of self-identified Australian organisations) and large-sized organisations (45 per cent). Those

less likely to expand within the next financial year were Members of the South China Chamber (13 per cent) and

medium-sized organisations (22 per cent).

Within the nextfinancial year

32%

Next 2 years33%

Next 3 years26%

Next 4-5years8%

Longer than next5 years

1%


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Guangdong and Shanghai are leading regions for expansion, in the plans for expansion for a third (34 per cent) of

organisations.

Figure 12. Region for Expansion (percentage of respondents)

Q23. Into which region(s) is your organisation likely to expand or grow its operations?Base: At least slightly likely to expand, n=128 Provinces/cities


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The key driver of expansion for organisations is demand, with 60 per cent citing demand for products/services and 29

per cent access to emerging markets/higher growth areas, as shown inFigure 13 below. Supply side advantages

appear to be lower order drivers of expansion, with lower operating costs a factor for only 8 per cent of organisations

and cheaper labour a factor for 7 per cent of organisations.

Figure 13. Drivers of Expansion (percentage of respondents)

Q24. Which of these factors most influence your organisations decision to expand or grow?Base: All respondents, n=153

60

29

27

24

23

22

14

12

12

8

8

7

4

Demand for organisation's products/services

Access to emerging markets/higher growthareas

Ability to find the right customers

Access to skilled labour

Acting ahead of competitors

Chinese partnering

Expanding nature of operations in China

Preferential tax rates

Regulatory changes favourable to theorganisation

More efficient transport/logistics

Shifting to region with lower operating costs(property prices, etc)

Access to cheaper labour

Other


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Organisational Performance

Organisations in general had a more successful year this year compared to last year, with half (47 per cent) of

organisations more profitable compared to under a quarter (22 per cent) less profitable.

Figure 14. Financial Performance Compared to Last Year (percentage of respondents)

Q16. How would you rate your organisations financial performance this year compared to last year?Base: All respondents, n=153

Much moreprofitable

8

More profitable39About the same31

Less profitable19

Much lessprofitable

3


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Organisations with over 90 per cent of their full-time employees based in Mainland China were less successful this

year, with 35 per cent less profitable compared to last year.

Organisations with 11-50 per cent of their full-time employees based in Mainland China were more likely to show

steady performance compared to last year, with only six per cent reporting they were less profitable compared to last

year and nearly half (48 per cent) with financial performance about the same.

Figure 15. Financial Performance by Employee Breakdown (percentage of respondents)

Q16. How would you rate your organisations financial performance this year compared to last year? by Q6. What proportion of your organisationstotal full time employees are in Mainland China?Base: All respondents, n=153Base varies by employee breakdown as shown

14

15

7

8

31

45

30

44

39

36

48

30

14

31

19

6

18

30

19

6

5

3

0-10% (n=36)

11-50% (n=33)

51-90% (n=33)

91-100% (n=43)

ALL ORGANISATIONS (n=153)

Much more profitable More profitable About the same

Less profitable Much less profitable


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Medium-sized organisations were less likely to report they were less profitable (10 per cent), while large organisations

were more likely to report they were less profitable this year compared to last year (34 per cent).

Figure 7. Financial Performance by Organisation Size (percentage of respondents)

Q16. How would you rate your organisations financial performance this year compared to last year? by Q6. What proportion of your organisationstotal full time employees are in Mainland China?Base: All respondents, n=153Base varies by organisation size as shown

6

12

6

8

32

40

40

39

35

37

20

31

19

9

32

19

6

1

2

3

Small (10 employees or less,n=31)

Medium (11-100 employees,n=67)

Large (100 or more employees,

n=50)


Much more profitable

More profitable

About the same

Less profitable

Much less profitable


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Challenges

Access to and the cost of labour pose key challenges for organisations operating in Mainland China, with 41 per cent

reporting that access to skilled labour has either an extremely high or high impact and 38 per cent reporting an

extremely high/high impact of wage pressures. Regulation with licensing, lack of transparency, ability to enforce

contract terms and an unclear regulatory environment also all rated among the key challenges having a high level ofimpact on organisations. Increasing competition from both foreign and Chinese companies also increasingly poses a

challenge for Australian businesses.

Figure 17. Challenges (percentage of respondents)

Q20. Please indicate the level of impact the following challenges have on your organisation in Mainland China.Base: All respondents, n=153

12

9

13

7

17

10

12

10

9

10

7

5

7

8

6

6

3

4

29

32

25

28

16

24

19

20

21

18

19

20

16

14

16

15

16

9

31

26

38

41

29

34

32

36

28

29

28

35

30

35

32

27

37

24

20

29

19

21

18

27

23

24

22

30

24

30

23

24

27

30

24

28

7

5

5

3

19

6

14

10

20

13

22

10

24

19

19

23

20

35

Skilled labour access

Competition from Chinese companies

Wage pressures

Cost pressures other than wage pressures

Licensing (obtaining required licences to dobusiness)

Competition from foreign (non-Chinese)companies

Lack of transparency in organisation practices

Unclear regulatory environment

Cultural differences

Ability to enforce contract terms with partners,customers, etc.

