Chinese tourism set for ‘boom’
CHINESE tourists spent a record $US164.8 billion ($208bn) overseas last year, according to official figures, but that amount looks set to be dwarfed by a tsunami of money that is following their now well-trodden path.
Some of the country’s biggest investors have been snapping up brands, property and other assets across the globe to serve as a magnet for China’s booming outbound tourist market.
Last year, Chinese tourists made more than 100 million trips overseas, but CLSA expects that number to double to 200 million by 2020. Just this week, Wanda pledged to invest $1bn for development in the Sydney CBD. Across the harbour, Fosun partnered with Sydney-based Propertylink to buy an office tower in North Sydney for $116.5 million.
Both firms have already made a splash in the Australian market with Wanda already acquiring a controlling stake in a Gold Coast property in August that it hopes to turn into a $900m luxury hotel and serviced apartments complex. Late last year, Fosun completed the acquisition of local oil and gas firm Roc Oil for $439m.
Fosun’s chairman sees these steps into the Australian market as just the beginning. “After the acquisition of Roc Oil in November 2014, we are happy to see that we can contribute more to the Australian economy,” he said this week. “ ” he said.
“The Australian property market is well known for its stable growth and transparency. It is the reason why Australia attracts so much attention from Asian investors including from China.”
The company has been on an overseas spending spree of late drawing heavily on funds made available after its strategic acquisition of Portuguese insurance firm Caixa Seguros. That purchase has allowed the company to snap up brands and companies without taking on more debt.
The strategy draws directly on that of Warren Buffet. Mr Guo is a devotee of the oracle of Omaha, and the philosophy graduate has shown a similarly deft touch for investments.
Among the company’s most recent acquisitions are a $725m purchase of the Chase Manhattan building in New York City, London’s Lloyds Chambers building and, after over a year of battling, French regulators have cleared the way for it to buy the holiday resorts group Club Med.
Jeffrey Towson, a managing partner of private equity firm Towson Capital and a professor of management at Peking University, says the Club Med deal is a strategic platform for Fosun.
“Fosun likes to compare itself to Warren Buffett,” says Mr Towson, “but the Club Med deal is actually very similar to what my old boss Prince Alwaleed did.”
“He made his first fortune in an emerging market. Then he used that to buy premier hotel brands in the West like the Fairmont and Four Seasons. He used these strategic platforms to start doing deals all over the world — especially in emerging markets.”
The slew of overseas purchases may look like a scattergun approach, but the unifying principle is a strategy to capitalise on China’s growing affluence.
Mr Towson says, Fosun can use Club Med to grow with China’s booming tourism market. Transitioning Chinese consumers is a major focus for Fosun and ClubMed is a unique asset in that regard, Mr Towson says.
“And as Fosun is the largest shareholder of Focus Media, which boasts over 300 million views, they have an ability to really promote Club Med to Chinese tourists, which are increasing rapidly anyway.”
Fosun’s Club Med purchase latches onto a trend that is beginning to transform how Chinese investors behave in foreign markets, and it’s something Australians should pay attention to.
Source : The Australian Business Review Fergus Ryan January 30th 2015
