Q&A with our Investment Director, Tom Ellis

MAI Capital regularly gets a variety of questions about market entry in China and the broader trends in the China market. The team at MAI Capital thought that the best way to answer some of these questions is through a Q&A with our Investment Director, Tom Ellis. Tom will answer some of MAI Capital’s most frequently asked questions and provide some invaluable insights based on his experience working directly with our China Partners.

1. So how long have you been leading the team at MAI Capital, Tom?

In my role as Investment Director at MAI Capital, I have been leading the team for about 3 years and over this time, I have been actively involved in bridging the gap between Australia and China and assisting our partners in both China and Australia explore different market opportunities.

 Tom Ellis – MAI Capital's Investment Director

Tom Ellis – MAI Capital's Investment Director

2. Can you tell us a bit about your background?

Since my teens, I’ve had a passion for business and creating opportunities. I started a few small companies through my high school and university days, before even entering the corporate world. I’ve worked in banking and advisory, which had a mix of listed, VC and PE backed enterprises. I have also done a large amount of advisory work through my own firm, ranging from M&A to early stage companies.  I’ve built and sold businesses and handled wealth for private families. Through this experience, I’ve been able to develop an eye for identifying investment opportunities across growth and mid-market companies and assist with their expansion into the global market, more recently with a focus on China.

3. MAI Capital bridges the gap between China and Australia. How does MAI Capital achieve that?

Our high-level relationships with partners in both Australia and China and collated insights from both markets provides us with the ability to educate and break down the traditional barriers for companies seeking market entry into China. These barriers include the cultural difference between Australia and China, difficulty in identifying a valid pathway and a lack of resources, including capital.  Our knowledge and experience in overcoming barriers to market entry in China, allows us the capability to guide Australian partners on how to adapt to the changing China market and strategise from our guidance.

4. What makes MAI Capital unique and different from other Australian Capital firms?

At MAI Capital we seek a partnership with our investments so that we can guide, support and assist them across both the investment process and market expansion into China. We also look for partnerships which are built on alignment between the partners and a mutual vision for the China market. Another differential point to many other Australian firms is the fact that our vision for investment is always of a long-term nature.  Overall, we take the role of investor, strategist and long-term partner seriously.

handshake.png

5. In your role as Investment Director, you regularly travel to China. What are some of the differences in conducting business in between China in contrast to Australia?

In my regular travels to China, I’ve noticed two key distinctions between China and Australia. The first one is the importance of relationships. At times in China, it appears that the ability to build a long-term relationship with partners is just as important as capital or an excellent product or IP secure technology. Relationships in China are intended to be long-term, deep and mutually beneficial.

Another distinction is the strong influence of Confucianism and Chinese culture, into the business practices in China, a stark contrast to Australia’s business practices. China’s rich history and culture is undoubtedly intertwined into Chinese business practices, with the business environment being strongly influenced by respect, seniority, family and loyalty; all traits which are commonly associated with Confucianism.

In China, I have witnessed a business culture focused on trusted networks and clear hierarchies, as-well as respect for all the involved partners.

From my experience, I believe that understanding these dynamics is critical in understanding China’s business environment and building strong, long term and meaningful relationships.

6. Two of MAI Capital’s focus areas are within Agriculture and Health/Med-Tech, shaped by the present and future opportunities in China. In your opinion what is the source of the opportunity?

There is an abundance of opportunities in China and a variety of reasons why. MAI Capital’s focus areas of Agriculture and Med-Tech have been shaped respectively by the demand for green and clean products and China’s ageing population.

I think that the great opportunities which lie within China’s broader healthcare sector have arisen from China’s reforming healthcare system and ageing middle class, cultivating in the need for global health standards and new innovations/technology. Factors which are found in Australia’s world class health sector and strong research facilities.

Whilst within the Agriculture space, China is seeking to be more efficient and productive with their limited agriculture resources, key drivers within Australia’s agriculture sector. Another source of the opportunity is a result of China’s emerging middle class and strong demand for high quality Australian products. This has sprung a clear opportunity for Australian green and clean companies, where they can export their products into China.

shanghaipic.png

7So, Tom, if you could give any advice to a company seeking market expansion into China, what would it be?

Some of the best advice I can give to any company seeking market expansion into to China is to have a strong understanding of the market and its available opportunities, as-well as its risks. It’s important that companies do not just enter the China market thinking, that’s its huge and that they can unequivocally succeed.  Recognising the cultural difference to doing business in the China market will put you ahead of the pack. Without these insights, or a trusted partner to guide you, many companies face an even tougher battle.

Companies must have a strong and validated China market strategy, partners in China, a strong understanding of the market and be ready to fulfil the demands of the market in China.  I also think it’s important that companies also appreciate the opportunity which exists in Tier 1 cities but also look outside Tier 1 cities. Brands that can successfully reach these markets will have an advantage of being present earlier on.

8. There is a lot of dialogue Tom about e-commerce in China. What’s your thoughts on e-commerce in China?

E-commerce is regularly associated with China and it makes sense given its scale and traction. China alone has over 700M Internet users, which provides an abundance of opportunity and market access. From topical readings, I read that recent estimates state that in 2017 China had over $1 Trillion (USD) in sales and as you can imagine is anticipated to continually grow.

At MAI Capital we have seen several global brands including Australian brands successfully use e-commerce as a mechanism to enter the China market; many with considerable success. Utilising WeChat, Online Platforms and KOLs to gain attention in the market. In previous MAI Capital articles, we’ve talked about the rise of O2O (Online 2 Offline), also termed as ‘New Retail’, a trend of combining online platforms with bricks and mortar stores, given the success of having a physical domestic presence and an online presence, this will continue to be a strong trend going forward not just in China but globally.

crowdpic.png

9What’s on MAI Capital’s agenda for the second half of 2018 and is there anything specifically that you are really looking forward too?

We have a number of active opportunities and a healthy pipeline for the upcoming year that our team are working hard to process. We’re pleased to be collaborating with some exciting Australian business’ and assisting them in expanding their offering into the China market within the consumer space, specifically F&B and Healthcare. 

In the past 12 months, we’ve seen an increasing interest in China expansion and we are really looking forward to continuing to collaborate with partners in both Australia and China, as-well as educate and guide companies in overcoming some of the hurdles for market entry into China.

That concludes MAI Capital’s first Q&A with our Investment Director, Tom Ellis. We hope that you gained some insights into the trends in China and the value we add here at MAI Capital, as well as some of the broader industry trends in China.

At MAI Capital, our focus is on providing the resources for promising Australian healthcare and agricultural technology companies to scale into China. We are always happy to connect with aligned teams who are trying to tackle this challenge. If you are interested in connecting with us, please contact us on info@maicapital.com