Australia poised to ride the Chinese consumer wave, but foreign firms face ‘rigged game’

Dong Tao, the Hong Kong-based managing director and chief regional economist at Credit Suisse, says many Australians still somehow believe Chinese government stimulus will bring back demand.

Speaking at The Economist magazine’s Australia’s Asian Future Summit in Sydney on Thursday, Mr Dong said the problem wasn’t “what’s wrong with the Chinese economy”.

“What’s wrong is you,” he said.

“The golden age of China’s infrastructure boom is over. The golden age of China’s housing boom is over. The golden age of China’s export boom is over. The golden age of China’s stimulus is over. So what’s not over? China has a consumption story.”

Mr Dong said people frequently say Chinese lack of demand was a problem. “That’s wrong. What’s happened is Chinese demand has changed,” he said.

As imports for commodities and heavy machinery fall, tourism spending, for example, has boomed — the Chinese now spend $1.2 trillion abroad.

“The Chinese visit Mt Fuji in Japan, and on the way back they bring these funky Japanese toilet lids with all kinds of buttons,” he said. “Ironically, that toilet lid is made in China.”

They travel to Korea for kimchi and cosmetic surgery, send their children to expensive schools in Australia and splash out on organic foods from New Zealand.

“Australia is well positioned to take advantage of the Chinese demand, but the Chinese demand is changing,” Mr Dong said.

“It’s up to you to figure out whether you want to chase the old supply or embrace the new demand and create new supply to accommodate it.

“The market still has a residual memory that China is an industrialising economy and needs lots and lots of steel and so on. If you can settle down and think of China as a 4 per cent growth calibre, you’ll be in a better place to judge Chinese statistics.

“The bottom line is China has passed the age of industrialisation.”

The risk for Australian firms overplaying their hand in China is great, however.

Earlier this week, the chief executive of listed dairy co-operative Murray Goulburn, Gary Helou, was forced to step down after vastly over-estimating the immediate outlook for exports to China.

According to Dominic Ziegler, Asia Editor of The Economist, foreign firms face serious challenges entering the Chinese market.
Customers at a McDonald’s in Shenzhen. Photographer: Brent Lewin/Bloomberg

Customers at a McDonald’s in Shenzhen. Photographer: Brent Lewin/BloombergSource:Supplied

“The question for Australians is, do you go into what is still a difficult Chinese terrain and set yourself up there trying to break into the market?” he told

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