This was more upbeat than similar surveys of US and European companies in China. However, the report also highlighted the growing risks of doing business in a market with unpredictable changes in government regulation. Intellectual property abuse, a huge concern for US companies, has not been as big of an issue for Australians in China because of the nature of their business.

The survey found 54.4 per cent believed Chinese enterprises had preferential treatment over foreign firms, and 36.8 per cent said doing business in China was getting more complicated and difficult.

It also revealed that e-commerce is a major challenge for Australian companies going into China. Only 16 per cent said they had detailed e-commerce strategies in place despite China's digitally-savvy population and the country's high rates of online shopping.

"We're seeing an exciting dynamic where Australian businesses' growing confidence in the Chinese market is met by an increasing need for the adoption of tailored e-commerce strategies and sophisticated data analytics," Westpac's general manager, Asia Pacific, Michael Correa said.

The participants were anonymous, but AustCham Shanghai's largest members include BHP Billiton, Rio Tinto, Bluescope Steel, Treasury Wine Estates and the major banks. National Australia Bank, Blackmores and Metcash were among the confirmed respondents. Agri-business and professional services firms now also make up a larger proportion of Australian companies in China, a market that was traditionally dominated by iron ore and coal exporters.

"The results indicate that we should be very optimistic about the trade relationship moving forward," Chairman of the AustCham Shanghai board Craig Aldous said.

The report is an important barometer of the Australia-China trade relationship and will be conducted annually each year. Companies were surveyed in December, before the latest deterioration in Australia's relationship with China, highlighted last week when The Australian Financial Review revealed senior ministers had been denied visas to visit the country.


This prompted a rare warning from AustCham Shanghai last week that its members had been concerned about the bilateral relationship for some time, although there had been no direct impact on business yet.

The survey covered 21 industry sectors, including professional services, mining, agricultural and mining. The respondents included companies selling products or services to China, companies with more than 50 per cent Australian ownership, and government entities. It includes small and medium-sized enterprises.

It found companies became more profitable the longer they operated in China, a market where it takes years to build up relationships.

The top risks for companies operating in China were unpredictable government policy, at 24.2 per cent, and new competitors at 23.1 per cent. About 58 per cent of respondents said the regulatory process in China was not transparent. Exporters such as Blackmores and Bellamy's were caught out last year due to unexpected changes in regulations covering online sales in China.

But in a separate question, 49.7 per cent said the biggest challenge hindering their operations was sourcing talent and capabilities followed by competition at 47 per cent and the regulatory environment at 36 per cent.

Just over half have benefited from the Free Trade Agreement between Australia and China and 42.9 per cent said China's Belt and Road infrastructure project was a positive.

Professional and business services were the most optimistic, but the construction, property and real estate industries were more pessimistic because of moves to tighten capital outflows.