Author: acsmecnadmin

China’s clean energy pledge will open up opportunities for Aussie startups

by acsmecnadmin

China, the country with many given titles like the fastest growing economy, the world’s manufacturing hub, the world’s largest economy by nominal GDP and purchasing power parity, its hard to not know about China.

I’m sure you’ve heard about China’s involvement with the push for clean energy and turning the tide for making a change for climate change. China announced last year that they would be investing at least $360 billion renewable energy by 2030.

That’s a pretty bold pledge considering that China is the world’s biggest polluter and consume more coal than anyone else, with reasons of course, as they are the ‘manufacturing hub’ of the world. Hence, it is definitely great to hear that they are pledging to make a change for climate change.

And they are pushing hard, they are at the centre of a global energy change, all thanks to technology and the (slow) lowing cost of renewables. I mean, according to Vox, they’ve made solar panels cheaper, and now they are doing that with electric buses.

Just recently, China transformed all the buses in Shenzhen to run by electric. Building the world’s largest electric bus fleet, which is mighty impressive in my opinion.

So what does all this say about us, the startup community?

Apart from the obvious hint that China is a massive market with massive dollar bills to invest in your startup, they are producing a new wave of scent right now.

The smell of opportunity for clean energy or renewable energy startups.

Even with massive opportunities and potential, expanding towards China can be daunting, with concerns about cultural difference in business, work and societal differences. However, with the right mentor or guide, this bridge can be built.

Australia China SME Association (ACSME) just announced last month that they are leading an innovation mission to China in July to help Australian entrepreneurs access Chinese seed funding and support.  The mission will comprise Australian entrepreneurs seeking to secure start-up funding to launch new ideas, products and services. 

Founder and President of the Australia China SME Association, David Thomas, said the mission would connect Australian entrepreneurs with these Chinese investors to assist the entrepreneurs to secure the funding and support they need to commercialise their ideas for the international marketplace. 

“Unfortunately, Australia is a limited market. Many entrepreneurs struggle to find the funds and investment they need to get startups off the ground in Australia.  As a result, many good ideas fall by the wayside and are never commercialised.  What many people don’t realise is that because we now live in a global market space, we should be looking for start-up funding in other countries, not just our own. 

“Chinese investors, like investors elsewhere across the world, are keen to invest in businesses which offer solutions to growing social issues such as pollution management, recycling, clean energy and healthcare,” he said.

China’s major challenges such as pollution, clean energy, healthcare, education and food security are well known and, as a result, sectors of particular interest to Chinese investors include:

  • Healthcare, including medical, pharmaceuticals, diagnostics, etc.     
  • Clean, green and sustainable energy,         
  • Waste management,        
  • Anti-pollution technology (water, air, soil)
  • Food processing technology and other innovations

We caught up with David to get his insights on how and why should we think about expanding to China.

Why is China an ideal place for Australian startup to consider venturing over? 

China has the money and the market. They have the funds, resources and commitment to invest in innovative ideas from overseas and commercialise them for a market of over one billion people, including a fast-growing middle class (currently 300m) and a large ‘premium’ market of millionaires and billionaires. Chinese companies like Alibaba, Tencent, Huawei and ZTE have demonstrated the power of developing innovative ideas and rolling them out quickly to achieve scale and leverage in such a large marketplace. Now its the turn of foreign companies, including Australian entrepreneurs, to raise funds and commercialise their ideas in China.

What are the advantages you can see that Australian startups will get from expanding to China? 

Australia is well known in China for our clean, green and secure environment which provides great opportunities for Australian startups in some of the areas of most interest to China, including healthcare, clean energy, food, education, tourism and environmental protection. Our advantage is that our local market is well regulated and organised, providing great confidence to Chinese investors and consumers who often have to grapple with “fake” products and ideas in their own market and from some other countries.

How can startups prepare themselves before expanding into Asia? Regarding funding or cultural understanding and market validation. 

Preparation is key, especially in researching the market, preparing bilingual marketing collateral and understanding about differences in culture, language and the way business gets done. I have written extensively on these topics in two ebooks Three Cups of Tea and Eight Critical Steps.

Why are Australian startups struggling to find investments to launch them into the global market?

There are many reasons for this, some cultural, some historical and some as a result of a lack of vision and policy from Government. Despite our $1 trillion superannuation industry, Australian startups find it very hard to raise money to fund their good ideas, and even harder to take them globally, as investors, including the banks, generally look for low-risk investments in the domestic market. As a result, many great ideas flounder in the Australian market, never get funded and never get taken overseas.

