Issues in Australian foreign policy : July to December 2010

Two unforseen developments impeded the Labor government’s capacity to pursue its foreign policy objectives in the period under review. Firstly, Labor’s precarious standing in the parliament tilted the government’s policy agenda in favour of issues that the Greens prioritised. Gillard addressed some of these issues, for instance by holding the parliamentary debate on Afghanistan and by pursuing Japan over whaling in the Southern Ocean, but not to the degree that the Greens demanded. Immigration was emblematic of the government’s travails. The Greens advocated an increase in the refugee intake, but the Coalition favoured the resumption of offshore processing. Just when Labor’s proposed Timorese solution was becoming a realistic possibility, the High Court’s decision devalued the entire notion of offshore processing. The only consolation for the government was that the court had reduced the options available to all political parties.

Secondly, the Wikileaks saga revealed that Rudd may no longer be — and perhaps never was — Labor’s trump card in the realm of foreign policy. American assessments of the foreign minister’s character and judgment were in parts scathing. The Obama administration, nonetheless, appeared to readily and usefully absorb his analysis of Chinese politics. Quite how revelations of Rudd’s conversations with Clinton will affect his relations with the leaders of the Chinese Communist Party is another matter. It may well be that Rudd’s influence on Chinese leaders was always wildly overestimated, but in any case it seemed likely that the foreign minister would spend some time rebuilding ties with Beijing in 2011.

A third development — which hitherto had applied more in the realm of perception than reality — similarly threatened to limit the options open to future Australian governments of all stripes: the intensifying debate over alliance management that Hugh White’s essay instigated. Judgments about what sort of region — and what sort of China — Australia will face were imprinted in issues such as the rare earths find and the AUSMIN meeting. By the end of 2010, few issues could be discussed without reference to the China factor.

Consumer-citizens of China : the role of foreign brands in the imagined future China

This book presents a comprehensive examination of Chinese consumer behaviour and challenges the previously dichotomous interpretation of the consumption of Western and non-Western brands in China.

The direct costs of raising external equity capital for US REIT IPOs

Purpose – The purpose of this paper is to investigate the total direct costs of raising external equity capital for US real estate investment trust (REIT) initial public offerings (IPOs).

Design/methodology/approach – The study provides recent evidence on total direct costs for a comprehensive dataset of 125 US REIT IPOs from 1996 until June 2010. A multivariate OLS regression is performed to determine significant factors influencing the level of total direct costs and also underwriting fees and non-underwriting direct expenses.

Findings – The study finds economies of scale in total direct costs, underwriting fees and non-underwriting expenses. The equally (value) weighted average total direct costs are 8.33 percent (7.52 percent), consisting of 6.49 percent (6.30 percent) underwriting fees and 1.87 percent (1.22 percent) non-underwriting direct expenses. The study finds a declining trend of total direct costs for post 2000 IPOs which is attributed to the declining trend in both underwriting fees and non-underwriting direct expenses. Offer size is a critical determinant for both total direct costs and their individual components and inversely affects these costs. The total direct costs are found significantly higher for equity REITs than for mortgage REITs and are also significantly higher for offers listed in New York Stock Exchange (NYSE). Underwriting fees appear to be negatively influenced by the offer price, the number of representative underwriters involved in the issue, industry return volatility and the number of potential specific risk factors but positively influenced by prior quarter industry dividend yield and ownership limit identified in the prospectus. After controlling for time trend, the paper finds REIT IPOs incur higher non-underwriting direct expenses in response to higher industry return volatility prior to the offer.

Originality/value – This paper adds to the international REIT IPO literature by exploring a number of new influencing factors behind total direct costs, underwriting fees and non-underwriting direct expenses. The study includes data during the recent GFC period.

Different shades of the collective way of thinking: Vietnamese and Chinese international students' reflection on academic writing

Investigating ELF/ESL students' experiences in constructing their academic written texts seems to be of great significance in EFL/ESL writing syllabus design and teaching. The case study reported in this paper explores the underlying factors which shape students' ways of supporting ideas in academic essays in English. Drawing on Lillis' (2001) framework for exploring student writing, the study examines the writing experiences of students from Vietnam and mainland China at an Australian university. Based on the students' reflection on their different ways of meaning making, this paper argues for the need to challenge the tendency to essentialize cultural rhetoric patterns and their effects upon Chinese and Vietnamese students' writing in English as a foreign or second language. Several implications for teaching EFL/ESL writing have also been drawn from the findings of this study.

