Chinese textile companies are eyeing off Australia's biggest and best cotton farms in a bid to take advantage of full dams, cheap growing conditions and high-quality crops.
Shanghai-based cotton trader Weng Chen Loh said yesterday the impending Chinese takeover of the country's biggest cotton farm and irrigator, Cubbie Station, heralded a new trend. "If you look at other commodities -- mining, metals -- (the Chinese) are buying up assets in Australia to be closer to the source," said the director of trade for Ecom Trading Asia. "They'll go after some of the biggest, like Cubbie."
Mr Loh made the comments after addressing the Australian Cotton Conference on the Gold Coast yesterday.
Chinese textiles giant Shandong Ruyi has lodged an application with the Foreign Investment Review Board to buy Cubbie, the 96,000ha southern Queensland station placed into voluntary administration in 2009.
The FIRB has refused to comment, but a spokesman for administrator McGrathNicol said the sale process was "ongoing".
Nationals Senate leader Barnaby Joyce, whose home town of St George is close to the station, has argued for the FIRB to reject the Chinese bid for Cubbie.
The asking price for the station is reportedly between $325 million and $350m, which exceeds the FIRB threshold of $244m.
Australia's cotton growers will soon plant a bumper crop for the third year running.
Driven by a high global cotton price, full dams and intensifying demand from China, the local industry is buoyant.
Nearly 60 per cent of the country's crop is exported to China, which considers the Australian commodity of higher quality than that of bigger producers such as India.
Mr Loh told the conference that China was the world's largest producer, consumer and importer of cotton. In the 2011-12 season, China produced 7.3 million tonnes of cotton and consumed 8.7 million tonnes.
Wang Yuhui, president of two successful Chinese textile companies, said that while his operations had no concrete plans to buy or invest in cotton farms in Australia, it was something he was considering.
"This is a good choice for whole-chain manufacturing," Mr Wang, president of Hebei Spring Textiles and Hebei Xindadong Textiles Printing and Dyeing, said through a translator.
"We don't have exactly a plan; we just think about it and consider it. But lots of Chinese mills may be very interested."
His mills process more than 26,000 tonnes of cotton each year, of which 15,000 tonnes are imported from Australia.
He said textiles companies aimed for the "whole-chain" system, which meant they controlled the cotton from when it was grown to when it was transformed into garments and marketed.
Mr Wang said he believed it was cheaper to grow cotton in Australia, where it was picked by machines, than in China, where it was picked by hand.
"The quality of Australian cotton is really good, especially with not any contamination (because it is machine-picked)," he said.
"The cost of labour in China is increasing and in Australia the farm is very big and the production is centralised.
"The machines you use are very popular, because in China it is handpicked."