Westpac won’t waver on its China strategy despite downturn

Westpac is sticking by what it views as a winning China strategy, despite the country’s economic downturn.

Andrew Whitford, the bank’s Hong Kong-based regional head for Greater China, told The Australian that following the trade flows was “critical for our business”.

This year, that means providing advice and financial assistance for a new wave of bank customers heading for Chinese markets.

“And I’m really impressed by the level of engagement of our client base,” he said.

The Free Trade Agreement that came into effect on December 20 was opening up opportunities across a broad front for Australian businesses, said Mr Whitford, including many that had not dealt directly with China before.

He stressed the significance of the “preferred nation” status accorded Australia through the FTA, “a ringing endorsement of the strength of the relationship”.

This was vital, with the end of the resource boom requiring a “rebasing” of the economic connection with China, he said.

The ageing of the Chinese population provided opportunities in aged and healthcare, Mr Whitford said.

He described the precautionary elements of Westpac’s own China strategy as including “not banking a company with nothing to do with Australia — though we would support a customer’s customer”.

Westpac was unlikely to do retail banking in China, he said.

Mr Whitford was responsible for setting up Westpac in mainland China — Shanghai — in 2007. Since then an increasing proportion of transactions had been conducted in yuan, he said.

Westpac was “the market maker” in setting the relationship between the dollar and the yuan, he said. “We want to be dominant in the areas we are good at, and this plays to our core strength,” with Sydney emerging as an yuan hub.

He said that “while there is no argument” about a slowdown in China, it was hitting some areas considerably harder than others.

“Go to Chengdu (in the nation’s southwest) “and you’ll find it on fire,” said Mr Whitford, who spends three weeks out of four travelling in mainland China.

“Other places are really struggling.

“You now have to look at China in a more granular way,” he said, checking out which provinces and which sectors are succeeding.

“The opportunities remain great, but you really have to be focused, more than ever, and you have to retain a long-term view” well beyond that of most market analysts, and even more challengingly, beyond that of many shareholders, he said. “Look at AMP, which has taken a long-term view of China, and which is starting to kick goals (through its consequent returns),” he said.

He said that only now, almost a decade after he went to China for Westpac, were some of the relationships he forged years ago beginning to reap rewards, “when you’ve proven your commitment to the market”.

He regards it as “ridiculous” that many foreign corporations send their “B Team” to China.

“If you’re not prepared to put your A team up there, don’t bother

— because the Chinese are too good, too smart, and you’ll get trampled in the rush.”

Mr Whitford said that he was “really proud” that while at the start of Westpac’s China involvement six expatriates were deployed there, today Beijing and Shanghai offices had none.

All the staff are Chinese.

The bank gained its Chinese banking licence early in 2008, immediately before the global financial crisis, he said.

“That was a turning point, because a lot of foreign banks pulled out, but we insisted we were there for the long term.

“That really helped us cement relationships swiftly.

“Maybe history is now repeating itself,” as China slows down — “which might again present us with an opportunity.”