(COVID-19) -Adjusting to the times

As many have seen, China has been focusing on containing the spread of the corona virus (COVID-19) while working on measures in order to allow companies to resume work. As the disease spreads around the world, other nations are facing the same issues and the Corona virus has not reached peak outside of China, meaning things may just get worse.

How do we best prepare for the ongoing repercussions of this virus?

What lessons can we learn from the way China has contained and dealt with the virus?

How do we get back to business in the best possible way to help ourselves and others?

We can take a cautious approach, but keep moving forward:

Step by Step

If you are doing business with China, it’s important to resume business as early as possible. Some businesses in China are resuming slowly, and time is needed to ramp up. It’s important to know that this will vary region to region and will be subject to inspections and approvals from local authorities. Keep up in constant communications with suppliers and manufacturers, and where possible partners in Free Trade Zones and Bonded Warehousing could assist in maintaining some aspects of your value chain running. For the majority, there is limited production capacity and limited staff, and many employees are home-based.

Staff Shortage and Challenges

As we know, In order to contain the spread of the corona virus , authorities implemented measures such as travel limitations across provinces and cities and local quarantine regulations. These measures however also result in a shortage of qualified staff for many companies. The staff shortage has had a high impact on production, we have spoken with some of our Australian partners who rely on manufactured supplies, they are now 55 days behind schedule for any new manufactured product.

Companies that have started production are currently operating on a limited staff capacity, ranging widely from 10 to 80 percent. Where the nature of the work is appropriate, working from home is a practice which can be implemented, students can take lessons online etc. Another complication is also the shortage of protective gear, masks and disinfectants, yet these are vital to ensure a healthy work environment.

Materials and Production

One of the reasons quoted by our Australian partner importing LED lighting for example, is that the manufacturers they deal with may have capacity for production but are held back by the lowing supply of raw material.

Another challenge is indeed the shortage of materials for production. Quite a number of suppliers and sub-suppliers have not resumed work due to local regulations, or resumed work on limited capacity, causing delays in material deliveries. In the current situation, it is unclear when they will be fully operational. Some companies still have goods on stock; however, they are very likely to face bottlenecks soon. Other companies increased production at their other sites, which are partly located outside China.


We have several interests and experience  in logistics in China. Another challenge many companies reported is delays or complications in logistics. Drivers experienced entry restrictions between provinces or cities, some of which could not be anticipated beforehand. Quite simply, there are many roadblocks and checks. Apart from body temperature checks for drivers – and more importantly, reported checks of re-work permissions on some highways – some areas only allow access when specific local requirements are met. For example, in parts of East China, companies experienced problems due to regions only accepting local drivers or trucks with local license plates to enter certain areas. As these demands vary from region to region, it is crucial to check with the national and local authorities for updates regularly.

Additional challenges in logistics that were reported are among others: logistics providers having limited their operation radius; a shortage of available drivers; international container shipments being partly postponed as deliveries cannot be made on time, and more. These challenges will have an effect on supply and distribution – both in China and worldwide.

Moving Forward

Flexibility is Key.

Resume work the best way you can without increasing exposure to risk, adapt and change if at all possible, use technology to help you in keeping teams local without the need for travel. For employees, providing additional support is a way of helping, and for business partners, relaxing some tight deadlines and terms as a way to show support and ease any operating difficulty.

For companies that can offer location-independent work, a common solution is the implementation of home office practices for certain business functions until further notice. Additional measures include establishing a crisis team, setting up a hotline for employees, and conducting a daily (digital) health status query of employees (e.g. via the WeChat work app), self-quarantine measures, etc. Non-mandatory business travel has been postponed.

One thing is for certain, the corona virus has caused chaos, and chaos can give rise to innovation and opportunities, overall, let’s keep a positive mindset to take up the challenges and opportunities emerging.

A Significant Business Opportunity

So what makes a good opportunity?

In this short article, we expand on the opportunity and the process of selecting good investments.

Opportunities land on our desk all the time, time is precious, We cannot be “All to Everyone”, and more importantly, if we choose to invest our time and resources into an opportunity with mediocre returns, we  forego other, more lucrative opportunities, something we term as “opportunity cost”.

So how we assess opportunities makes a significant difference to a) time management (and pile of papers on my desk ) b) my quality of work  c) reducing opportunity cost and d) maximising opportunity rewards.

So what’s the answer?

Follow a quick screening, reductionist principle, do not try to fit a square peg in a round hole, and don’t be everything to everyone. Stick to your mandate, profile and investment philosophy.

The ‘reductionist’ principle is nothing more than a flow chart of decision making, pivoting each answer through a “go or no go”  decision matrix. A “no go” answer and the business plan goes to the “round” file (no exceptions).

