THE man who presented the Gold Coast Sheraton Mirage to its Indian buyers told a trade conference today on the Gold Coast that opportunities for exporters in India are ‘overwhelming’.
Austrade senior trade and investment commissioner for South Asia Peter Linford, put the Sheraton Mirage on the radar of Pearls Group. One month later they paid $60 million cash for the asset.
Speaking at the Radisson Resort as part of Austrade’s ‘Winning Business in India and South Asia’ conference, Linford recalled how the Indian property company asked him to identify strong investment opportunities on the Gold Coast.
“Pearls said to me ‘what else is available on the market. I had a meeting with Dale Dickson (GCCC CEO) and he said ‘we’d like a new university, a hospital would be good and the Sheraton Mirage is on the market with receivers’,” he says.
“I went back to Pearls and they said ‘how much is the hotel’ and they bought it within a month. The lawyers who did the sale rang me and said ‘who are these guys, we’ve never heard of them?’
“(Pearls) have 250 offices across India and direct employees of about 30,000 and are one of the largest private land owners in India. In two years, they put about $500 million into properties in Brisbane and the Gold Coast market and are looking for more. There are lots of companies like that who we see are coming in here and it all links through this property investment sector.”
India is Australia’s third largest and fastest growing trade partner, with a GDP of USD$1 trillion and growth rate of 7 to 8 per cent.
Linford says 85 per cent of Australia’s $20 billion in exports to India are in three products; coal, gold and copper.
“India is just huge. Even though it is a country, you need to treat it as a continent and there’s no way you can cope with the size of the markets that are there anyway,” he says.
“What we need to find out is where in India we are going to place you, assuming first that you have something that has competitive advantage and has advantages for the market where we’d like to take you to.”
Linford arrived in India three years ago and has since increased the number of ‘unique’ Australian companies working with Austrade in the region from 400 to more than 1500.
“We’ve done a lot of work to promote the country. But more importantly, traditional markets either closed up or retracted considerably during the GFC so Australian companies had to look for new markets and the markets with the most growth are China and India,” he says.
“I’m not keen on the analogies with China because India is so different, but in terms of the size of the place, the GDP growth rates and where it’s moving in terms of its positing as a superpower, there are definite comparability’s there.
“There are (Australian) companies that have been there for a long period of time but the real push has been since the GFC and we’ve seen exponential doubling of Australian companies coming into India. Two becomes four, four becomes eight and they’re all starting to come in now.”
Linford says steel production is a good indication of the maturity stage of a nation’s economy. India is expecting to more than triple its current steel production to up to 200 megatons by 2014-2015.
In 10-15 years time the country could come close to matching China’s current figure of 500 megatons of steel produced per year.
“In India, steel production and power generation, which extrapolates across to all other products including whitegoods, automotive products, building and construction; the demand is almost insatiable,” he says.
“Most of it is domestic demand, that’s why India didn’t suffer during the GFC, they weren’t reliant on overseas markets that downturned. It’s fair to say that India is probably 10 or maybe even 15 years behind China in terms of its relationship (with Australia). Whether Australia will stay with India as other markets come back, time will tell.”
Linford says the Indian Government’s handling of business corruption surrounding last year’s Commonwealth Games is a strong indicator of improved corporate governance and business security in the region.
He admits corruption and security is still an issue for India, but the perception is changing.
“I find corruption abhorrent and unfortunately there’s more of it in India than I would like. But the key to it is what is the Indian government and Indian society doing to stop it and what are they going to do to counter it?” he says.
“If we just see it escalating and accelerating then it’s a serious problem, but we are seeing action to jump on it, particularly in the private sector. The more of this I see, the more confident I am becoming with the way India is dealing with its own problems and the world needs to recognise that mistakes have been made but they’re being dealt with.
“They’ll be some companies that would rather work in countries other than India, but I think the momentum and snowballing of what’s happening in India will continue from the Australian point-of-view.
“India will increasingly become a global player and will increasingly invest into other markets and Australia will be one of those markets.”
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