I do not know who wrote this, but ALL must see. An absolutely beautiful piece that truly dictates what will happen to QF. To the person that wrote it, apologies, but I do take my hat off to you. Brilliant.....
Jetstar
"Exploiting Asian Market" - Alan Joyce's Irish suicide - an analysis"- sent to AH$ for posting...
"Exploiting Asian Markets" - Irish Suicide.
The CEO of Qantas has apparently said words to the effect that Qantas is going to "Exploit rapidly growing Asian markets."
I am so incensed by the lunacy of The Qantas Board and Management that I will go on record now and say that there is not a snowballs chance in hell that Qantas is going to: "Exploit rapidly growing Asian markets."
That is an Asian market and it is going to be exploited by Asians for Asians and to the benefit of Asian shareholders.
The only "impact" that Qantas is going to make on that market is a small stain on an Asian mattress someplace where Qantas shareholders cried themselves to sleep after losing their entire capital on an unprofitable failed Asian joint venture.
Pardon my French, but FFS, the history of Western investment in "Asian Markets" is a ******* cemetery of failed business ventures where the West has been efficiently skinned by their erstwhile Asian partners. Jetstars adventures in Vietnam should have been an absolute warning to them.
It takes what are called "Old China Hands" at least Thirty years of trading experience to engage profitably with China and the East, and this little Irish bowel movement thinks he can just walk in and make off with some profits?
Here is what is going to happen to you Alan;
1) You are going to be encouraged by your Asian partners to invest every bit of spare cash you have, or you can borrow, in your Asian operations.
2) You are going to be encouraged to invest your management time in your Asian operations to the exclusion of everything else.
3) You will be encouraged to move as much of your operations and employees to Asia as is physically possible.
4) In support of this strategy, you will be wined and dined by everyone from the Asian Government and business community from the top down. The continuous mantra being thrown in your direction will be "huge Asian markets."
5) At some point a few years from now, a stock market analyst will sound a warning that Qantas is now balls deep in Asia and that any downturn or disturbance in Asian markets will severely impact not just the Qantas International markets, but the Qantas Domestic market, which by then will have been "rearranged" to have synergies with the new you beaut Qantasia International (read deep discounts for Asian travelers plus Asian maintenance and crews, etc.).
6) The warnings won't be heeded. Remaining institutional investors who were wondering exactly what the Qantas sustainable competitive advantage in Asia really was will quietly exit. Qantas will start borrowing from the banks, who are always too stupid to see where companies are heading.
7) Within a year the cupboard is bare. Qantas is in hock to its eye teeth and still waiting for profits to be generated by the "huge Asian Markets". The revenue will be there, its just that everyone (the Asian partner, airports, lessors, maintenance organisations, manufacturers, finance houses, fuel suppliers, catering, ATC, etc. etc) seems to be making a dollar or two of profit except Qantas. Funny that.
8) Getting desperate for cash, Qantas tries to rearrange its finances and perhaps repatriate some funds to Australia.... and runs smack into a concrete wall of uncompromising Asian Governments, regulators, financial institutions and a less than helpful but"Oh so sorry" Asian "Partner".
Perhaps you like to sell your business? We make you velly good offer?
The Qantas Sale Act will be no help because there is nothing left to sell.
That is what is going to happen to Qantas Alan. You have absolutely no experience whatsoever in operating in Asian markets and neither has Qantas apart from flying in, filling up and departing, yet you think that running an LCC operation in a bog in Ireland is suitable experience for operating to the shores of the Middle Kingdom?
Take the old Asian custom of "gifts" also know in vulgar terms as kickbacks. How are you going to deal with the necessity of those Alan? Australian law prohibits them, but I guess that the Qantas auditors and your own "robust internal processes" will keep you safe.
Well, except that they didn't, did they?
Qantas one of 11 airlines fined $1.1 billion for rigging cargo prices | The Australian
Quote:
The fine comes three years after Qantas was fined $40 million for price-fixing in the North American air cargo market.
In 2008, Qantas also agreed to pay a fine of $20 million under a deal reached with the Australian Competition and Consumer Commission over the European price-fixing cartel.
Never mind Alan, the Board knows how to deal with the thorny problem of Asian business customs. They will keep you safe. Leigh Clifford comes from Rio Tinto. They know all about Chinese corruption don't they?
Rio Tinto mops up after China bribery mess | The Australian.
So how are you going to do the "exploiting" Alan? Tell us about the mass of trained Qantas managers who know instinctively what to do when there appear to be employees on the payroll that have never been seen; when invoices appear that cannot be reconciled. What happens when you discover that the security guards on your stores and property exist to prevent you from accessing them after hours when the real business is being conducted? Do you understand that you had better give your Chinese managers about Ten percent of the shareholding lest they be enticed away to your loss? Have you ever had to write on a Six million dollar invoice "Please do not ask for credit as refusal often offends", Alan? Alan? Tell us about your vast experience of the orient! Do you like Chinese food? Is that it?
Somebody should tell this bog Irish idiot that he is not doing business with another Belgium or Holland. He knows nothing about the East - where business is played by rather different rules. Just ask Cathay and Swire, they have only been in the game for what? Two hundred years? ..And you are going to encroach on their territory?
It is perfectly clear who is going to do the "exploiting" in this transaction, and it won't be Qantas. You come to this market with zero expertise, and you are too stupid to understand that you have no understanding of what is required.
....and finally. The Board and management of Qantas keep harping about generating an "acceptable" return on Capital invested in the international business.......
Asia is the home of the concept of "Patient Capital"; exactly how does the long term Asian time horizon sit with your need to generate "Acceptable Returns" every year?
I can tell you right now that it doesn't. Wait till your business partner says: "Yes Alan, I know we are making a loss now, but in Ten years time!"
Please let everyone see this. The end of the Q as we all know it.....unless....