The screening part is the qualitative part of the process, and for us it is based on a number of venture screening methodologies and our own research and the ensuing years of assessing business plans and ventures. The questions asked are critical, and the way the answer is derived is just as important as the answer itself.

The screening aims to answer a number of main issues, namely:

  • Does the venture or opportunity create value to the customer?
  • If so, how? Does the venture or opportunity solve a significant problem faced by customers? Is the customer willing to pay a premium for that solution?
  • What are the market characteristics like? Is the market robust, creating high (and durable) margin and moneymaking opportunities? Is the market growth worthwhile (>20%), does the venture exhibit strong, recurring revenue generated from a low asset base? Therefore does the venture have the capacity to return attractive returns for investors?
  • What does the team look like? Have they done it before? Is there a good fit between the founders, managers and potential investors?

The quick screen seeks to identify details on the market and margins, the range of competitive advantages, the value creation and harvest issues and the overall potential, to determine whether it is worthwhile to embark into a deeper analysis of the opportunity.

Assuming the venture proposal passes my quick screen, it’s time to roll up  sleeves and really take a long hard look at the opportunity. It is here where we have the opportunity to ‘tweak’ a venture proposal for added value or identify a ‘fatal flaw’ to avoid sunk costs in a venture. From here on, the screening is a collaborative effort with the founders, managers, stakeholders to determine the best approach to investors.

The screening at this stage is on the basis of answering well over 300 questions aimed at looking at a number of criterion which include:

  1. Opportunity
  2. Market and Product
  3. Need
  4. Economics
  5. Model
  6. Harvest
  7. Value Creation
  8. Sustainable Competitive Advantages
  9. Competition
  10. IP
  11. Team
  12. Alliances
  13. Fatal Flaws
  14. Assumptions
  15. Implementation
  16. Decision Making
  17. Risk and Mitigation
  18. Scenarios

At the end of the process, we have the privilege of placing the opportunity into one of a number of categories:  is it  a cash cow? Part of a Fad or fashion? Is it a hobby? Is it buying the ‘entrepreneur’ a job or is it creating real value?

Is the venture chasing the real opportunity or is it investing a ‘better mousetrap’? Is it led by innovative entrepreneurs or by technology led technocrats?

Quite often a business plan is rewritten based on any new information and insight uncovered. At worst, a bad opportunity is avoided or a good opportunity is identified or ‘tweaked’ and a well written plan is confirmed to be investor ready. At best, investors will be convinced to part with their cash and back your venture.

The first 40 days of 2020

So there is no doubt that the year 2020 has so far, delivered more turbulence than ever before, out-of-control fires, followed by ravaging floods, temperatures above 20 degrees Celsius in Antarctica, droughts, Brexit, the Corona virus, China’s economy and supply chain stalling, retailers closing down, airlines and tourism sectors down, international students from China kept out costing the Australian economy billions, and it has only been 47 days into 2020!

I remember reading Nassim Taleb’s Black Swan years ago where he talked about a ‘black swan’ event as a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.

We don’t know when a ‘black swan’ event will occur next, but we do have to have the foresight to visualise and model a number of future scenarios to be better prepared for change. More importantly, we have to have the ability to predict situations that are not strictly a ‘black swan’ but with rigour can be somewhat expressed in terms of probability.

But I’m getting off track, though this is a fascinating theme. This article is more about being alert, open to change, and being prepared, operating knowingly in an increasing turbulent environment.

So, what is turbulence?

Turbulence could be described as unpredictable uncertainty that is often as a result of unknown unknowns and rapidly changing environments where there is a lack of clarity into the future.

The elements that contribute to turbulence are therefore ambiguity, complexity, paradox, discontinuity, in turn, creating or leading to surprise, uncertainty, but also opportunity. According to Dr. Colin Benjamin the definition of turbulence is “the experience of something totally unsettling that you cannot predict”.

There is no argument that the world is becoming more and more turbulent, and it will be our capacity to deal with turbulence that will determine success and longevity in business. More importantly, it will be our capacity to deal with complexity and recognise patterns and breaks in those patterns that will lead to innovation and opportunities in the future.

So when investing in a business, look into multiple scenarios, look at the team and their capacity to deal with complexity and uncertainty, look at the way each individual handles turbulence and how the sectors you’re investing in will be impacted in the next 50 years.

Remember, if your answer to our questions is along the lines of “for the foreseeable future…” you had better rethink!

This is a teaser to begin our thinking, and we will follow with a number of articles on this fascinating subject.