International human resource management strategies of Chinese multinationals operating abroad

Strategic international human resource management (SIHRM) is crucial for the effective leveraging of human resources in organizations to achieve the desired business strategies. There is a rich collection of studies on western multinational corporations (MNCs) in China, but few studies that explore the SIHRM of Chinese MNCs operating overseas. This study utilizes cross-level, in-depth interviews to analyse SIHRM of three large Chinese multinationals. The paper contributes to literature by addressing two contextual SIHRM issues, namely the characteristics of the SIHRM for Chinese multinationals and how their SIHRM orientation facilitates their international investment and operation. The findings indicate that organizational transformation is the starting point for latecomers matching their international HRM strategies. Their SIHRM approaches, such as forming learning organizations, reliance on host-country nationals, reconciling both home and host-country effects and promoting ‘best practices’, facilitate their international operations.

Chinese students’ perceptions of the teaching in an Australian accounting programme – an exploratory study

This exploratory study is designed to elicit and understand the views of Mainland Chinese students concerning their learning experience in an Australian accounting education programme. The article contributes to the literature by investigating the issues and implications associated with international students’ perceptions of teaching, as little research has been undertaken in this context. Data were obtained from focus group interviews at two Australian universities, comprising students who had no prior experience of Western education. Based on an adaptation of Ramsden's 2003 model [Learning to teach in higher education (2nd ed.). London: Routledge], the data show that the students’ educational experience in China has a direct and negative influence on their perceptions of the teaching and learning experience in Australia. The negativity is particularly strong for entry-level students but dissipates to some extent with time. Issues concerning teachers’ enthusiasm, commitment, delivery skills and students’ expectations also emerged as important factors affecting student perceptions.

The relationship between stock returns and the foreign exchange rate: the ARDL approach

This study employs the ARDL cointegration approach in order to examine the impact
of financial liberalization on the relationships between the exchange rate and share
market performance in China. We discovered that cointegration has existed between the
Shanghai A Share Index and the exchange rate of the renminbi against the US dollar
and Hong Kong dollar since 2005, when the Chinese exchange rate regime became a
flexible, managed, floating system. We found that both the exchange rate and the money
supply influenced stock price, with a positive correlation. We further show that the
money supply increase was largely caused by a huge ‘hot money’ inflow from other
countries in recent years. After local currency appreciation, hot money, followed by
the money supply increase, pushed the market into a high level, based on expectations
regarding the local currency’s further appreciation.

Does banks’ dual holding affect bank lending and firms’ investment decisions? Evidence from China

This study investigates the effect of banks’ dual holding on bank lending and firms’ investment decisions using a sample of listed firms in China. We find that dual holding leads to easier access to bank loans, a result that is more pronounced for non-state-owned enterprises (non-SOEs) than SOEs. We also find that dual holding distorts banks’ lending decisions and harms the investment efficiency for SOEs, while resulting in optimal lending decisions and enhanced investment efficiency for non-SOEs. For non-SOEs, further analysis suggests that optimal lending decisions and efficient investment can be achieved for firms with higher ownership concentration, and firms in which the family and foreign investors are the controlling shareholders. We argue that, in emerging markets, whether a bank plays a monitoring role by directly holding the debt and equity claims of companies relies heavily on whether the potential collusion between firm executives and bank managers can be averted, which in turn is determined by the firms’ governance framework and ownership structure.

Do venture capitalists play a monitoring role in an emerging market? Evidence from the pay–performance relationship of Chinese entrepreneurial firms

This paper investigates venture capitalists' monitoring of managerial behavior by examining their impact on CEO pay–performance sensitivity across various controlling structures in Chinese firms. We find that the effectiveness of venture capitalists' monitoring depends on different types of agency conflict. In particular, we find that venture capital (VC) monitoring is hampered in firms that experience severe controlling-minority agency problems caused by disproportionate ownership structures. We provide further evidence that VC is more likely to exert close monitoring in firms that have greater managerial agency conflict, and thus require more direct monitoring. However, controlling-minority agency problems have a greater impact on VC monitoring than managerial agency problems. Overall, our study suggests that venture capitalists' monitoring role is hampered in an emerging market where firms have complex ownership structures that contribute to severe agency conflict between controlling and minority shareholders.

Are Chinese stock markets increasing integration with other markets in the greater China region and other major markets?