Visa/work permits

Exchange rate fluctuations

International trade restrictions/border controls

Local/city/provincial/national trade restrictions

Protection of IP (intellectual property rights)

Restrictions on repatriation of profit

Quality of infrastructure

Property ownership

Extremely high impact High impact Moderate impact

Slight impact No impact at all


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In terms of regional differences, skilled labour access poses a significantly greater challenge in Shanghai, with 62 per

cent of organisations rating it as having an extremely high or high impact on their operations. In South China, only 29

per cent of organisations rate skilled labour access as having a high impact.

Cost pressures (other than wage pressures) also have a significantly higher impact in Shanghai (54 per cent rating it

as having a high impact) and significantly lower in Beijing (20 per cent).

Property ownership has a significantly higher impact in South China, with 22 per cent rating this as having a high

impact compared to 14 per cent overall.

Figure 18. Challenges (Extremely High/High Impact %) by Chamber (percentage of respondents)

Q20. Please indicate the level of impact the following challenges have on your organisation in Mainland China by ChamberBase: Beijing, n=36: Shanghai, n=40: South China, n=67

39

31

35

20

44

40

40

29

34

28

32

31

18

21

18

21

12

6

62

35

49

54

36

36

32

33

32

38

26

26

29

24

26

21

21

5

29

42

30

31

25

25

23

27

25

23

27

22

26

22

20

19

24

22

Skilled labour access

Competition from Chinese companies

Wage pressures

Cost pressures other than wage pressures

Licensing (obtaining required licences to dobusiness)

Competition from foreign (non-Chinese)companies

Lack of transparency in organisationpractices

Cultural differences

Unclear regulatory environment

Ability to enforce contract terms withpartners, customers, etc.

Visa/work permits

Exchange rate fluctuations

International trade restrictions/border controls

Local/city/provincial/national trade restrictions

Protection of IP (intellectual property rights)

Restrictions on repatriation of profit

Quality of infrastructure

Property ownership

Beijing Shanghai South China


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The following survey comments illustrate the challenges for Australian businesses in mainland China

Regulation and China's capital gate and currency controls. Lack of reciprocity - our Chinese competitors

are allowed to do far more in Australia than we are allowed to do in China.

(AustCham Shanghai)

Bureaucracy is a major headache - from visas for staff, to frequent policy changes (e.g., tax, social

welfare, etc.), to difficulties transferring money via local banks mired in bureaucracy, etc. Retaining good,

experienced staff is also a challenge, despite us giving pay rises to staff every year. Prices / costs are also

rising steadily.

(AustCham Beijing)

Government - they choose to implement law or restrictions as and when it suits them which can be a real

challenge to closing transactions and therefore forecasting revenue; rising labour costs particularly in East

China, lack of suitably trained/experienced labour in the service sector, inflation.

(AustCham Shanghai)

Complexity of Government Sector.Recognition of need for performance improvement to public services:

Health, transport, FM. Corruption.

(AustCham Hong Kong)

Availability of good staff - heavy handed government controls - regulatory environment distorted in heavy

favour of local competitors.

(AustCham Shanghai)

Lack of legal accountability overall.For example, for suppliers/contractors means one constantly needs to

check one gets what one pays for as quite often one does not! Until China has a strong legal framework it

is difficult to see how they can ever reach the quality and reliability levelsseen in the western world.

(AustCham Shanghai)

Rising wages, and an increase in general costs. Tighter labour market, more labour regulation.

Availability of skilled labour. Constant changing of regulations creating uncertainty. Non-level playing field

for foreign owned enterprises. Increasing competition, leading to lower margins.

(AustCham Shanghai)


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Competition

The level of competition within Mainland China has intensified with a fifth (20 per cent) reporting that it has increased

a great deal and a further third (33 per cent) reporting it has increased moderately in the last 12 months.

Figure 8. Level of Competition (percentage of respondents)

Q27. How has the level of competition within Mainland China changed in the last 12 months?Base: All respondents, n=153

Increased a greatdeal20

Increasedmoderately

33

Increased slightly19

Stayed about thesame

21

Decreasedslightly

4

Decreasedmoderately

3

Decreased agreat deal

0


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26/40


Organisations face a high degree of local competition, with three-quarters (73 per cent) of organisations facing

competition from organisations based in China and Hong Kong, as shown in Figure 21 below. Foreign competition is

largely from North America and Europe, with over a third (37 per cent) of organisations competing with organisations

based in those regions.

