Posted on 21 Apr 2015
Japanese investors want more Asian focus from Australia
Japanese investors in
Australia have been frustrated by lack of focus on the broader business
opportunities in the Asian region in the local business
scene, according to a new report about offshore Japanese investment.
The study by PwC cites the recent $6.5 billion takeover of Toll Holdings by Japan Post
as the role model for much greater pooling of skills between
capital-rich Japanese companies and often technically skilled Australian
companies to expand in Asia.
But it says: "Leading Japanese
firms with subsidiaries in Australia – such as Kirin – have found
difficulty in persuading employees in Australia to latch on
to opportunities in ASEAN and beyond."
It says Japanese companies
have been far more active investors in South East Asia than Australian
companies, but nevertheless notes that this has still been modest
outside the leading Japanese manufacturers and trading houses.
From an Australian
point of view, Japan had already done much of the heavy lifting by
setting up strong trade and investment links in the region boosted by
its large development aid spending.
"This makes Japanese firms a
compelling choice for risk-averse Australian firms in contemplating an
ASEAN expansion. Strategically, Australia would clearly benefit from
attracting more Japanese companies looking to access Asian markets to
use Australia as the location to support the development of their future
business in Asia, with the recent acquisition of Toll Holdings by Japan
Post as an example," the PwC study Japan Rebooted released on Tuesday says.
The
report cites Nippon Steel Sumitomo Metal Corporation's purchase of a
stake in BlueScope Steel's coated steel business to supply customers in
South East Asia and beyond with materials for white goods in rapidly
expanding consumer markets as another role model for more collaboration
between companies in the two countries.
'Cautious approach' favours Singapore
The report cites data
showing about half of the Australian investment in Southeast Asia going
to Singapore, in contrast to a much more diverse investment spread by
Japanese companies, as evidence of a more cautious approach which could
be changed by more partnering with Japanese investors.
It says
Japanese companies identify Australia's clean image and well-developed
financial services firms and retirement savings as things it could offer
to any joint venture. Japan, on the other hand, has
world-class technology in many fields, proven expertise in product
development, cheap debt for expansion and extensive government support
to bring to the table.
The report says the recent trade
agreements with China, Japan and South Korea will eventually boost
Australian investment into those countries, but partnering with Japanese
firms might still be a lower-risk way of entering Southeast Asian
markets.
"That might lie in supplying services and advice in
infrastructure or a range of other sectors or even through
supplying agricultural produce into Japanese food and beverage,
supermarket and food production supply lines into ASEAN markets," it
says.
