If you recall, in November 2006, a consortium including PG Capital LLP and Macquarie Bank approached Qantas with a buyout offer. The consortium encountered an incredible amount of government scrutiny amid a political storm over the fate of the airline. Over the ensuing 6 months, the deal went through numerous changes and rebuttals, ultimately failing for the last time earlier this year.

Looking back further, in February 2006, SIA requested access for the Sydney to US pacific flight route; i.e. to be able to fly directly from Sydney to the US without a stop in Singapore. Qantas claimed that SIA had little to offer and there was no lack of capacity on the trans-Pacific route. The Australia government said the benefits of allowing SIA on the route would be very small, and that Virgin Blue (and possibly Air Canada) would provide competition for Qantas. The bid failed.

Now, albeit these are all slightly different situations, they draw an interesting comparison of the investment environments in China and Australia and the government’s openness/flexibility to change.

China still has, at least in name, a communist government that understands that China needs foreign investment and isn’t afraid of it in circumstances where it can truly help the country. The China Eastern investment is a great example; you can be sure that within 5 years, China Eastern won’t be at the bottom anymore.

In the case of Australia, a buyout of Qantas or direct SIA flights would have increased competition there too and perhaps changed the international market as much as the intro of discount airlines changed the domestic market, but protectionism prevented it. This is of course not to say that China doesn't have protectionist measures of its own, as it very clearly does, but just that it's just a bit smarter about how it uses them.

Investment in the Chinese banking industry is driving a similar change.  The Chinese government recognises that they need a certain amount of foreign expertise to really kick-start the banking industry. Luckily for them, foreign banks see the 1 billion customers in China and are more than happy to invest money and time in JVs to make this happen.  Foreign banks are bringing talent and money to the table and helping to shake up a massive industry that, as it becomes more liberalised, will be even more competitive.