Why Chinese companies like citrus grower Dongfang plan to list on ASX
Chinese tangerine and navel orange grower Dongfang is hoping to list on the Australian Stock Exchange – but it will not grow one citrus tree in Australia.
The company, which is seeking a $400 million listing, is firmly focused on boosting its market share in its home country, where it is considered a premium product.
Its has already raised about $40 million, the minimum it needs for its float, and says it has more cash to come from Chinese investors.
HSBC chief economist Paul Bloxham is expecting more Chinese companies will list on the ASX, citing Australia's free trade deal with China.
Indeed, it has received a lot of support from its home market, so why is it – as well as other Chinese companies – planning to list on the ASX?
Dongfang's Australian advisor, Barry Dawes of Paradigm Securities, says the company isn't dodging China's IPO ban, implemented in an effort to stabilise the country's volatile share market.
In December last year China's State Council urged companies to go global, saying "the move will raise the international competitiveness of Chinese products, especially equipment products, boost structural upgrading of foreign trade and push manufacturing and financial sectors to a medium-high level."
Chinese investors believe stockmarket listings, particularly on OECD exchanges, are prestigious and will help fuel company growth strategies.
