Thoughts on Foreign ownership in Australia

[Melbournian]

yet the SGD is seen as a better safehaven if the EU collapses and money moves away from the CHF.....

singaporeans just want to park their money outside singapore as the whole place is like pigeonholes.

you need to get married to be able to buy the subsidized housing in singapore as they're limited in supply.

 

[Melbournian]

Agreed, definitely not surprised at all.
They probably own 1/4 of Perth.

didn't realize they're than many of them there. u sure you not confusing them with malaysians?

 

[tom32]

i love it. blind faith in the goodness of "society".

i have faith in the evils of man; and very little else.

plan for that and anything else that happens is good news.

I would substitute greed for evil. It is greed that you can rely on. Most people are only evil in pursuit of some personal gain.

In the end it is because of greed, as long as these OS companies are not government owned I don't care if they own most of Australia.

They will go on doing what is most profitable which means running a tollroad or exporting wheat or leaving it here whatever makes them the biggest buck, not subsidising their own foreign governments.

centrally owned chinese corps I do take issue with...

 

[mech81]

What you need to realise is that in a lot of these countries, the reason their conglomerates are government-controlled is because the nature of corporations and corporate governance is different than relatively freer markets. Private enterprises rarely become big conglomerates simply because the country is not at a stage where it wants to exploit capitalism to its fullest.

And what nature is this? Some govts have a stake but let the company be run as how a private entity should be run = take for instance Singapore Airlines. SIA major stakeholder is the Singapore govt and so is temasek as you have mentioned. The Sg govt has mostly taken a handsoff approach in their management of those companies despite having a major vote right. That can change anytime and you don't have to know about it. If Enron could've gotten away with it for so long (I know, its different matters), whats to say there's nothing to change in a govt staked entity

I'm not convinced that the some companies whom a certain govt of Asia who have major stakeholdings in those companies just have a major stake due to "limitations" of their corporate governance. Wielding political clout later on i reckon is the motive. They never do anything without a political reason.

Love the mature debate Delta.

didn't realize they're than many of them there. u sure you not confusing them with malaysians?

Most of my mates who are singaporeans are wanting to get out. Its a major rat's race for them and they are getting tired of it despite of the stability of the Sg economy. They have learnt that there's more to life outside work and the concrete jungle. Different from 10 years ago

that being said - a lot of that population leaving is being replaced by malaysians crossing the border. I'm a malaysian Chinese btw.

Cheers

 

[tom32]

Private enterprises rarely become big conglomerates simply because the country is not at a stage where it wants to exploit capitalism to its fullest.

My concern is with strategic thinking these same gov run companies could completely take the **** from capitalism and exploit it..

Could this be happening now?

Chinese gov buying mines here and investing mega dollars plus having a policy to deliberately inflate the iron price for enough years to guarantee a supply response the likes the world has never seen in countries like Australia to then go in the next few years; "hey we only need half that volume p.a. folks, but keep sending it at below costs of production now your mines are built and your export volumes are double 2000 levels." The minerals cycle is long and a supply side lag could be exploited for on average cheaper prices.

I might be paranoid but industrial cycles are well understood by all bar the Australian government and treasury it would seem so the Chinese could easily exploit us by using the overreacg of a slow supply response in gas, iron and coal to set themselves up for some mega growth with cheap commodities over the next few decades.

That some high profile chinese ventures here have been pulled does not make me any less suspicious. Could they be bluffing. Citic Pacific etc would be an expensive bluff...

 

[Deltaberry]

mech - Well , you just have to think of them as political organisations, which is what they are. I don't think anyone's trying to hide the fact that Chinese state-owned enterprises are government-owned (they are called SOEs aren't they?) and certainly the connection between people who run these companies overlap with people who run the cities, who run the states, who run the bureacratic departments and who run the country. Take CITIC for example. Its founder went on to become the Vice President of China. So no doubt there's a political motivation behind their investments, but I'm just saying that this political motivation is to:

a) secure strategic supply of resources because they are limited and they don't want to enter into bidding processes with other countries (eg India, Japan, Sth Korea, Indonesia etc which will all require these resources in increasing abundance);

b) hedge against rising prices

If they were driven by more militaristic motives (which is what most bogans in Australia are worried about), they'd seek to control your gas grids and power stations and telecommunications companies, which is far more er... useful than owning a few stupid plots of land via the torrens system which can be torn up to pieces in the middle of an outbreak of war anyway, if that's what you're alluding to.

tom32 - need not worry about that because for iron ore BHP, Rio Tinto and Fortescue account for 90% of iron ore exports from Australia. And the BHP/Mitsubishi Alliance, Rio Tinto, Xstrata, Anglo American and Peabody account for 70% of coal exports from Australia. I guess the point is the Japanese and Americans probably have more leverage to drive prices up and down. If you're worried about the Chinese/Indians/Koreans being in a position to control sufficient amount of supply of export bulk metals to drive prices, well they're probably 100 years away and by then the er... urbanisation of China and India has probably finished so prices will in fact be half of what they are any way.

