Federal Court: Orders Winding Up of Chinese Firm Over Australian Business

Repeated purchases of cotton and wool counted as carrying on business in Australia A Chinese group that bought Australian cotton and wool carried on business here, exposing it to winding up, the Federal Court found. In Shenzhen Xinhe Hongshi Investment & Consultancy Co Ltd v Shandong Ruyi Technology Group Co Ltd (No 3) [2026] FCA 1214, handed down on 2 September 2026, the court held that Shandong Ruyi Technology Group Co Ltd (Ruyi) carried on business in Australia and ruled that it should be wound up. The plaintiff was owed money by Ruyi under final judgments of courts in China. The Foreign Judgments Act 1991 (Cth) allows enforcement of judgments only from countries that reciprocate, and it did not cover mainland Chinese courts, so the plaintiff relied on common law rules to enforce them. Ruyi did not dispute that the judgments qualified, and accepted that about $28 million was still owing as at 6 March 2026. The main dispute was whether Ruyi carried on business in Australia. If it did, a court could wind it up under s. 583 of the Corporations Act 2001 (Cth), even though Ruyi was a foreign company, and a liquidator could collect its Australian assets, chiefly a loan account in a local subsidiary. Ruyi described itself as a textile and apparel group that owned sheep farms and the Cubbie Station cotton property in Australia. Over many years, it repeatedly bought large volumes of Australian cotton, much of it from Cubbie Station, and wool through its local subsidiaries. Ruyi argued that simply buying goods from Australian sellers could not count as running a business here. The court disagreed. It found that buying from Australia, not just selling into it, could amount to carrying on business, and that Ruyi's regular purchases were part of running its business. That finding alone was sufficient. The court gave further reasons. It found that a management team branded the "Ruyi Australia Group," which had staff but no legal existence, ran as an arm of Ruyi inside Australia. It also found that Ruyi treated one Australian subsidiary as its own trading arm, paying that company's bills directly and using its assets as security for debts of other Ruyi companies, for no benefit to the subsidiary. The court concluded that Ruyi ran its Australian operations as part of its own business and should be wound up. Ruyi had accepted that, if the court reached that view, there was no reason it should not be wound up. The court asked the parties to propose formal orders within 14 days, and left the final sums to be settled. Subscribe to our FREE newsletter service and we’ll keep you up-to-date with the latest breaking news, cutting edge opinion, and expert analysis affecting both your business and the industry as whole. Please enter your email address below and click on Sign Up for daily newsletters from Australasian Lawyer.