Project Finance

When it comes to Project Finance, if you need the cash yesterday, please do not apply. Project Finance is precise and onerous and requires months of work and planning. It is not the cheapest form of finance, but it does provide for ‘greenfield’ solutions, based on projected cashflows. Moreover, Project Finance has some additional benefits for the company, which include:

  • Allows the company to ‘ring-fence’ the project and not affect its balance sheet or borrowing power.
  • Lending of funds is based on a stream of cashflows generated by proposed project assets. In a sense therefore, it is also considered to be a limited recourse funding, not exposing the company’s assets outside the project.
  • It provides a structure for ‘sharing’ risk and may involve several joint venture partners, particularly useful in cross border situations which could provide an opportunity for double or even triple dipping structures and tax advantages across jurisdictions.
  • A Project Finance approach allows for the careful management and control where a consortium is involved in a multi-discipline project. It provides for structure, discipline and project management processes which allow for the coordination of various participants.

The top five sectors (in order) preferred by financiers in this discipline are:

  • Power
  • Infrastructure
  • Public Private Partnerships
  • Mining
  • Oil and Gas

Other emerging sectors  include Large Scale Manufacturing, Renewable Energy, and Leisure based  sectors such as theme parks, resorts and casinos.

However, any sector can benefit from taking a similar approach to funding, and imposing the rigour of project finance internally. Considering the inputs, risks and modelling sensitivities not only provides great insight for the management, but addresses concerns and provides comfort to investors and financiers in a way which goes beyond the usual best case scenario and worst case scenario approach most managers take.

In any type of Project Financing there are a number of risks (anything from 15 to 20) which need to be carefully considered. Part of the due diligence involved is to identify each risk, rank them in order of potential impact to the bottom line, and address where possible through mitigating strategies. I emphasize “where possible” because there are some risks that you just simply accept as part of the course, in which case you merely identify and assess how the risk is allocated (who carries that risk). So what are some of the risks we look at?


If you have a project and do not consider each risk, then you run the risk of a credit committee rejecting the project (if lucky), and you will find an uphill battle in trying to obtain funding. At worst though, if funding for the project is generated internally or through third party equity, an oversight of any of the risk factors mentioned, potentially places the project and equity at an unacceptable level risk.

This type of financing takes time to negotiate, and for smaller sized projects, structured alternative strategies may be the best approach in order to save time. A stepped approach, could allow a project to begin to take shape, fund bankable feasibility studies and provide a ‘bridging’ function, while the company negotiates longer term project finance. As project finance requires an equity component as well, creating a form of guarantee on behalf of the sponsors to provide an additional level of comfort to the lender, but without tying up huge sums of cash for the sponsor (developer) should be considered.

The Thinking Behind Language

應急 Emergent

創造力 Creativity

The term emergent creativity I have used many times in the context of entrepreneurship, innovation and creativity. Portraying words like “Entrepreneurship”, “Innovation” for Chinese audiences has its challenges, as the way words are constructed carry implications we may not have observed in English.

The radicals of the Chinese symbols for Emergent Creativity – is a beautiful story in itself:

EMERGENT is depicted by Shelter, One – Snow, Heart

CREATIVITY is depicted by Man, Join, Knife – Mouth, Walk –

Power Creation takes strategy, and a man to walk his talk, which results in power, and Emergent is uncovering what is true in the heart, ( as snow melts, it reveals the shelter )the act of experiential learning or the act of painting or drawing becomes an act of discovery of what is true in your heart, and the act of creation is empowering.

What about the English language? Have you ever thought about your choice of words in strategy?

Visit to Daoming

We traveled to Daoming,to a small community of artists and bamboo artisans, just outside of Chengdu. A beautiful experience awaited the Australian delegation as we toured the beautifully crafted buildings.

A place of true creativity and design, zen and peace. Daoming Bamboo Village located in Chengdu, the capital city of southwest China’s Sichuan Province, has practiced bamboo knitting for more than 2,000 years, and villagers have made a living from traditional bamboo techniques. We were privy to some great design concepts and had the opportunity to discuss bilateral ties relating to design and investment.

Australian Delegation to Meishan

Together with The Australian Research Institute for Bamboo Industry (ARIBI), Aulisone organised a trade delegation to visit the City of Meishan and surroundings. We attended the 2019 International Bamboo Industry Fair, held in Sichuan Province.

Bamboo Connects the World, the 2019 International Bamboo Industry Fair

(photo courtesy of Terry Dear)

Sichuan is a key producer of bamboo, and Meishan has a total forest area of 4.5 million mu ( almost 3 billion square metres), which equates to a forest cover of almost 50 percent. There are more than 100 species of bamboo in the area, but a favourite is the “Dragon Bamboo”, a giant of the forest which can grow as fast as 1.5 metres overnight.

