Eva O’Dea is a Research Associate in the Lowy Institute’s East Asia Program.

Australia needs to better understand Chinese state owned enterprises (SOEs), according to Andrew Michelmore, CEO of MMG Limited. In his address to the Lowy Institute’s tenth anniversary China Changing Lecture in Beijing yesterday, Michelmore said in the Q&A period that, contrary to the popular Western conception of 'China Inc', there is 'massive competition' between SOEs (from 35:12).

There are also big differences in the ways SOEs are managed. Michelmore observed that, while the strategy of SOEs is approved by the State-owned Assets Supervision and Administration Commission, delivery of the strategy is up to the company itself. SOEs with experience in the international arena tend to be 'far more progressive' than those that dominate the domestic market and expect to export that model abroad.

According to Michelmore, MMG’s state-owned parent, Minmetals, is keenly aware of the reputational damage that could be done to both the company and by extension China if it does not take care of its relationship with local governments and communities. This results in it taking a much longer-term view of its investments than most listed companies (from 47:22).

Michelmore also spoke about the challenges of working in a cross-cultural setting (from 39:36). He noted that by embracing cultural differences among staff and ensuring differences are properly managed, businesses can end up creating better solutions. 'But this only works if you have built up trust. And trust takes time.'

As well as the video above, you can listen to a podcast of Michelmore’s speech and Q&A, and watch Andrew Michelmore in conversation with East Asia Program Director Linda Jakobson, who spoke to Michelmore about responding to the Australian public’s views on foreign investment and dealing with the challenges of working in both the Chinese and Australian business worlds.