As always, being informed about statistics and data puts things in to perspective.

I don't think CITIC Pacific was not an expensive bluff. CITIC Pacific is founded by Rong Yiren's son blah blah and was more akin to a private investment. Too difficult to explain/not in my interest to talk about sensitive stuff anyway.

On more public deals, do you think SinoSteel pulling out of midwest and Mitsubishi potentially pulling out is a bluff? If you look at the difficulty of producing iron ore from there and the costs required to do so, you would't have thought so. You need to build a super expensive railway, build an entirely new port. All this just to get hold of some very very low grade magnetite iron ore with 30% grading. Those of you in to geology out there would know how inefficient/expensive this is. Might as well buy more high grade iron ore from Brazil instead.

 

[HiEquity]

but I'm just saying that this political motivation is to:

a) secure strategic supply of resources because they are limited and they don't want to enter into bidding processes with other countries (eg India, Japan, Sth Korea, Indonesia etc which will all require these resources in increasing abundance);

b) hedge against rising prices

If they were driven by more militaristic motives (which is what most bogans in Australia are worried about), they'd seek to control your gas grids and power stations and telecommunications companies, which is far more er... useful than owning a few stupid plots of land via the torrens system which can be torn up to pieces in the middle of an outbreak of war anyway, if that's what you're alluding to.

I agree with this. But the motivation doesn't have to be military to be against our national interest. Customers pursue vertical integration for a wide variety of commercial reasons, including the ones you cite, all the time. In most cases that's fine.

But when those customers have the financial and diplomatic strength of the Chinese govt it becomes a different kettle of fish. They effectively have the financial capacity to buy the entire global iron ore supply chain if they wanted and were permitted to (they might have to sell some US debt first... ). The result of such a move (or moves towards this) for us would be a marked drop in market prices of the commodity and a huge reduction in royalty revenue for Australian govts. Such power and control over a market can be wielded to any number of commercial ends. One could argue control over the iron ore market could lead to effective control over steel production which could place them at a strategic advantage in the build up to any military conflict. The future path of these things is difficult to see now...

We were very close to effectively losing Rio Tinto to the Chinese govt at one stage there so it's not all pie in the sky... The long term result of that would certainly not have been in the national interest. Now instead they are adopting a softly, softly longer term approach to achieve similar ends, with most of their effort going towards Africa instead, no doubt where it's easier pickings...

As for SinoSteel and OPR, I suspect you may well be right. Magnetite projects are massive consumers of both power and water - they are completely different propositions to just digging hematite out of the ground, crushing it and putting it on a ship...

 

[mech81]

mech -

a) secure strategic supply of resources because they are limited and they don't want to enter into bidding processes with other countries (eg India, Japan, Sth Korea, Indonesia etc which will all require these resources in increasing abundance);

b) hedge against rising prices

Totally agree on your first point Deltaberry. And as HiEquity mentioned that they are using the softly softly approach. All their acquisitions and MoMs with African countries started out mid 2000s and I reckoned earlier than that behind closed doors.

These days, the new form of militarism is economic control. I also with what HiEquity and tom32 said...manipulation of supply and demand can be detrimental to one economy and advantageous to another especially when its resources essential to basic living. I've learnt a few things from this thread while putting my point forward

 

[Deltaberry]

Well I just don't know if such motives should even be in the same sentence as the the term militaristic.

It is, as one of you say, vertical integration and it's only natural for any end user to try to minimise their input costs..

I guess at the end of the day, it's just about how much you compromise your free market ideologies to achieve other objectives (such as keeping commodity prices higher for, if you like, anti-competitive reasons). I guess this is akin to the debate on WorkChoices (such as making the replacing of workers harder and keeping employee costs higher, again for anti-competitive reasons), except on an international level.

That would probably explain the difference. For the record I'm a bit of a free market thinker (so don't really like the socialist objectives) and supported WorkChoices in the past

 

[mech81]

I actually agree to workchoices (as you can tell, I'm somewhere in the middle abit intervention abit free market). The way that unions now are using their group power is unbelievable. Just look at qantas. The ship is sinking and they refuse to bail water.

With the state of our retail economy, small businesses are having a tough time deciding whether to hire or just ride it out. Not to mention our minimum wage is higher than most of the world. When EBA's start affecting the number of businesses, thats when we need to say..uhoh and start looking at Greece and how we do not want to end up like them.

