To coincide with the historic signing of an Australia-China FTA yesterday, Finsia has released a new research report – in conjunction with the China Studies Centre at the University of Sydney – which lays out the opportunities and challenges for financial services providers in taking advantage of the new arrangement.
"The opportunities are vast, but under-exploited,” said report author Professor Kerry Brown of the China Studies Centre, adding that while financial services exports are on the rise, China still accounts for only four per cent of exports.
"This is despite the many advantages that Australia has as an exporter of financial services — including robust governance frameworks and an attractive business environment," he said.
"Improvement of the international structure of financial decision-making and co-operation will figure at the G20 this week too, and it is crucial Australia is placed at the forefront of this global, and regional, debate. A good strategy towards China is one of the most important components."
The paper contends that there are four major structural impediments to increased financial services exports to China, namely the stagnated rate of Chinese consumption; the under-representation of services in the Chinese economy; the need for greater urbanisation; and a lack of non-government capital investment in fixed assets.
Chinese licensing and regulatory regime challenges and “bureaucratic hurdles” are also listed as issues obfuscating export levels, with “documentation for foreign banks 15 times more time consuming than for Chinese banks operating in Australia”.
In addition to the structural obstacles, the report identifies a number of perception issues, such as “Australia's financial sector [being] perceived as too small and conservative by China” and Australians being concerned about the “risk profile” of some Chinese institutions.
However, should these structural challenges be mitigated through sound public policy and market responses, the opportunity is significant, according to Finsia chief executive Russell Thomas.
"In the next phase of the China growth story, urbanisation, a growing middle class, and ageing population will deliver a greater appetite for services — it's incumbent on Australian governments and business leaders to identify opportunities to export,” Mr Thomas said.
"Australian expertise stands out in wealth management and insurance, and these are the success stories we've seen in exports so far.
“It's vital that government and business build on these solid foundations to build awareness of Australia's strengths in the Chinese market,” he said.
The report’s release comes as treasurer Joe Hockey talks up the government’s plans to boost financial services exports to China.