This paper investigates the cointegrating and long-term causal relationships between the Shanghai A and B-share market, and between these two markets and the Hong Kong, the Taiwanese, the Japanese and the US market of two sub periods between July 1993 and March 2007. On the basis of a new Granger non-causality test procedure developed by Toda-Yamamoto (1995) and Johansen’s (1988) cointegration test, my results suggest that a long-term equilibrium relationship measured by cointegration has been merged between
the Chinese A-share market and the other markets in greater China region as well as the US market during the post-crisis period which covers the period since Chinese A-share market was opened to the Qualified Foreign Institutional Investors (QFII) in 2002. I also found that the Shanghai A-share market uni-directionally Granger-causes the other regional markets after the Asian financial crisis, while the A-share market and Hong Kong H-share market have had a significant feedback relationship since then. However, I found no evidence there has been cointegrating relationship between Shanghai B-share market and any other market ever since the B-share market was opened to the local retail investors in 2001.

The relevance of Asian development bank: existing in the shadow of the Asian infrastructure investment bank

This paper analyses the potential impact of the China-led Asian Infrastructure Investment Bank (AIIB) on the Japan-USA-led Asian Development Bank (ADB). Given the financial strengths and the technical know-how of the newly formed AIIB there is a question about thefuture role and indeed relevance of the ADB. The questions canvassed in this article refer to ADB’s ability to change and adapt to the new situation, where it is no longer the dominant multi-lateral development bank (MDB) in the Asia-Pacific region. Against this background the discussion turns to issues concerning the geo-political sphere of influence of the ADB andAIIB and analyses the ADB – AIIB geo-political equilibrium in the Asia-Pacific region. Subsequently this paper discusses factors that may impact on ADB’s future relevance.

Enhancing linguistic and cultural proficiency through Chinese children’s literature

This paper addresses the issue of selecting high-quality materials for teaching Chinese to non-native-speaker students. The paper argues that the unique nature of literary texts for children and adolescents written in simple and standard language reflecting the rich social fabric of China make them valuable materials for teaching foreign learners of the modern Chinese language. The special value of these materials to non-native learners lies not only in their linguistic aptness, but also in their informative connection between the modern Chinese language and the history and culture of China. The paper demonstrates how to effectively use these materials in a cooperative Chinese language classroom.

Impact of automated dispensing cabinets on medication selection and preparation error rates in an emergency department: a prospective and direct observational before-and-after study

RATIONALE, AIMS AND OBJECTIVES: The implementation of automated dispensing cabinets (ADCs) in healthcare facilities appears to be increasing, in particular within Australian hospital emergency departments (EDs). While the investment in ADCs is on the increase, no studies have specifically investigated the impacts of ADCs on medication selection and preparation error rates in EDs. Our aim was to assess the impact of ADCs on medication selection and preparation error rates in an ED of a tertiary teaching hospital. METHODS: Pre intervention and post intervention study involving direct observations of nurses completing medication selection and preparation activities before and after the implementation of ADCs in the original and new emergency departments within a 377-bed tertiary teaching hospital in Australia. Medication selection and preparation error rates were calculated and compared between these two periods. Secondary end points included the impact on medication error type and severity. RESULTS: A total of 2087 medication selection and preparations were observed among 808 patients pre and post intervention. Implementation of ADCs in the new ED resulted in a 64.7% (1.96% versus 0.69%, respectively, P = 0.017) reduction in medication selection and preparation errors. All medication error types were reduced in the post intervention study period. There was an insignificant impact on medication error severity as all errors detected were categorised as minor. CONCLUSION: The implementation of ADCs could reduce medication selection and preparation errors and improve medication safety in an ED setting.

Investment banks' entry into new IPO markets and IPO underpricing

We examine the relationship between investment banks' initial public offering (IPO) market shares and their prior IPO underpricing in the new IPO market for China-based companies on the Hong Kong Stock Exchange. To gain expertise in Chinese business practices, investment banks have the incentive to obtain business in this new IPO market by providing high offer prices to the issuer, leading to less underpricing and less money on the table. We hypothesize and find that the less an investment bank underprices Chinabased company IPOs, the greater its subsequent market share of China-based company IPOs in the Hong Kong Stock Exchange. Furthermore, this relationship is driven by a bank's initial China-based company IPO deals. These results suggest that in new IPO markets, investment banks' initial market shares, obtained through lower underpricing, help them grow their market shares in later periods, possibly through the expertise gained in the initial business.