Australian giant on China growth path

PUBLISHED : Wednesday, 07 September, 2011, 12:00am
UPDATED : Wednesday, 07 September, 2011, 12:00am


Goodman Group, one of the world's largest logistics operators, expects to see revenues from offshore increase to 60 per cent of the group's total, helped by rapid investments in China, Hong Kong and Japan.

'We've got 50 per cent of revenues coming from offshore. That is 50 per cent from Australia and 50 per cent from the rest of the world,' Greg Goodman, chief executive of the Australian-based group, said.

'That will increase to 60 per cent very quickly. Of that, Asia will make up 30 per cent. We see China as a strong growth engine to us over the next three to four years.'

Despite some global economies slowing, Goodman said China was still going quite well. 'There is an under-supply of high-quality logistic space in China,' he said.

Goodman has predicted that its investment in China would reach about A$3 billion (HK$24.7 billion) in five years. Assets under management in mainland China have an investment value of US$300 million. They include four logistics centres in Shanghai held through the Goodman China Logistics Holding fund, an 80-20 joint venture with Canadian pension fund CPPIB. It also has its first development in Chengdu which is expected to begin operations this year.Its current developments on the mainland are capable of delivering more than 500,000 square metres, according to the company.

Goodman's driver of expansion relies on fast-growing domestic consumption, which is supported by the growing middle class and urbanisation.

'Logistics is going very well. We rely on domestic consumption,' Philip Pearce, managing director of Goodman's Greater China division, said.

Commenting on its partner China Investment Corporation (CIC), Goodman said the mainland's sovereign wealth fund had improved credibility of its mainland expansion.

'It gives us more of a national feel when you are in China,' he said.

CIC committed a US$409 million hybrid securities investment in the company in 2009. That will allow CIC's holding in Goodman to reach 18.2 per cent, when converted.

Goodman's main assets in the region are also in Hong Kong, where an unlisted fund invests in logistics and warehouse properties. The fund has 13 properties and one development project, worth about HK$9.5 billion.

Commenting on the global slowdown, Goodman said the competitive environment would provide opportunities for bigger players to increase market share.