"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

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!"

Sunfish,

Interesting observation of the situation Qantas may find itself in if it pursues such a plan.


Mike

Where was the "Like" button again on this forum???

:D:D:D

Sunny,

:ok: and once again :ok:.

Just read a week's worth of the Straits Times and you don't have to be Einstein to see which way things flow in parts to Australia's north.

There also appears to be the risk of repeating the time-honoured schoolboy error of treating 'Asia' as a homogeneous unit. It ain't. Don't think you can go to Asia and treat everyone the same. You'll end up p!ssing all of them off and then, they will come together (for a while) to defeat the common enemy before getting back to business (with each other) as usual.

What does Singapore Get ?
 

If a new Qantas Premium Airline is to base itself in Singapore it will go head to head with SingAir.Surely they will want a trade off ?
Through rights to the USA perhaps?
This strategy has all the earmarks of a management who are clueless

Hey Sunfish,
You should email that to him, :ok:

A Merger Perhaps ?
 

Maybe SingAir and Qantas are getting in the sack together?
Which one will be the train and which will be the tunnel?

Singapore? I must have missed something, I thought it was Malaysian they were smooching up to. :confused:

:ok::ok: ................

Sunfish,

Gold:ok::ok::ok::ok::ok::ok:

Out of his depth
 

With no disrespect to my Asian affiliates, the only way to conduct a successful aviation model is to supply cash, bags of it, to 'get the job done'. A tried and tested method of business that does work quite well.
But how does that model of business fit in with QF's core policies and transparent business practises ? Most likely rather well when you examine some of the 'mischief' that has surrounded a number of QF's business practises in recent years.
But in reality all that QF and AJ are doing currently is 'poking the ants nest'. Annoy the ants long enough and they will swarm, execute and devour. There is a good reason why China, Singapore other and Asian countries have a healthy balance sheet while the western world crumbles.

Alan, you are out of your league and it is time to go back to playing in the little kids sandpit. Quit while you are ahead.

I hope the Journo's read this....pure gold Sunfish. As an outsider can you please tell me how the Onestar Asia business is traveling? Do you think the "Qantas" asian push will be 100% driven by Onestar expansion? I'm just curious as someone who is outside the loop but keenly watching.

FH

FH, I'm an outsider too, it's just that my school fees were paid by trading in Asia for many, many years, my Dad started learning that game in 1935.

"LIBM"
Little Irish Bowel Movement
Perfect description
:D:D:D

Sunfish.

It's possible AJ knows all this. Remember the real agenda is to get away from the nasty high cost Australian labour and access el-cheapo Indians, Paki's, Chinese ect ect.

At the end of the day Singapore is hub to and from Australia. If Qantas international is 'based' there, but doing something like its existing flying program then in reality it will not be any further in the asian market then as it is now.

taildragger - 100% correct:

there are more factions in Asia than the left wing of the ALP at a Greens picnic.

Remember the 'eyes on Asia team' are the same people that showed such outstanding insight at Ansett and other similar not so successful ventures. They are also the same people that demonstrated notable poor judgement that has cost Q millions (eg 330-200 J seating etc etc.,)

AT

Nma
no more alan

Mohikan:

You demonstrate perfectly the lack of comprehension of Asia that I am talking about.

Do you honestly believe a Qantas Asian based business will be allowed to make a return to its Australian shareholders? Let alone a return that is "acceptable" to the Boards notional Australian institutional investors, which is probably double or triple what an Asian carrier would consider "acceptable"?

If so, I have a bridge to sell you.

I use the phrase "a return to its Australian shareholders" because those are the operative words that the Board should be considering right now, and if they have not done the necessary due diligence to trace exactly how that will occur then they are already in trouble.

Firstly there is the little matter of earning a profit under the applicable Asian accounting standards.

Then there is the question of taxes in that Asian domicile.

Then there is the question of in what circumstances your partnership agreement allows for the declaration of a shareholders dividend as opposed to retaining the earnings in the business.

Then there is the tax treatment of dividends.

Then there is the little matter of foreign exchange rules and repatriation of funds.


....And you think all that works just like in Australia? Sovereign risk and commercial risk are not trivial issues in Asia, as Qantas and Rio Tinto should already know to their cost.

And there is also the problem that you only ever own 49% of the business and the transparency around that. For example, in the case of Jetstar Asia, has the 51% owner contributed 51% of the capital needs of the airline so far? From what resources?
Of course he gets 51% of the profits, not the Australian shareholders. A lot of work is being done by the 'A-Team' for 49% of the profit.

Working for a very successful asian carrier and living here and seeing so many very up and coming mainland carriers with huge wealth behind them, AJ is going burn QF. Our national flag carrier will not survive here. Do they have billions to compete with the wealth here? NO. They are just not in a position to survive. QF is an aero club compared to asian carriers who have bottom-less pockets

Sunfish, Good work!!