Take the opportunity

So there you have it, China, your next step to make it big and make a dent in the climate change issue.

To make this even more exciting, ASCME is looking for a maximum of 10 companies to be selected to join the August 2018 mission to Guang Zhou, China, and each will be fully assessed, vetted and pre-qualified by our Chinese partners to ensure everyone has a high chance of success.

Registration of interest is open now till 30th of June, so grab this opportunity while available. 

Australia rattled by investment chill

by acsmecnadmin
Growing tensions between Beijing and Canberra a key reason behind Chinese ODI falling in the country Chinese investment in Australia last year fell by 11 percent, with China’s changing regulatory environment and growing tensions between Beijing and Canberra cited as contributing factors. Chinese invested US$10.3 billion during the year, down from US$11.5 billion in 2016. The figures appeared in the report, Demystifying Chinese Investment in Australia: June 2018, by global professional services company KPMG and the University of Sydney Business School, released on June 12. The report comes at a time when diplomatic relations between Australia and its biggest trading partner, China, are at a low point amid unfounded allegations that China is buying influence in Australia. The chill in relations has rattled Australia’s business community, especially in the agricultural sector. The annual report also included the twice-yearly Chinese Investors in Australia Survey, which provides insights into perceptions of the Australian investment climate among Chinese investors. The survey showed that Chinese executives still find Australia a relatively safe and more attractive country to invest in, but only 35 percent of respondents felt welcome to invest in Australia, down from 52 percent in 2014. The survey involved interviews with senior executives from 45 Chinese-invested companies located in Australia on their perceptions of the investment climate Down Under and key challenges they face there. Seventy percent of respondents said the political debate had made Chinese companies more cautious about investing in Australia, and 67 percent see the Australian government as less supportive than previously. “The survey shows there is a clear perception (among) Chinese businesspeople in Australia that they are unwelcome, and that the federal government is hostile,” said co-author of the report, Hans Hendrischke, professor of Chinese business and management at the University of Sydney Business School. “Having said that, we should make the point that China has imposed regulatory changes and currency restrictions,” he told China Daily Asia Weekly. “Investment in areas such as agriculture and infrastructure, sectors in which China is encouraging investment, have gone down quite a lot,” he said. Hendrischke said he did not want to “overstate” the trend, but admitted “it is worrying”. “At a time when business relations should be growing between the two countries, Australia is falling back, and competition from Europe and the United States increases. “What’s interesting is that New Zealand does not have the same problems as Australia when it comes to doing business with China,” he said. The report said the survey respondents cited the Australian media as the group least supportive of Chinese investment, and Australian business leaders the most supportive. “While most Chinese investors retained a level of optimism about their Australian investments, some investors, especially SOEs (State-owned enterprises), are apprehensive due to diplomatic tensions and the sense of feeling unwelcome,” Hendrischke said. “Last year was an important and testing year in many ways for Chinese direct investment in Australia,” said Doug Ferguson, head of Asia and international markets at KPMG Australia and co-author of the report. “The numbers don’t lie: Chinese ODI (overseas direct investment) in Australia has fallen,” Ferguson said. Even so, he said Australia remains globally competitive for attracting Chinese investment. Australia still retains its position as the second largest recipient of accumulated Chinese investment — only behind the United States — with just under US$100 billion since 2008. “But the gap is growing,” Ferguson said. He said the fall from 2016 levels in Australia has not been as severe as in the US (where the rate of growth of new Chinese ODI is down 35 percent) and the EU (down 17 percent). Ferguson admitted, however, that there is likely to be a continuation of the current downward trend in 2018. The report said Chinese investors continue to be drawn to projects in Australia that relate to growing Chinese consumer demand and Chinese government priority initiatives — health and well-being, tourism and lifestyle, real estate, technology, services, and a continuing demand for mining commodity resources, “all areas where Australia is internationally competitive and has potential to grow”. Michael Zhang, head of the China desk in Australia for global real estate services firm JLL, said: “Australian real estate remains a key destination for Chinese capital.” “The macroeconomic framework is supportive, while the market is attractive from a global perspective — economic fundamentals are robust, population growth is solid, market transparency is high, and returns are broadly higher relative to comparable markets globally,” he said. Zhang pointed to a notable shift in the scale and type of investment related to Australian real estate. “Investors and developers are becoming more selective in acquisitions, with mandates increasingly geared toward higher quality investment assets and well-located sites with less planning risk,” he said. “There has also been a partial shift away from trophy assets and large-scale acquisitions, with investment activity concentrated in the A$5 million (US$3.8 million) to A$49 million price bracket. “Around 63 percent of the total number of transactions occurred in this lower price bracket. “This is somewhat attributable to the restrictions placed on capital outflow from China.” Zhang said that while investors are not necessarily impeded in acquiring Australian real estate, “restrictions have altered investment outcomes and changed the relative attractiveness of different property types”. “The more robust asset selection criteria and the shift toward quality product and sites at the smaller end of the market is a reflection of these capital control measures,” he said. The report concluded by saying that Australia’s relationship with China, while experiencing a period of heightened tension, is “mature and deeply established in trade and investment and increasingly in society and culture through education, tourism and migration”. This was reflected on May 28 when a delegation of 100 business leaders from East China’s Zhejiang province gathered in Sydney for a trade and investment forum sponsored by the Australia China Business Council. Sydney University’s Hendrischke said he talked to several people at the forum. “The feeling I got was the Chinese are still positive about doing business in Australia. They have not, at this stage, said they are turning away from Australia,” he said. In July, David Thomas, president of the Australia China SME Association, representing small and medium-sized enterprises, will head a delegation of Australian entrepreneurs to China seeking seed funding and support for new ideas, products and services. Thomas said a lot of Chinese outbound investment is being redirected to onshore domestic projects and the Belt and Road Initiative. “Having said that, there is still an appetite to invest in Australia in non-residential real estate projects, and especially aged care, child care, agriculture and tourism infrastructure,” he told China Daily Asia Weekly. “Building residential apartments is not of interest anymore. Individuals are becoming more concerned about playing by the rules for outbound investment, which will naturally slow things down,” Thomas said. “I can’t say that there is any evidence of investment in Australia being discouraged for political reasons. But everyone is aware of the current tensions.” “When I was involved with the citrus industry, we benefited from the closing down of the trade in Sunkist oranges due to tensions in the US-China relationship. It would be a shame if the same happened to us after all the good work we did.” Visit China Daily HK

