Melbourne Trading &

Investing Seminars &

Expo

Friday 5th October 2012

An overview and forecast of the

Chinese Investment landscape in

Australia

Tim Lu National Director China Practice KPMG Australia

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Chinese outbound investment – a snapshot

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Investment into Australia - snapshot

$bn

Chinese investment into Australia still in early stages and lags other western countries, but has increased rapidly since 2009.

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 4

Approved investment applications

Source: FIRB

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 5

Top foreign investing countries in Australia

Stock of Foreign Investment as at end 2011 by country

Source: ABS

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. 6

Foreign investment stock – Equity and Debt capital

214

176

49

15

31

22

10 16 17

2

13 6 9

345

312

75

35

16 21 29

15 9

21

10 14 10

0

50

100

150

200

250

300

350

400

A$

billi

on

Equity Capital

Debt capital

As at end 2011 by country

Source: ABS

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

Completed Chinese deals by Australian state

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

0 42

0

0

53

11

14

91

13

7

10

1

20

74

80

0 43 82

26

25

4

0 16

2

54

5

26

60

0

0 0 19

8

12

18

6

24

21

76

0

71

7

0

16

28

2

4

55

8

41

6

97

58

40

93

13

2

16

0

14

97

7

0

5000

10000

15000

20000

25000

30000

Agriculture, forestry and

fishing

Finance and Insurance

Manufacturing Mineral exploration and

development

Real estate Resources processing

Services Tourism Total

A$

mill

ion

2007-2008 2008-2009 2009-2010 2010-2011

8

The sectors where China has applied to invest

Source: FIRB

© 2012 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

42

10

7

6

7

$0m - $25m $25m - $100m $100m - $200m $200m - $500m $500m+

9

Source: MergerMarket and KPMG

FY10

(number of deals) 87% of deal value

72 deals

11

6

2

5

$0m - $25m $25m - $100m $100m - $200m

$200m - $500m $500m+

48

82% of deal value

72 deals FY11

(number of deals)

Source: MergerMarket and KPMG

China’s investment into Australia

© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.

Hainan

Xinjiang

Tibet

Gansu

Ningxia

Sichuan Chongqing

Guizhou

Yunnan

Guangxi Guangdong

Fujian

Zhejiang

Shanghai

Jiangsu

Hebei

Liaoning

Jilin

Heilongjiang

Henan

Hubei

Hunan Jiangxi

Anhui

Taiwan

Inner Mongolia

Shaanxi

Qinghai

Beijing

Shanxi Shandong

Tianjin

Location of HQ of Chinese investors who have invested in Australia from

1 July 2008 till 24 Jan 2010

Sources of Chinese capital into Australia

In 2009 Chinese

proposed FDI into AUS

came from 26 provinces

© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.

Macro picture of Australia-China relationship

• China is Australia’s largest trading partner – A$113 billion (FY 2011)

– 23% exports

– 19% imports

• Trade surplus with China (A$10+ billion)

• China is one of Australia’s largest source of

– Foreign Students (No 1)

– Foreign Capital (No 1, in 2009)

– Migrants (No 4)

– Economic value of tourists (No 1)

• China has been major contributor to Australia’s economy

© 2010 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG

International, a Swiss cooperative. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.

Major Australian mineral exports to China

Source: ABARE, ABS

Mineral Year 2007/08 2008/09 2009/10

Iron Ore

Export Total 294,293 Kt 323,338 Kt 389,846 Kt

Export to China 167,574 Kt 222,917 Kt 265,545 Kt

% of Australian export 56.9% 68.9% 68.1%

Copper Concentrate

Export Total 1,694 Kt 1,802 Kt 1,933 Kt

Export to China 567 Kt 638 Kt 614 Kt

% of Australian export 33.5% 35.4% 31.8%

Coking Coal

Export Total 83.65 mil ton 79.55 mil ton 97.71 mil ton

Export to China 1.37 mil ton 9.81 mil ton 15.52 mil ton

% of Australian export 1.64% 12.3% 15.9%

Zinc Concentrate

Export Total 2,323 Kt 2,098 Kt 2,228 Kt

Export to China 823 Kt 943 Kt 1,154 Kt

% of Australian export 35.4% 44.9% 50.6%

Lead Concentrate

Export Total 308 Kt 382 Kt 490 Kt

Export to China 72 Kt 147 Kt 222 Kt

% of Australian export 23.4% 38.5% 45.3%

Thank you