2019 Westpac Australia-China Business Sentiment Survey

The 2019 Westpac Australia-China Business Sentiment Survey is a barometer of Australian business sentiment in China. The second annual Survey was undertaken by 211 organisations (up 33%YOY). This year’s Survey identified that the vast majority of Australian businesses remain optimistic in both the short and long term, with companies investing in China- oriented innovation experiencing further success, reporting that they are 32% more profitable than those not tailoring to the market.                        

 

Results also pleasingly demonstrate an increase in Australian businesses forecasting profitability in 2019 (78.9%, up from 62.5% in 2018). Business ease is stabilising; reflective of a more steady, mature market. Meanwhile, revenue forecasts indicate that Australian businesses are factoring slowing macroeconomic forecasts and rising costs into their planning and decision making.

Domestic consumption is deemed to be the most important opportunity for Australian businesses in 2019. With this in mind, businesses identified understanding customers as the most important information gap to consider. Results also reveal a clear prioritisation of customer-centric investment by Australian businesses, with 10.7% year-on-year growth of increased investment into market research and development.

Our competitive advantages signal that strong equity remains in 'Brand Australia'. Meanwhile, the key drivers of opportunity and change include changing consumer behaviours (driven largely by China's growing middle class); digital and technological innovations; and the globalisation of Chinese companies.

The implementation of the China-Australia Free Trade Agreement continues to benefit more Australian businesses year-on-year (3.6% increase from 2018 results). Increased concerns regarding the macrogeopolitical environment are likely attributed to the US-China Trade War and a slowing economy (11.5% increase from 2018 results).

Despite this, recent policy changes in China have identifiably improved the business environment year-on-year, and there is a notable rise in the number of businesses identifying that China treats foreign and Chinese enterprises equally.

Under China’s recent policy initiative, Made in China 2025, Beijing is striving to establish China as a global technological leader by actively nurturing competition to induce greater innovation. Australian businesses have responded accordingly, with a growing number adopting China-centric digital marketing and eCommerce strategies. Almost two out of three (59.7%) Australian businesses surveyed have a China eCommerce strategy in place or in development. The Survey also exposes a 26.5% year-on-year growth in the average number of eCommerce channels used per eCommerce active business.

Almost fifty businesses surveyed are early adopters of China’s New Retail business model (integrating the digital and physical shopping experience). Results found that 66% of these businesses are experiencing a 10%+ rise in revenue and 55.4% are also benefitting from increased brand and market insights. More