Ground breaking mission to help Aussie entrepreneurs access Chinese seed funding

by acsmecnadmin
David Thomas, China expert and founder and President of the Australia China SME Association is leading an innovation mission to China in July to help Australian entrepreneurs access Chinese seed funding and support.  The mission will comprise Australian entrepreneurs seeking to secure start up funding to launch new ideas, products and services.   According to David Thomas, "The Australian China SME Association has forged a ground breaking alliance with The Guangdong SME Association in China and many of its members have strong interest in investing in new technology and solutions from overseas.   The mission will connect Australian entrepreneurs with these Chinese investors to assist the entrepreneurs to secure the funding and support they need to commercialise their ideas for the international marketplace. "Australians are highly creative and entrepreneurial people and one of the key challenges to getting ideas and businesses off the ground is accessing start up funding," David Thomas said today. "Unfortunately, Australia is a limited market.  Many entrepreneurs struggle to find the funds and investment they need to get start ups off the ground in Australia.  As a result, many good ideas fall by the way side and are never commercialised.  What many people don't realise is that because we now live in a global market space, we should be looking for start up funding in other countries, not just our own. "In July this year I will be leading an innovation mission to China to introduce Australian entrepreneurs to Chinese investors and partners who are keen to invest in and be part of innovative new businesses. "Chinese investors, like investors elsewhere across the world are keen to invest in businesses which offer solutions to growing social issues such as pollution management, recycling, clean energy and health care.” China’s major challenges such as pollution, clean energy, healthcare, education and food security are well known and, as a result, sectors of particular interest to Chinese investors include:
  • Healthcare, including medical, pharmaceuticals, diagnostics, etc,
  • Clean, green and sustainable energy,
  • Waste management,
  • Anti-pollution technology (water, air, soil); and
  • Food processing technology and other innovations.
"My goal for the innovation mission to China in July is to assist as many Australian entrepreneurs and business owners as possible to secure the funding and partnerships they need to commercialise and launch their new ideas and products into the market space – the Chinese and global market space," David Thomas added. "We will be taking a range of experts with us on the mission to ensure our entrepreneurs have the support they need to secure funding. "Our goal is to ensure that every entrepreneur who takes part in the mission is successful in securing the funding they need to move forward with their new venture.  Qualified and experienced experts in corporate structuring, IP protection, patent registration and local company set up will join the mission to provide support and advice on the ground as needed. "Entrepreneurs and business owners interested in taking part in the mission need to register with the Australia China SME Association by 31 May 2018. “ACSME’s ultimate goal is to see more Australian businesses benefiting from China’s growing market through export, investment and collaboration opportunities.   This will benefit Australia and our future as a nation if we support more Australian SMEs to promote and sell their products and capabilities overseas.” Asian Inspector

