Chinese investment in the Australian construction industry: the social amplification of risk

Chinese companies are investing heavily in overseas construction and property assets. In Australia, and in many other countries such as the United States and United Kingdom, this has generated an emotive and polarized debate about the risks and opportunities posed to local industry and to wider national interests. To explore the social and cognitive mechanisms which people are using to make sense of this new global phenomenon, Kasperson’s Social Amplification of Risk Framework (SARF) was mobilized, through semi-structured interviews with senior Australian construction industry leaders. The results show that the SARF is a valuable lens to explore perceptions of risk and opportunity associated with Chinese Foreign Direct Investment (FDI), although it represents a rather linear view and underplays the importance of power, collaboration and social media in forming perceptions. They also show that senior practitioners in the Australian construction industry are taking a highly rational, commercial and pragmatic approach to increasing FDI. Despite some concerns around non-compliant materials, labour standards and safety standards, Chinese FDI is seen as inevitable and crucial to the development of Australia’s construction industry. Surprisingly, given negative media coverage of Chinese FDI in Australia and a lack of experience in working with Chinese investors, we found little evidence for the social amplification or attenuation of risk. Knee-jerk regulatory reactions which are advocated by many groups are generally seen as risky and we conclude that the nature of Chinese – Australian business experiences over the near future will have a major effect on whether those perceptions eventuate as negative or positive. It is recommended that the best way to mitigate any risks and maximize the opportunities is not to withdraw and oppose Chinese FDI but to build collaborative links to improve direct interactions between Australian and Chinese firms, underpinned by targeted risk and opportunity management protocols.