|People wearing face masks walk their dog in a park in Melbourne, Australia, Sept. 27, 2020. EPA|
On Thursday afternoon, Poly Australia told more than 100 employees across its offices in Sydney and Melbourne that a "substantial" number of staff will be cut by the end of the year as the company restructures to cope with the impact of Covid-19 and Australia's first recession in nearly 30 years, according to people briefed on the decision.
The specific number of job cuts at Poly Australia, which is ultimately owned by state-owned China Poly Group, is unknown, but follows on from news that Huawei Technologies will cut jobs from its Australia operations amid growing tensions between Beijing and Canberra.
Poly Australia denied rumours that it had been tapped by Beijing to leave the Australian market entirely, saying it will instead scale down its investments and exercise caution with regard to future projects.
"The global economic challenges flowing from Covid-19 have been felt across all parts of the Australian economy. These challenges place a responsibility on the management of companies such as Poly Global to ensure that we survive the downturn so we can thrive if conditions improve," a company spokesman said.
The company burst onto the Australian property scene in 2016 as a housing developer buying up numerous pieces of land, spending heavily on projects and expanding quickly into commercial property investment, funds management and private debt lending as the property market boomed.
The spokesman added that the company would now take a more passive business approach, focusing on asset management as opposed to the more frantic housing development scene.
According to the latest top 100 real estate company rankings by China Real Estate Information Corporation, China's leading real estate data research firm, Poly is the 10th largest property company in China.
The Australian property market peaked in 2018, and as it has continued to decline during the pandemic, it is understood many apartment projects, including those by Poly, have struggled to sell.
Last week, Australian press reported Poly had ditched negotiations on a land deal with major local property group Lendlease following months of tensions between the two countries and new concerns the conflict could spill over into Chinese investments and businesses in Australia.
Last week, Australian press reported Poly had ditched negotiations on a land deal with major local property group Lendlease following months of tensions between the two countries. New concerns were also raised by the Chinese Ministry of Foreign Affairs last week that the conflict could spill over into Chinese investments and businesses operating in Australia.
Poly is not the first Chinese property developer to scale down its Australian operations. Dalian Wanda last year sold its two real estate projects in Australia, namely hotel and apartment complexes in Sydney and on the Gold Coast, with the Chinese private property group under pressure to cut debts and to repatriate funds home.
The China-Australian relationship has been on the decline since Australia announced it would coordinate an investigation into the origins of the coronavirus in April, and aside from trade sanctions, journalists from both countries have been targeted in recent weeks.
On Thursday, two Australians, Clive Hamilton, who wrote a book on Chinese influence in Australia, and Alex Joske, an analyst at the Australian Strategic Policy Institute, a think tank partially funded by the Australian Department of Defence, were banned from entering China.
China's foreign ministry spokesman Wang Wenbin said on Thursday that China had the sovereign right to decide which foreigners to allow into the country.
Australia relies heavily on foreign investments, with the United States with A$983.7 billion (US$699 billion) and Britain with A$686 billion worth of investments at the end of 2019, its biggest foreign investors.
Despite being Australia's biggest trading partner with two-way trade between China and Australia worth around A$240 billion (US$171 billion) per year, China is only the ninth biggest foreign investor with A$78 billion.
But aside from Huawei and Poly, there are no signs of a mass exodus of Chinese companies from Australia, with the number of Chinese businesses in Australia having grown substantially since the onset of Australia's east coast property boom in 2013.
Helen Sawczak, the recently departed chief executive of the largest China-Australia business club, the Australia China Business Council, said a sudden decoupling would be unlikely as Chinese investors in Australia take a long-term view with their overseas ventures.
"The current tensions are temporary. Business remains confident," she said.
More broadly, China's "going out policy", referring to companies expanding abroad that was launched around 2000, is a long-term strategy for China, according to Hongying Wang, a Chinese politics professor at the University of Waterloo in Ontario, Canada.
"It is a necessity based on China's need for overseas markets, resources and technology. The current pushback against Chinese investment makes the situation difficult for Chinese companies seeking to go out, as does the economic slowdown that began before the pandemic … but in the long run, Chinese companies will likely continue their expansion abroad," she said.
Chinese companies told the South China Morning Post that they were committed to staying in Australia, but some said they would be watching the US presidential election closely, indicating a win for incumbent Donald Trump could cast a further shadow on the China-Australian relationship.
Foreign affairs experts said China's end game with trade sanctions against Australia, such as anti-dumping duties on the Australian barley sector, was to encourage Australia not to side with Washington in its agenda to contain China.