Bamboo has many uses, although we first looked at it for Carbon Sequestration, it is an ideal plant for cities as it generates greater amounts of oxygen per square metre than an average tree, and makes it ideal for rooftop buildings. Bamboo has traditional uses in paper, furniture, art, weaving, textiles , however, it is the high tech applications which show promise, particularly in carbon fibre, graphene, batteries, and biofuel.


Meishan is indeed a beautiful place, and the birthplace of a poet known as Dong Po. The culture is intrinsically linked to bamboo, the essence of Meishan is everything bamboo. To be told that ” one would rather not eat meat, than to go without bamboo” is a very special saying here.

During this visit we were hosted by the Mayor of the city where we held talks on the potential collaboration between Meishan and Melbourne.

(photo courtesy of Terry Dear)

Cheng Cheng Capital

On the 21st of September 2019 the Aulisone team visited the beautiful city of Huichang. On this day, we had the privilege of entering into a Memorandum of Understanding (“MoU“) with Cheng Cheng Capital (“CHCH“). The MoU covers a high level of cooperation within China and Global projects and investment. 

The main points of the agreement centres on facilitating technology transfer and promotion of innovation, research and education across a number of industry sectors which support local companies create employment and be kinder to the environment.

This overall intent of this agreement is to create a win-win, co-investment collaboration partnership within China and outside of China on high growth emergent opportunities which will become relevant to the future economies in a rapidly changing world.

CHCH own the Cheng Cheng High-tech Equity Investment Fund Management Co., Ltd. and Cheng Cheng Smart City Investment Fund Management (Beijing) Co., Ltd, and are registered as private equity fund managers. CHCH invest and rely on the support of local governments and relevant departments to jointly initiate and set up government guidance funds to effectively promote the healthy, rapid and sustained growth of the invested enterprises, and strive to create a win-win effect of the government, enterprises and capital.


We spent the weekend in a city with a population of about 520,000 to meet Chairman of Cheng Cheng Capital (“CHCH“), Mr. Cao Qingwei. where they have several investments, a lovely place, beautiful and peaceful Huichang. 

Huichang county is located in the southeast of Ganzhou city, Jiangxi province, bordering Wuping and Changting to the southeast, Xunwu to the south, Anyuan to the southwest, Yudu to the northwest and Ruijin to the northeast. With a length of 85 kilometres and a width of 56 kilometres, it is the key junction of Jiangxi, Fujian and Guangdong. 

Beautiful city of Huichang

We had a tour of three of their investments, in vacuum glass production, aquaculture, and hot house agriculture. The aquaculture is intense growing with the bio-waste fed into the hothouse as nutrients for the plants. The vacuum glass creates a thermal, UV and sound barrier and works to keep energy usage low.

Intensive indoor aquaculture
Hothouse growing vegetables

CHCH has a number of Funds, including the  Huichang Chengcheng Industrial Development Fund which was jointly established by CHCH and Huichang Forestry Investment Company (which is wholly-owned by the Huichang Government).

Focus of the Fund is on e-commerce platform enterprises, precision poverty alleviation projects, ecological forestry, cultural tourism, leisure pension, oil tea industry, agricultural and forestry products processing, energy conservation and environmental protection, new industries, “Internet +” and other related industries, as well as PPP projects, P2G projects and foundations Facilities construction.

Vacuum Glass (photo courtesy of CHCH)

City of Qingyuan Delegation

On the 25th of May 2019, the Aulisone team hosted a breakfast meeting at the University of Melbourne’s, School of Business with Government Delegates from the City of Qingyuan. 

Aulisone has been working relentlessly over the past few months, proposing the concept of an AI Innovation Hub to work specifically on logistics and the waste generated from used aviation tyres for Avilions Hanglun Group, an aviation tyre logistics company operating across China for Michelin Aircraft Tyres. On this day, we entered into a Memorandum of Understanding (“MoU”) with the City of Qingyuan.

The MoU covered points on development of bilateral trade, economic, and cultural collaboration between the city of Qingyuan and the city of Melbourne.