China is becoming seriously concerned by Australia’s negative attitude towards it’ — and it could put the entire economy at risk

by acsmecnadmin
Recent media articles and comments by Australian politicians are starting to rub the Chinese the wrong way. Just ask David Thomas, founder and President of the Australia China SME Association. On a recent business trip to China, Thomas was acutely aware of a change in the way his Chinese counterparts spoke about Australia. “China is becoming seriously concerned by Australia’s negative attitude towards it, he said. “I have just completed a one week business visit to China and have never before heard such negative comments about Australia’s politicians, media and government.” And this was with people who he visited on a regular bases over the past two years. While he recognised the temperature change, he said it isn’t preventing collaboration and co-operation yet. “The (Chinese) view was that it’s not too late for Australia to turn this around. But there needs to be a change of attitude in Australia (government and media) to avoid it getting any worse,” he said. “Chinese media is controlled by Government so there is often a perception that, when stories gets written in the Australian media it reflects the views of the Government, which of course isn’t true. But that can be the perception.” Thomas suggests more appreciation should be put towards Chinese trading partners, or Australia could risk economic disaster. “Whether people understand it or not, China is our biggest export partner,” he says, and as “China’s middle class [grows]… they are spending money on quality goods and services and they like Australian products because we have a good reputation for producing clean, ethical high quality goods and services. SuppliedDavid Thomas “Everywhere across China, our goods are being sold in shops and online. “So many Australian businesses are exporting to China. Food, beverages, health and wellness, beauty products, the list goes on. “Our export market to China is creating jobs, economic growth and prosperity for our country. Every household across Australia benefits from our exports to China. Quite frankly, without our investment and trading relationship with China, Australia would be in serious trouble. “Many people don’t realise that our education is our third largest export (after iron ore and coal) and our universities depend on foreign students to survive. “Chinese students currently make up the largest group of international students in Australia and are currently standing at a record level of 160,000 this year. But all I hear are complaints, ranging from spying to clogging up our transport system. “It’s getting out of control.” Thomas said business and political leaders “need to step up and show some leadership” and “the negative commentary needs to stop”. “They need to acknowledge the importance of the Chinese trading relationship for Australia,” he says. “We cannot continue to allow negative and derogatory comments about Chinese businesses, entrepreneurs, migrants, students and tourists to be made in the press or elsewhere. All this does is erodes trust and demonstrates a level of disrespect that is unnecessary and unwarranted.” He adds: “Unfortunately we have a few populist politicians here in Australia using China scare tactics to win votes. All this does is peddle hate and divisiveness. It is irresponsible and stupid and puts the whole country at risk.” Without urgent change, Thomas fears the Australian economy would be crippled. “We desperately need people to start standing up for our country and our trading partners including China. We need our export partners more than ever,” he said. “Thanks to technology, we live in a global economy and there are plenty of other countries that are desperate to get China’s business including New Zealand, Canada and the European Union post Brexit. The last thing we need is to upset one of our major trading partners to the point where they start buying from and investing in other countries, instead of Australia. This would devastate businesses across Australia and send our economy into a catastrophic downward spiral. It’s starting to happen already and we need it to stop now.”

IDEAS The key to doing successful business with the Chinese is to drink three cups of tea

