The Australian federal government’s significant investor programme has sparked interest from Chinese industrialists in investment bank Moelis & Co’s $500 million property fund, according to The Australian Financial Review.
Although the programme, which allows investors access to visas for a minimum sum of $5 million, has not led to a flood of wealthy immigrants, the advisory firm’s joint managing director in Australia, Andrew Martin, said the slowly developing Chinese investor relationships are likely to spread into other investment vehicles.
He told the newspaper that attracting Chinese millionaires to Australian investment schemes requires time-consuming relationship-building, but that once established those relationships produce interest in a range of investment vehicles.
“A lot of the business in China is referral so if you can gain the confidence of one family they tend to invest alongside their family members and associates,” Mr Martin told the AFR.
Mr Martin added that the visa programme could eventually produce a $20 billion dollar annual windfall for the Australian economy.
Courtesy of the Chinese Spectator
The release of the Significant Investor visa (SIV) as part of the re-vamped Business Investment & Innovation program (BIIP) and the proposed time-frame of the benefit to Australia, shows a misunderstanding of the way business decisions are made in China. Unlike the more direct ‘Like it , sign a contract!’ approach of western investors – subject of course to the usual business due diligence – business between Chinese investors – regardless of size- and business brokers and investment houses etc is not quite as straight forward. Business comes down to relationships and trust (guanxi) – which must developed and grown.
The clear benefit of this approach of developing guanxi is long term. It is likely that more and bigger business is possible through this connection when you secure the client’s trust. Other related investors – and not simply family members- will perceive this relationship as valuable and will probably be keener to get involved.