Australian wine business is set for a flood of fresh Chinese investment

AUSTRALIA is set for a flood of fresh Chinese investment in non-mining sectors, particularly agribusiness and food, after Shanghai municipal government-owned conglomerate Bright Group made a play for CSR's venerable Australian sugar business.

Mining has been the almost exclusive focus of China's investment so far, with deals worth $11.5 billion signed last year and a number of others already on the table since January 1.

But the failed $2.31bn bid for Nufarm by China's Sinochem is an indication other parts of China Inc have their eyes firmly on substantial Australian companies.

Investment advisers in China yesterday said there had been increased activity by dozens of companies exploring investments in a variety of business sectors.

Food and agribusiness, including wine, are on top of the list, according to sources.

China is determined to secure long-term supplies of food and it is also keen on acquiring knowledge and technology. Another key area of interest for China is green and renewable energy.

Set up in 2006, Bright Group is one of China's largest food and agribusiness conglomerates with registered capital of 3.43 billion yuan ($541 million).

Its subsidiaries, four of which are listed, are involved in dairy, supermarket, rice wine, logistics and property businesses.

Trade Minister Simon Crean, who has been a strong advocate for developing investment beyond the mining sector, welcomed the prospect of more diversified Chinese investment in Australia. A spokesman for Mr Crean said the minister could not comment on specific deals.

"However, Mr Crean is a strong advocate of diversifying the trade and investment relationship between Australia and China beyond the resources sector," the spokesman said.

"Mr Crean has made frequent visits to China encouraging trade and investment in a broad range of sectors, including automobiles, clean energy, as well as agriculture and food processing."

More diversified Chinese investments are also expected to be facilitated by the growing presence of the country's major financial institutions in Australia.

China's Agricultural Bank will open a branch office in Sydney as early as this month.

It will join major banks from the country, including its biggest, Industrial and Commercial Bank of China, China Construction Bank and Bank of China in having a presence in Australia.

A potential Chinese bid for CSR's sugar business presents a challenge for the Foreign Investment Review Board, which has so far been almost solely concentrated on mining sector deals.

In line with investment proposals, the group has developed expertise in only one sector of the economy, and must now prepare for a greater range of proposals.

Although Bright Group has said the CSR's sugar and energy group would be rolled in under its Shanghai sugar, cigarette and wine subsidiary, the Australian businesses could find themselves listed on the Hong Kong stockmarket.

The division of Bright Group running the deal is its freshly acquired sugar business, Yinmore. Bright bought 60 per cent of Yunnan Yinmore Sugar, which has a building materials business, last year for 800 million yuan.

Yinmore's deputy managing director, Yuan Sunming, is in Queensland leading talks with CSR.