by acsmecnadmin
Every culture has a different set of beliefs and values that are generally reflected in the way people approach business. For the Chinese, like many, the utmost importance is placed on trust in a business relationship. And while that is a common factor for many areas of the world, there is a particular way it is showed and earned in Chinese business dealings. According to China expert and President of the Australia China SME Association, David Thomas, the key to to doing successful business with the Chinese is to drink tea. And it’s not just one cup. It’s specifically three. “The Chinese have been doing business the same way for centuries and they only do business with people they trust,” Thomas says. “While we all like to do business with people we trust, the reality is that the Chinese have mastered the art of building and maintaining trust through long term relationships. “They like to get to know the people they do business with. It is imperative for them to understand and like the values, behaviours and style of the people involved and if they don’t, they won’t do business with them. “In my experience, this involves taking ‘three cups of tea’. While a simple approach, it usually works.” He goes on to explain his thinking: The first step in the process is to meet with them and have a cup of tea. A lot can be shared over a cup of tea. As ‘strangers’, this is the first opportunity for everyone to meet, get to know each other and find out how each person thinks and operates. This is not a time to discuss proposals, offers or contracts, this is a time to create good first impressions and to show a genuine interest and curiosity in their culture and environment. The Chinese build networks of relationships they trust and do business with, and the first step to doing business with the Chinese is to become part of their trusted network. The second cup of tea involves getting to know each other a little more, becoming ‘friends’. Meeting again reaffirms everyone’s feeling about each other and the long term intent. It gives people the opportunity to develop a sense of what people are like to work with on a consistent basis. It also enables the relationship to move forward. By this stage, people should be getting to know each other a bit more. Confidence and trust should be growing. And finally the third cup of tea involves taking the relationship to the next level, and becoming part of their extended ‘family’ and inner circle. By this stage, everyone should feel entirely comfortable with each other. Trust should be established. This is the point at which business can be discussed. Thomas says if these steps are followed, “the relationship has a chance to develop into a successful and rewarding long term business partnership for both parties”. “As China continues to open up its market to the world and invite businesses from across the globe to sell to their growing middle class, there are significant opportunities for Australian businesses to be part of this opportunity. “However, in order to do so, businesses and leaders must understand how to work with the Chinese way of doing business.” More information such as how to negotiate sales, or understanding Chinese hierarchy can be found in Thomas’ ebook Three Cups of Tea.

MOU to grow export opportunities to China

by acsmecnadmin
China is Australia's largest export market. While Australia's export relationship with China has focused international students, tourism, direct investment and agriculture, a shift in the Chinese Government's policy has opened up opportunities for Australian businesses in he services and consumption sectors. This is complemented by the China Australia Free Trad Agreement which into effect in 2015 and is encouraging Australian businesses to penetrate more deeply in to the Chinese market. Despite these new opportunities, Australian businesses are still unsure of how to engage with China and to go about selling their products into China. Many businesses, particularly small to medium size businesses still believe exporting to China is expensive and laden with complicated regulations and requirements... Visit Publisher Website To continue reading, Business First Magazine page 32

China’s untapped potential for Aussie beer and wine makers

by acsmecnadmin
Published by: Inside Small Business  || Author: David Thomas
Asia has become the fastest growing region on earth with millions of people entering the global middle class. Much of this growth is happening in China with higher incomes and increased demand for quality products such as food and wine. While Australia has one of the most efficient agricultural sectors in the world and produces high quality clean healthy food, we are also ideally placed to supply fine foods and beverages as well. Australia has a key role to play in being the food bowl for Asia but the sheer size of Asia’s demand and our reputation for quality produce means we can also become a specialist and a high value supplier of fine foods. Two of the key areas of opportunity are craft beer and boutique wine. China’s beer market is worth $70 billion a year however while annual spend is increasing, total volumes have been falling by around five percent over the last three years due to the rising popularity of wine and craft beer alternatives. Younger more affluent consumers are preferring premium drinks such as craft beers and many of these are from abroad. Selling to consumers in China is a lot easier these days due to the Chinese Government’s decision to reduce tariffs to assist mainland Chinese to access imported products and the widespread use of online shopping. In 2015, online sales of imported goods accounted for 17 percent of China’s total online sales. Clearly there are significant opportunities for Australian craft beer and boutique wine makers to be part of China’s middle class growth. This export sector is no longer limited to those with large budgets and monolithic brands – it is now accessible to the smaller up and coming players as well. We need to do more to help smaller Australian businesses to understand that there is so much untapped potential in China. Many people might be surprised to know that China is now one of the world’s biggest markets for imported wine. They like aromatic wines such as Riesling, Sauvignon Blanc, Chardonnay and Moscato and are happy to buy online because they like to be able to access the accompanying information and recommendations. Red wine sales are also increasing with Chinese consumers preferring fruitier softer wines with lower tannin and acidity. This is good news for Australia because we are highly regarded for these varietals and our boutique wineries have the capacity to provide China’s younger and more open minded consumers with premium quality products which have some exclusivity and edge about them. Looking across Australia’s growing craft beer and boutique wine sector, we should be seeing more of our local brands reaching China. Unfortunately many business owners think that exporting to China is too hard and or they don’t even bother to try or haven’t even considered it as an option.

It only takes a little bit of traction in China to create a life changing opportunity for an Australian business. With some 48 million urban upper middle class consumers of imported wine and beer in China, there is room for a lot of Australian success stories. Hopefully we will start to see more Australian craft beer and boutique wine makers getting involved.

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