Chinese State-owned Enterprises On The Australian Mining Investment And Political Risk Analysis

Since 2009, China's state-owned enterprises have raised a wave of mining industrial capital investment in Australia, which was represented by CHINALCO's extensive capital injection in Rio Tinto, CNMC's takeover of Lynas, China Minmetals'investment in OZ Minerals and Yanzhou Coal Mining's purchase of Felix; however these trades were embittered by repeated failures. To analyze these cases, we may find that political risk plays a key role. This thesis intents to answer such questions: the embodiment of political risks in China's state-owned enterprises investing in Australia's mining industry, the root causes of political risks and the strategy to avoid these risks.According to analysis of such four cases, we can come to the conclusion that the political risks of China's enterprises'investment is mainly embodied by Australia government's harsh censor policy for the sake of national interest. Moreover, Australia government listed several restrictions to obstruct investment, including shares purchasing limitation, corporate governance structure and operating strategy limitation.To seek the reasons for the barriers to the acquisitions of Australian mining assets set by the Australian government, the author argue that the significant strategic lack of trust is critical to explain why there are so much interferences in the common commercial operations. The deep distrust roots in the basic self-perception, which is Australia is part of western countries in spite of its geographic location and the Australian-American military alliance is the foundation of Australian national interest. On the other hand, the partisan politics and the fierce nationalism both play a important role in the political risks brought by Australian government. In addition, Australia is concerned about the special identity of Chinese stated-owned corporation because the subtle relation with Chinese government.The author gives some practical suggestions for Chinese stated-owned enterprises to mitigate political risks maximally. To desalt state-owned enterprises backgrounds, adjust the acquisition strategies flexibly and enhance the understanding about political risks can assure the success of takeovers of Australian mining assets.