 

[grossreal]

hi all
interesting post
not sure if I read it all as it seems I am an uneducated fool.
as for the cow and why would a chinese buy the farm and milk the cow here and ship to china
simple do you need the milk in china
next question why not just buy the milk from here and not buy the farm
supply
the chinese and indians need supply of food and water
as for the gold and well its been bug out here and processed here so its still here who says so. not me
delta you have said that people need to be educated and I agree you do
I have not said overseas should not invest here
I have overseas investors
I am saying that people invest in a market and today I have investors investing and should they yes today but should we change so we have the control
well you best hurry.
think what you wish to think but here is a senario thats is not far from my view
the farmer sells to a chinese or indian
he(chine/indian) sells the milk or food stuff to the chinese or indian in home state that is a family member
now is he going to sell to his relative or you
think of its as you being the farm owner
now think of australia as the same farm
thats what I am saying
I am not saying run to the hills
(They maywell be owned by chinese or indians)
but you all need to understand what is happening
and Deltaberry please don't tell me I have no understanding of this market
I can tell you that the people within my group of contacts will have at lease ten times your international trade exposure and you could be kevin rudd under a different name and they would have clocked up more point then him this year
as for the question about could you buy land in china
there is only one person I know of that has got a chinese corporate seal here in aust and that allows you to buy land in china
and he is not on somersoft as far as I know but if he is he can ring me he has my number
I will not wait for the call
so no you can't buy land in china
you can't invest with a chinese unless approved
yet a chinese can buy here upto 350mil without anyform of itentification or regulatory requirement
you can walk down anywhere in any city and buy what you wish and the only person stopping you is the bank for the funds transfer
try that in india,china,us, even uk
maybe I am the silly one but for the people reading this post you lot have not understanded what is happening and if you have then I stand back and disagree

 

[MIW]

995 Millionaires & 95 Billionaires and 1mill created daily in China

[
New Economies
Or is the concern more about say China/South Korea/Russia/India, that aren't the closest in terms of culture and traditional alliances (even though they were allies in WW2)? Would you feel more comfortable with Japanese ownership (even though they were a WW2 axis power)? These nations obviously have their fair share of mines and power corporations.

Nothing wrong with foreign investors, well at least if you hold property. China's impact will be like no other, not even like Japan's.
Want some China's statistics: then read this eye opening article in AFR, "Investment wave set to break on our shores"
PUBLISHED: 06 Aug 2011 00:40:16"

Some information presented:
- Total household disposable income is 65% higher than reported by official statistics (about $U3.4 trillion)
- About 80% of grey income belongs to 20% wealthiest households (saving around $U1.7 trillion a year) That amount ($1.58 trillion) is about 50% larger than Australia's entire economy and roughly 75% more than the market capitalisation of the ASX 200.
The internationalisation of the yuan, once it will become fully convertible currency, then investment will flow in and out. Even 10% of $1.58 trillion is significant for Australia. It will chase not just sharemarket but hard assests such as property, agricultural land and infrastructure.
Other stats:
- 995Millionaires and 95Bilionaires and creating a millionaire a day (compare -that to AUS about 115Millionaires and 9Billionaires and see the difference)
Once all China's people are permited to invest overseas.....all that suggest to me that next property boom is coming and guess from where? Also, I see long term uranium investment unforseeable, to sustain China's growth, what do you think?
Globalisation is here to stay so interesting times are coming....Times like no other in the history!

 

[BayView]

as for the question about could you buy land in china
there is only one person I know of that has got a chinese corporate seal here in aust and that allows you to buy land in china
and he is not on somersoft as far as I know but if he is he can ring me he has my number
I will not wait for the call
so no you can't buy land in china
you can't invest with a chinese unless approved
yet a chinese can buy here upto 350mil without anyform of itentification or regulatory requirement

And yet; we here in this Country are obsessed with how the world perceives our political correctness and our so-called racism.

How about this rule; when you let us buy in China, we'll let you buy here.

 

[Melbournian]

money talks @#$ walks.

same everywhere around the world whether china or colombia.

 

[Ideo]

I ain't going to ask to see the passport of a buyer.

You have the money? Good for you. That's what matters.

 

[Melbournian]

right on the money

 

[Deltaberry]

Haha grossreal maybe you should make some new contacts if you only know one who can buy land in China. And to think they have 10x Kevin Rudd's contacts. Meet me one day and you can add another to your list

 

[eKwatee]

Foreign investment in Aussie farmland on hold

By Larry Schlesinger
Foreign investors have spent a record $12 billion buying up Australian farmland and agricultural businesses over the past year, but have put off investing a further $14 billion until the outcome of a Senate inquiry in March 2012, a new report by Ferrier Hodgson says........

more here

The debate continues.....

 

[Melbournian]

nothing new...