Figure 21. Competitor Location (percentage of respondents)

Q25. Where are your key competitors based?Base: All respondents, n=153

73

37

37

23

21

20

17

14

13

12

10

2

China/Hong Kong

North America

Europe

Oceania

Southern Asia

ASEAN region

Northern Asia

Western Asia

Central and Southern America

Middle East

Africa

Dont know/not sure


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Price and client relationships/customer service are the key competitive factors in Mainland China, identified by over

half of organisations (59 per cent and 53 per cent, respectively).

Figure 22. Key Competitive Factors in Mainland China (percentage of respondents)

Q26. What are the key competitive factors in Mainland China?Base: All respondents, n=153

59

53

46

37

31

27

27

19

16

5

Price

Client relationships/customer service

Quality

Relationships with government

Innovation

Alliance with local partners

Availability

Expanding into growth areas within China

Range

Other


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Among Members of AustCham Beijing, relationships are a more important competitive factor, with both relationships

with local government (56 per cent compared to 37 per cent overall) and alliance with local partners (42 per cent

compared to 27 per cent overall) higher order factors.

In Shanghai, price is the dominant competitive factor (85 per cent compared to 59 per cent overall), while client

relationships/customer service (68% compared to 53% overall) and availability (43 per cent compared to 27 per centoverall) are also higher order factors.

In South China, innovation is a higher order factor (42 per cent compared to 31 per cent overall), while price (43 per

cent compared to 59 per cent overall), client relationships/customer service (40 per cent compared to 53 per cent

overall) and availability (18 per cent compared to 27 per cent overall) play a lesser role.

Figure 23. Key Competitive Factors in Mainland China by Chamber (percentage of respondents)

Q26. What are the key competitive factors in Mainland China? by ChamberBase: Beijing, n=36: Shanghai, n=40: South China, n=67

58

64

42

56

19

42

28

19

14

85

68

55

28

30

23

43

18

20

43

40

43

31

42

21

18

16

16

Price

Client relationships/customer service

Quality

Relationships with government

Innovation

Alliance with local partners

Availability

Expanding into growth areas within China

Range

Beijing Shanghai South China


29/40


Appendix


30/40


Appendix

The profile of the organisations involved in the research is shown in the following charts.

Generally, respondents to the survey occupied senior positions with organisations, with 35 per cent at a CEO level or

their direct reports, a further 22 per cent Director/Senior Manager and 7 per cent occupying positions on the Board, asshown inFigure 24 below. Eight per cent of respondents gave a response of Other, which included positions such

as partner in a law firm, sales manager, corporate affairs manager and team leader.

Figure 24. Role Within Organisation (percentage of respondents)

Q1. Which of these best describes your role within your organisation?Base: All respondents, n=153

Almost half of organisations surveyed (44 per cent) are wholly foreign-owned enterprises. Of those who responded

other, organisation types included law firms, Chinese state-owned enterprises and Chinese companies.

7

35

22

14

14

8

Board Director

Executive (Chief Executive Officer orequivalent and their direct reports)

Director/Senior manager (2-3 levels belowCEO or equivalent)

Country/Region Manager

Marketing or Business Development Manager

Other


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Figure 25. Legal Entity (percentage of respondents)

Q2. What sort of legal entity does your organisation have in Mainland China?Base: All respondents, n=153

Almost two-thirds of respondents identified as an Australian organisation operating in China.

Figure 26. Identification as an Australian organisation (percentage of respondents)

Q3. Would you regard your organisation as an Australian organisation operating in China (e.g. organisations majority ownership is Australian,organisations main headquarters are in Australia, etc.)?Base: All respondents, n=153

Over a quarter (27 per cent) of organisations surveyed had more than 15 years of operation in Mainland China.

44

24

18

9

12

3

Wholly foreign-owned enterprise

Representative or branch office

Joint venture

Holding company

Other

Don't know/not sure

Yes63

No37


32/40


Figure 27. Years in Operation in Mainland China (percentage of respondents)

Q4. How long has your organisation had a physical presence in Mainland China?Base: All respondents, n=153

A fifth (20 per cent) of organisations surveyed were small (10 employees or less), 44 per cent were medium-sized

(11-100 employees) and a third (33 per cent) were large (100 employees or more).

Figure 28. Full-time Employees in Mainland China (percentage of respondents)

Q5. How many full time employees does your organisation have in Mainland China?Base: All respondents, n=153

7

20

30

16

13

14

1

One year or less

2 - 5 years

6 - 10 years

11 - 15 years

16 - 20 years

Over 20 years

Don't know

20

12

14

18

14

19

3

10 employees or less

11-20

21-50

51-100

100-500

More than 500

Don't know/Can't say


33/40


Organisations surveyed tended to be polarised in their employee breakdown, with a quarter (24 per cent) having only

10 per cent or fewer of their full-time employees based in Mainland China and a quarter (28 per cent) having over 90

per cent based in China.

