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Some of Australia’s best-known exports are amber nectar, with the Foster’s and Victoria Bitter logos among the most recognizable brands the country has produced.
What is less well known is that the local brewing industry is effectively owned by two Japanese companies – Asahi and Kirin – which, following industry consolidation in recent years, now own eight of Australia’s top 10 best-selling beer brands. Even Coopers, the only major brewery that has remained independent, has joined the club and is brewing Sapporo beers in Australia.
It’s a sign of Japan’s extensive investment in Australia, extending far beyond the “fat” beer bottle into renewable energy, finance, software and other consumer-focused areas such as insurance, cosmetics and vitamin pills.
The depth of the Japan-Australia partnership was highlighted in a report by law firm Herbert Smith Freehills and the Australian National University. It says Japanese finance is “one of the great untold stories supporting Australian prosperity”.
In 2023 alone, there were 44 acquisitions of Australian companies by Japanese buyers and 38 partnerships. Japanese foreign direct investment now accounts for 12 percent of total investment, reaching $88 billion (AUD$133.8 billion) in 2023, and the country remains Australia’s second-largest trading partner and export destination.
Woodside chief executive Meg O’Neill highlighted the impact of Japanese investment on Australia’s largest oil and gas producer “from day one”, saying the Asian country’s banks, government and energy companies were key players in growing the local energy economy. This has extended into 2024 as Japanese investors have spent around $2.3 billion to acquire shares in Woodside’s Scarborough offshore gas project – Australia’s largest energy project – to ensure continued supplies of liquefied natural gas into the future.
The enthusiasm for Australian investment was evident in the coastal city of Newcastle last month when Canberra-based start-up MCi Carbon commissioned a pilot plant called Myrtle to convert carbon dioxide into cement. The company was backed by Japan’s Itochu, Mizuho Bank and Sumitomo Mitsui Trust Bank. Potential customers included Nippon Steel and Mitsubishi UBE Cement.
China remains Australia’s largest trading partner, although tariffs and sanctions on Australian imports such as wine, beef and lobster are only just beginning to ease in 2020. Still, Chinese-led acquisitions have fallen sharply. A report from KPMG and the University of Sydney Business School this month showed 2023 was the joint lowest year for Chinese takeovers of Australian companies since 2006, with just 11 deals completed. The value of the acquisitions fell 36 percent in Australian dollars in 2023, from $1.4 billion to $850 million, as Chinese development money was focused on other markets in Southeast Asia. In contrast, there were 271 Chinese takeovers of Australian companies worth $23.5 billion between 2017 and 2023, when mining was a key focus of buyers.
So have Japanese buyers filled a gap left by Chinese companies that are now looking elsewhere? Shiro Armstrong, director of the Australia-Japan Research Centre, does not believe there is a direct causal link between the increase in Japanese deals and the sharp decline in Chinese takeovers in Australia, but instead sees a role for politics in the trend.
Armstrong said there had been a tightening of national interest rules in Australia in sectors such as critical minerals, which had deterred Chinese buyers. He pointed to a 2020 decision by the Australian government to block a Chinese takeover of a milk and juice company out of national interest, even though the company was already owned by a Japanese company. Armstrong cited this as an example of “overblown concerns” surrounding foreign takeovers of companies supposedly bought for strategic reasons.
For Armstrong, the irony is that Japanese buyers and investors encountered a similar attitude during the first wave of investment in Australia in the 1970s and 1980s. That is no longer the case as the Woodside deal and Japanese chipmaker Renesas’s $5.8 billion takeover of a Tasmanian software tools company in February proved uncontroversial. Armstrong says Japanese companies were once treated with suspicion and investments kept secret. “Businesses want to tell you their story and Australia is committed to that,” he said.