With the Chinese middle class expected to reach over 800m by 2030, the opportunity for Australia is boundless but we can expect that the global competition for their attention will be intense.
Anchored by Confucian precepts, education is highly valued in China and the prestige of an international education is increasingly appreciated by the middle class. Thanks to their rise in affluence Chinese families are increasingly able to send their children abroad to study.
Australian universities have worked hard to attract Chinese students into their programs and they've been very successful to date, with Australia ranking third globally as an education destination for Chinese students, who represent almost 30 per cent of Australia's international enrolments.
This success is due in large part to the excellent and well-deserved international reputation of Australian universities. In the latest QS World University Rankings, over half of Australian universities were ranked in the top 400, with 5 of them in the top 50.
While a quality university education appeals to the Chinese dream, we should also recognise all the related Australian services that are required over the course of an undergraduate or postgraduate degree.
Sectors like dining, accommodation, immigration or financial services are also critical to Australia flourishing as an education destination.
Australia is a popular investment destination for China, with Chinese investors planning to invest $A27.7 billion according to Australia's Foreign Investment Review Board. For the first time, approved Chinese investment will exceed the United States' (by over $A10 billion), due largely to the popularity of Australian real estate.
The appeal of Australian real estate is likely due to a variety of factors, including our relative global proximity, the sustained rise in value of Australian property and their relative value by international standards, the stability and tranquillity of Australian life, or even the growing ties formed by education and holiday experiences.
Nonetheless, it's estimated Chinese residential real estate investment only represents around 2 per cent of all residential real estate transactions in Australia. While further growth is contingent on FIRB approval and Chinese capital controls, the appeal of Australian real estate is likely to persist.
Travel continues to be lead amongst most desired experiences by the affluent Chinese, driven in part by a growing global trend for appreciation of experiences over material goods.
The appeal of Australia as a tourist destination is clear, with almost a million Chinese visitors in the past 12 months. This is a 22 per cent rise in Chinese visitors, stronger than the 20 per cent growth of total Chinese tourists going overseas.
China is now Australia's second-largest source of overseas visitors, behind New Zealand, and is Australia's most valuable tourist market with Chinese visitors spending $A6 billion to $A7 billion each year.
As the Chinese middle class grows, we expect growth in both the number and the total spending of Chinese tourists for Australia.
So how can foreign businesses embrace these opportunities? My first piece of advice is to wholeheartedly embrace China. It's understandable to take judicious, measured steps when entering a new market, especially one that is as unique as China. But embracing China should also be personal.
To embrace China is to appreciate, welcome and celebrate the differences; to maintain an open-mind and an insatiable curiosity about the middle kingdom, so that you develop a new perspective and your own insights.
I must admit that I first found China to be strange place with unfamiliar language, food and people. Now it's only the language that's still unfamiliar. Thankfully communication is rarely a problem with so many bilingual Chinese available.
Doing business in China without speaking Chinese is certainly possible, but you're best positioned for success if you demonstrate an understanding and interest in the language and culture, especially local dialect and customs.
I'm also seeing more Australian businesses recognise the value of connecting at a deeper level with customers. I expect that this is just the start.
HAVE TRUSTED CORRIDOR PARTNERS
At each end of a business' corridors with China, there needs to be trusted partners that truly understand business in Australia.
Whether the corridor is Sydney-Shanghai or Melbourne-Guangzhou, a business needs a reliable and reputable anchor in China that truly understands Australian business and can effectively advocate in the Chinese market.
A trusted partner needs to feel a strong connection to foreign business and thoroughly understand the value-add that your business offers. Not only do you gain valuable local market understanding, but your corridor partner can also establish and build relationships for you in the long term.
Even for ANZ, where we have our own branches and staff across China, we still find it incredibly valuable to second Australian staff to China so that we can marry a rich understanding of our Australian capabilities with a nuanced understanding of the local market.
RECOGNISE CHINA IS DIGITAL
Due to language, cultural and regulatory differences, the digital ecosystems of China have evolved in different ways to the rest of the world, but are still amongst the world's largest and most sophisticated.
Mobile is already the most common way of accessing the Internet in China, and like many other parts of the world, social media dominates time spent online. In China, there are 659 million social media users, representing 99 per cent of all internet users and more than twice today's population of the USA.
Where Australia's most popular social media network is Facebook, China's internet population turns to locally grown social media apps like QQ, Weibo and WeChat.
WeChat is a great example of how different social media is in China. WeChat is used by over 60 per cent of Chinese internet users. WeChat is not just for individuals, it's also for businesses of all sizes.
All businesses need to go to where their customers are, and in China, it's likely that they're online using social media from their mobile phone.
Australia is already well-positioned to be a beneficiary of China's changing demographics, given its long-standing appeal as a leading education, investment and tourist destination. While it took us some time to appreciate these lessons, we're now well on our way to our Chinese dream too.