Figure 29. Proportion of Full-Time Employees in Mainland China (percentage of respondents)

Q6. What proportion of your organisations total full time employees are in Mainland China?Base: All respondents, n=153

24

7

4

5

6

3

6

6

7

28

0-10%

11-20%

21-30%

31-40%

41-50%

51-60%

61-70%

71-80%

81-90%

91-100%


34/40


Local Chinese employees generally made up the majority of full-time employees in Mainland China for the

organisations surveyed, as shown inFigure 30 below. For nearly two-thirds of organisations (63 per cent), local

Chinese employees made up at least 90 per cent of the full-time workforce in Mainland China.

Figure 30. Proportion of Full-Time Employees of Local Chinese Nationality (percentage of respondents)

Q7. And what proportion of your organisations full time employees in Mainland China are? Base: Able to estimate breakdown of local Chinese employed, n=137

10

27

63

Less than 50%

50-89%

90% or over


35/40


A broad range of industries were captured in the survey, as shown inFigure 31 below.

Figure 31. Industry (percentage of respondents)

Q8. Which of these best describes the industry in which your organisation operates?Base: All respondents, n=153

1010

9

7

7

6

5

5

5

5

4

4

4

4

3

3

3

2

2

2

1

01

Financial and Insurance ServicesConsulting Services

Education and Training

Transport, Postal and Warehousing

Business Support Services

Information Technology, Media and Telecommunications

Construction

Manufacturing

Advertising, Communications and PR

Legal Services

Accommodation and Food Services

Architecture and Engineering Services

Hospitality

Retail Trade

Arts and Recreation Services

Health Care and Social Assistance

Mining

Government, Public Administration and Safety

Rental, Hiring and Real Estate Services

Wholesale Trade

Agriculture, Forestry and Fishing

Electricity, Gas, Water and Waste ServicesOther Industry


36/40


As with industry, there was a broad range of products and services provided by organisations surveyed.

Figure 32. Products/Services Provided by Organisations (percentage of respondents)

Q9. Which of these describes the product or services your organisation provides?Base: All respondents, n=153

2716

15

14

14

11

10

10

9

8

8

8

8

8

6

6

5

4

3

3

3

2

Consulting servicesFinancial services

Elaborately transformed manufactures

Business Support services

Education and Training

Advertising, Communications and PR services

Transport services

Information technology & telecommunication services

Processed food

Simply transformed manufactures

Construction services

Legal services

Travel services

Health Care and Social Assistance

Minerals

Hospitality services

Product design/Research and Development (R&D)

Unprocessed food

Fuels

Insurance & pension services

Government, Public Administration and Safety

Arts and Recreation services


37/40


Organisations were asked about what operations they conduct anywhere in the world, not just in Mainland China.

The majority of organisations are involved in consulting or professional service provision, as shown inFigure 33

below. Product manufacture is only conducted by a fifth of organisations (18 per cent).

Figure 33. Operations Conducted by Organisation (percentage of respondents)

Q10. Which of the following operations does your organisation conduct? For this question, please think about operations your organisationconducts anywhere in the world, not just in Mainland ChinaBase: All respondents, n=153

51

42

27

27

19

18

18

12

7

5

2

6

Consulting/Professional service provision

Sales

Corporate office(s)

Organisation support services (e.g. IT, HR, Admin)

Service outlets/Branch

Product manufacture

Distribution of goods

Sourcing of raw materials

Construction

Refinement of raw materials

Product sourcing

Other operations


38/40


As shown inFigure 34,operations are conducted across several regions. In terms of supply chain, of the 27

organisations involved in product manufacture, eight (30 per cent) solely manufactured products in China.

Figure 34. Location of Operations (percentage of respondents)

Q11. Where does your organisation conduct each of the following operations?Base varies by operation, n as shown Noteoperations n


39/40


A third (34 per cent) of organisations were financed by retained earnings.

Figure 35. Financing Arrangement (percentage of respondents)

Q12. How does your organisation principally finance its operations in Mainland China?Base: All respondents, n=153

Three-quarters of respondents (74 per cent) work for organisations operating in more than one city in Mainland China.

Four organisations surveyed (3 per cent) had no operations in Mainland Chinese cities.

Figure 36. Number of Cities Operating in Mainland China (percentage of respondents)

Q13. In which Mainland Chinese provinces/cities does your organisation have offices/operations?Base: All respondents, n=153

34

12

9

6

5

3

3

3

3

7

16

Retained earnings

Intercompany loans and guarantees

Terms of trade/supply chain arrangements

Debt facility from overseas financial institution

Venture capital

Debt facility from Australian financial institution

Informal loans and guarantees from family members/

associates

High net worth individual

Issuing shares

Other

Don't know / Can't say

3

23

22

22

11

19

0

1

2

3

4

5 or more


40/40

australia business perceptions in china 2012

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