Tying The Chinese Business Knot
THE SUNDAY AGE
Saturday August 13, 1994
INVESTMENT banker Richard Li describes himself as a ``marriage broker" for Chinese and Australian businesses, bringing them together in unions that are not always easy but that generally prove positive for the participants.
Mr Li has been creating his cross-cultural liaisons for the past 11 years. His Sino Securities group often finds itself acting as a peacekeeper to ensure the unions survive.
``We are, in a sense, used as a punching bag," he says. ``If you allow the two principals to punch each other, you don't have a deal.
We soften that blow by transmitting the correct signals if there's any disharmony."
In the past year, Sino has sponsored two listings by Chinese companies on the Australian market, Guangdong Corporation and Canada Land, and has another three listings coming up. The first two floats raised $17 million.
The deals have three common ingredients: well-placed Chinese companies operating in expanding markets, experienced overseas Chinese business people, and well-developed Australian capital markets.
Mr Li said these sorts of partnerships were necessary to realise the potential of China because its companies had been locked away from international developments for so long. ``Chinese companies are 10 to 20 years away from being at a standard to go into the West by themselves," he said.
Mr Li said Australia's financial markets attracted Chinese companies because of their efficiency and high standard of regulation. A survey earlier this year showed Australia had the second most efficient stock exchange in the world (behind the US exchanges). Given that the US markets are not fully computerised, Mr Li said: ``You could say that the Australian market is more efficient."
Chinese companies are reasonably comfortable dealing with Australia as it is politically friendly with China, and US investment funds are authorised to operate here.
Australia's position in Asian time zones is another important advantage.
Guangdong Corporation, an offshoot of Guangdong Enterprises (which is 40 per cent owned by the Guangdong Government), makes prefabricated skins for high-rise buildings. In Shanghai, where its operations are focused, 300 new buildings are going up in the Pudong district.
``They are virtually building a new city," Mr Li said. About 10 per cent of those buildings would use a ``curtain wall" skin technology provided by Guangdong, ensuring good business for the company in coming years.
Canada Land, controlled by Hong Kong businessman Mr William Yip, has rights to develop 800,000 square metres of real estate in a new development zone of Guangzhou (the old Canton).
Sino has also taken Australian companies to Asia. Industrial tyre maker Airboss has gone to Malaysia and China through joint ventures brokered by Sino, and National Forge has moved into the central Chinese city of Xian.
© 1994 THE SUNDAY AGE