为了促进此次签约合作,清远政府经贸代表团特意从伦敦经过珀斯短暂停留访问墨尔本。维多利亚州是澳洲第一个也是唯一一个与中国政府就“一带一路”达成协议的州省,航轮集团响应“一带一路”的倡议,积极参与共建“一带一路”,经过集团的考察与研究,拟在清远建立航轮总部. 航空支援产业园。Avilions HangLun Group (AHG) 还将通过建立一个独立的运营管理系统,创建中澳智能产业进行国际化创新和商业化智能网络,鼓励和培育高价值产业创新与多元化。

保罗先生首先一一介绍了参加的嘉宾以及航轮集团(Avilions HangLun Group – AHG)的公司概况:航轮集团拥有先进的物流管理体系,作为一家独特的飞机轮胎物流公司,也一直是世界500强米其林轮胎公司的合作伙伴,集团在中国已经经营了二十年,2019年将与世界前三名的航空轮胎:米其林、普林斯通、固特异等知名品牌合作,服务于中国各大航空公司,与航空公司有着多年的良好关系。集团公司不断快速优化地增长,将进军航空器材、航空租赁、航空轮胎检测中心等服务领域是集团的战略方针,做精做大做实做好航空服务,扎扎实实服务航空支援,旨在成为中国第一家航空支援产业,服务好上下游客户。

数据表明,中国在2020年中将成为全球最大的航空市场,航轮集团也希望借此前维州和中国签订的“一带一路” 谅解备忘录框架的倡议下,以积极务实、循序渐进的方式持续发展航空支援产业,共同推进“一带一路”建设。进一步增进两国地方间交流,推动所在地方经济社会发展和民生改善。


就此会议,总理内阁部维多利亚州长丹尼尔.安德鲁斯先生(The Hon Daniel Andrews MP)也发来贺信,在信中他提到:“我十分欢迎广东清远经贸代表团莅临墨尔本。清远市与航轮集团(AHG)的合作是值得称赞的,它旨在利用“一带一路”倡议下的机遇,深化澳大利亚和中国之间的商贸与研究关系。维多利亚是澳大利亚进入中国的门户。并且通过我们强而有力的贸易、文化及个人关系得以加强,我期待着在“一带一路”建设中加强合作。祝各位嘉宾与代表团成员在这次会议中取得圆满成功!”

    随后,维州政府就业、区域与地区发展部专员,维州州长内阁部的Jason Fitts主任对大家说维州州政府特别重视各个部门与中国的发展,尤其关注中澳之间航空及交通运输物流方面的合作,通过这样的进出口合作,墨尔本的企业都能够将货物快速通畅地转运出口。因此诸如像阿里巴巴把澳新两国总部设在墨尔本便可以看出维州与中国的紧密关系,所以他很欢迎也很期待清远市在维州的投资以及物流进出口各方面的合作。



2. 2020年城市将要建立12所职业教育基地,为10万在校生提供人才培训,借助人力资源支持,推广汽车配件,家居,建材,机械等行业,培育智能化工厂,建设数字化产业车间,支持企业建设技术智能中心等。


紧接着,澳中工商委员会的副总裁裴仁杰先生(Tom Parker)上台代表工商委员会所有成员对促成这次签约合作的各方表示祝贺,他说过去20多年来澳洲的经济成长和中国有着密切的关系。全球金融危机后,澳洲经济增长率的40%来自中国,双边贸易额达到1920亿澳元,澳中经贸关系往来极为重要。悉尼科技大学澳中关系学院近期一份学术报告显示在1998年,澳中两国的学术交流合作只占全澳的1%。如今已达15%,明年这个数字将超美国。所以这次的清远市和航轮集团的极具代表性的战略合作可以看到澳中两国间的科技合作会更上一层楼。

最后,航轮集团保罗先生还给大家介绍了柯林本杰明(Colin Benjamin OAM)教授,本杰明教授是国际公认的澳大利亚博学家和未来学科学家,全球研究领导者。 是“Life. Be in it”总领导,也是战略思维工具的发明者。 超过50年的研究,本杰明教授建造,测试和改进了“ColourGrid”,这是一种创新思维模式工具,用于为许多澳大利亚和国际主要企业的战略方向和文化变革举措提供信息。这个全新的思维模式系统适合澳中两国的企业间建立一致性,可以促进企业的转型,调整通信和信息的准确传输。




    最后,清远商务局局长张杨彬先生和航轮集团蒙榆凤女士在清远市委书记郭锋先生、 清远市副市长张帆先生,外事局局长周晓兰女士,清远市清城区区长邱泽军先生,清远市清新区区长张仁建先生和澳大利亚维多利亚州政府就业、区域与地区发展部国际事务局Jason Fitts先生,澳中工商委员会的副总裁裴仁杰先生(Tom Parker),州长新闻秘书高级顾问Marty Mei 先生,爱国华侨清远市侨联第五届委员会海外委员邓一佳先生,科学家Colin Benjamin教授,澳大利亚国际贸易促进会会长郭建强先生及嘉宾们的见证下,共同签订了双方战略合作协议并互赠礼品留念。