Speaking at the Association of Mining and Exploration Companies convention in Perth this week, mining advisor and former University of Western Australia Confucius Institute director Philip Kirchlechner told delegates that attracting Chinese investment would require the establishment of deeper, more personal relationships.
“The last six years have been a low point in our relationship with China and it’s going to take a long time to rebuild that,” he said.
Citing industry trends of using the expression “foreign owned” as xenophobic and potentially repulsive to Asian investors, Kirchlechner asked if Australian miners could afford to be so unwelcoming to China.
“According to the United Nations, Australia’s investment attractiveness rating has declined from number six to 13 in only one year,” he said.
“So we really have a marketing problem. In marketing the most fundamental concept is to know your customer and our number one customer is China – but interestingly, the biggest knowledge gap we have is with China.
“I’ve seen many companies fail in China or in dealing with China because they don’t understand Chinese culture, history and politics.”
Kirchlechner said Australians interested in attracting Chinese investment would benefit from following the examples of the country’s past foreign relations successes with Asia.
He evoked the Colombo Plan of 1949-1957 as a “great soft power” initiative and former prime minister Harold Holt’s work to take apart the “White Australia policy”, as well as Holt’s foreign relations pivot from the UK to Asia and the US.
Kirchlechner also called for industry to learn from progress made as recently as the 1980s when he said then-prime minister Bob Hawke demonstrated the value of more personal and long-term relations with China.
“At that time there was no trade-off between the US and China and now there is,” he said.
“The reason is that in those days we had a profound relationship which went beyond just a commercial dialogue.
“In Chinese society, it’s very important to look at the division between the inside and the outside of a group. It’s very important if you want to be successful to penetrate that dividing line by establishing common interests.
“What you do is you build trust and you’re not just seen as a commercial agent. We need to rediscover that ability to build profound relationships with China.”
Kirchlechner advised resource company professionals to assess their need for stronger relationships with China in the context of an increasingly competitive global environment where other markets were establishing more substantial ties with the country.
“China is getting all the attention yet they only represent 1% of total investment stock in this country,” he said.
“But I’m worried that this percentage will actually decline because China can invest in other jurisdictions.
“Last year, Europe was China’s biggest investment destination.
“The last two years China made a big push into Brazil and of course Africa is now open for business.
“It’s not about a Chinese invasion – it’s about global economic integration.”
