Roaring Tigers of the New Australian Economy
Migrants into Australia are a vitally important part the economy, worth $1.6 trillion by 2050. Migrants not only offer important economic benefits, they also bring diversity of thinking, innovation and growth to the Australian business landscape.
New research by KPMG Australia and The University of Sydney sheds light onto a specific migrant sector: Chinese Australian entrepreneurs – born in China, but founding businesses in Australia. Since the 1990s there has been a surge in Chinese migrants to Australia. Many of them initially arrived in Australia as students, skilled migrants or high-net-worth migrants who then established local businesses. Most of them grew up in China during China’s economic opening and reform which started in 1978 and as a result, their business outlook and behaviours differ from previous generations of Chinese migrants.
How do these Chinese Australian entrepreneurs operate? What makes them successful and how they view themselves compared with other businesses and the challenges they face?
With record bi-lateral trade between China and Australia of $235 billion in the 2018-2019 financial year, Chinese Australian entrepreneurs play an important role in acting as a bridge between business communities at home and abroad. Ethic community ties remain significant in their business operations. Three quarters of respondents collaborate with companies with a Chinese background in Australia, and work together to gain local market access and supply of products, services and capital. A third of Chinese Australian entrepreneurs use ethnic business networks to access clients, markets and distribution channels, and a quarter turn to ethnic business networks to source products, services and technology.
Chinese Australian entrepreneurs say their cross border knowledge is a key reason for their success, as they have an understanding of the norms of doing business in both countries. This makes them ideal partners for Australian businesses looking to enter the Chinese market, as they understand the two cultures.
Chinese Australian founders also display some unique characteristics compared to many Australian-born SME founders. They tend to start their businesses when relatively young, with 45 percent becoming founders in their twenties and thirties. They are integrated in both Australian and Chinese networks and have uncovered opportunities in Australia’s Chinese community. They export Australian-made products into China, while also transferring technologies from China for local innovation in Australia.
Another finding is that they don’t follow a generational business strategy. Most Chinese Australian entrepreneurs don’t expect to hand down their businesses to other family members or even employ family members. Only 14 entrepreneurs out of 100 said they would hope to have their children take over the business in the future, and of these, six still anticipated hiring a CEO to run the organisation alongside their children after their retirement. Many don’t consider their children to have the experience or cultural awareness and networks to take over.
As a group, Chinese Australian founders haven’t been immune to the impact of COVID-19. Half of the companies surveyed saw Jan-March 2020 revenue fall over 30 percent with 14 percent witnessing a more than 50 percent drop. Despite the fall in turnover, most of those surveyed are trying to retain their employees with 57 percent not laying off any staff, and 25 percent cutting working hours and salaries to preserve jobs.
They face the same challenge as Australian-born peers when it comes to finding and retaining talent, with 71 percent viewing it as the top challenge. Working across the cultural divide can be an issue for them. While they value the importance of corporate social responsibility, balancing expansion with corporate governance is a common issue.
Despite their Chinese heritage, most Chinese Australian investors have a long-term commitment to their Australian business and to their role in the Australian community and economy. While the impacts of COVID-19 have affected them in the short- and mid- term, there is a strong sense of optimism about the wider future.