Health and Wellness Summit: R&D Panel (University of Auckland careers day)

Opinion: The in-flight Wi-Fi dilemma – Do you really need to be connected? (NZ Herald)

Report: How global medtech & pharma corporates engage with Australia (MTPConnect)

A new report, prepared by MTPConnect in partnership with BioPacific Partners examines Australia’s engagement with global pharma & medtech firms.

Released by MTPConnect at the BIO International Convention in Philadelphia, the report highlights the role played by multinational pharmaceutical and medical technology companies in nurturing Australia’s healthtech research and commercialisation.

The report examines the factors determining the attitudes of multinational companies engaging with Australian pharma and medtech innovators and provides a unique, consolidated overview of the global market and the Australian industry as well as exploring sector trends and drivers.

“Our report underscores the fact that the market for innovation is global and reaffirms the high regard that multinational pharmaceutical and medical technology firms generally have for Australia’s excellence in science and research and the quality of our regulatory system,” Dr Grant said.

In order to make medical technologies and pharmaceutical innovation more attractive to multinational companies, this report uncovers tangible solutions to mitigate the hurdles that exist.

These include:

  • Focus on areas of overlap between global multinationals and areas of excellence in Australian innovation;
  • Identify the right targets to save wasted effort chasing companies that will ultimately have no interest in a technology;
  • Be present at the right events and prepare wisely for them;
  • Consider taking part in global accelerator competitions to accelerate development and get noticed;
  • Seek early-stage collaboration with multinational companies where relevant;
  • Prepare for the long game, particularly in medical technology where acquisitions tend to happen at a later stage; and
  • Consider geographies outside the traditional regions: As China continues to open up it will increasingly challenge the market dominance of the United States and Europe.

Download the report here to read more.

China Business: 2019 – Exchange securing a future (NZ Herald)

Tim McCready talks to James Fok, Head of Group Strategy at the Hong Kong Exchange

Herald: What sets the Hong Kong Exchange apart from other exchanges around the world?

Fok: We’re one of the top several exchanges in terms of market capitalisation in the world. We have been number one in IPOs in six of the last 10 years. In many ways, we have a fantastic business — particularly leaning on mainland China and helping Chinese companies from the 1990s onwards raise capital from international markets. Unlike many other cash equity exchanges around the rest of the world, we have quite a lot of growth in our core business. While in New York you’re seeing the number of listed companies fall year-on-year, we’re seeing the number of listed companies go up.

Going back almost 10 years now, we recognise that mainland China is also changing in the way in which it operates and is structured. The first H-share company [companies incorporated in mainland China that are traded on the Hong Kong Stock Exchange] to IPO on the exchange was Tsingtao Brewery Group in 1993. At that time there wasn’t a lot of capital in China, so if Chinese companies wanted to raise capital they had to come out into international markets, and Hong Kong was a place that enabled them to do that.

Herald: With China opening up over past decades, how has the Exchange’s relationship with China changed?

Fok: Today there is a huge surplus of capital in China — notwithstanding the economy slowing down. There is over US$25 trillion sitting in Chinese deposit accounts that has not been deployed into capital markets. We still see a big opportunity with China, not necessarily with Chinese companies coming out to raise capital — although they are continuing to do that — but to try and find a way for Chinese investors to be able to diversify their investment in international markets.

Chinese financial market needs are also becoming a lot more complex. Chinese companies and individuals are doing a lot more things internationally, and supply chains are such that they are making sure they squeeze every bit of margin out of everything. That means they have to hedge a lot of the input prices such as metals and commodities. China is rich in many ways, but in terms of natural resource commodities it is generally having to import to supplement its own domestic production. On top of that, doing more business internationally means that there is foreign exchange risk, interest rate risk on foreign currencies, etc.

The role Hong Kong needs to play going forward is a much more comprehensive one. Not just the capital formation centre that we have continued to be, but we need to become a wealth management centre and a risk management centre for China as well. International investors coming here continue to come here for the Chinese exposure. They now have the option of going to the mainland directly, but many still find challenges in going directly onshore.

Now, as well as bringing Chinese companies here directly to list, the exchange is helping to provide a channel in which investors on both sides of the border can access each other’s market without the product or company being directly listed there.

We are providing a gateway for people to go in using their broker in Hong Kong — without having to open new accounts onshore — allowing access to the onshore market in as frictionless way as is possible, where we manage the differences in market structure.

Equity is still a large piece of the business, but more and more we have been shifting towards different asset classes as well — the most obvious was our acquisition of the London Metal Exchange in 2012.

Herald: How are new advances in fintech reshaping how you’re operating?

Fok: Stock exchanges are the original fintech businesses. Technology has driven our business for a very long time. But what seems to be happening at the moment in the technology space is that we have a confluence of factors that are forcing a huge acceleration in the pace of change.

That change, in many ways, has been hugely disruptive. You only have to look at retail businesses and what Amazon has done to those to understand that. When you look at stock exchanges and you look at the fundamental business model — providing a centralised place for people to buy and sell securities — generally that model is very efficient. But in every other facet of our business — ranging from clearing and settlement, the ways companies communicate with their investors, through to the day-to-day operational processes — that is now disrupted.

When you look at the ability of robotics and artificial intelligence to replace a lot of fairly menial — and actually relatively sophisticated but process-driven jobs — it’s phenomenal. We have had to, like everyone else, look at how we adopt technology into our business to drive efficiency.

Many businesses do this as a way to cut costs. There is an element to which that is true for us, but actually it goes much beyond that. Because everyone investing in our market has to use us, if we are inefficient as a market and as an infrastructure, it imposes a significant cost on all the market participants which ultimately affects Hong Kong’s competitiveness.

Herald: How is the exchange helping to attract smaller start-ups to Hong Kong?

Fok:  Last year we undertook the largest set of listing reforms we have done in 25 years. We launched three new chapters of our listing rules — all of which were targeted at new economy companies, but two in particular:

We launched a segment of our main board that caters to pre-revenue biotech companies. Many R&D companies when they come to market don’t have revenue, let alone profit. The biotech board allows companies from the biotech sector to come here and list. Prior to these changes companies had to at least have revenue.

The second component is to allow weighted voting rights. These allow founders to maintain control even if they are diluted below 50 per cent of the shareholding of the company. We didn’t offer these kinds of governance structures here, so we saw a lot of Chinese companies in the tech space find themselves in the US market.

We were number one for IPOs last year for the amount of money raised, and 32 per cent of that money raised came from companies listing under the new chapters.

Herald: The Hong Kong Exchange signed a Memorandum of Understanding with the NZX early last year. What was the purpose of this for the HKEX?

Fok: The long-term ambition for us is to develop the product offering in Hong Kong more widely. It is largely an equities market still today, and when you look at trading and market capitalisation, something like 80 per cent of turnover is on mainland Chinese companies. While this is precisely what attracts international investors, as we open up to more direct mainland China investors who already have a lot of China product to invest in onshore, we need to diversify our offering.

New Zealand isn’t the only country we have signed an MoU with.

Of course, on the stock side, New Zealand is not one of the highest priority markets — most Chinese investors looking to diversify will look to the US market. Instead, the purpose is to bring a more diverse range of products to the exchange. New Zealand has done very well in the agricultural milk future space — something that is potentially of relevance to mainland Chinese consumers, particularly given their consumption.

Promoting confidence

The NZX and Hong Kong (HKEX) exchanges signed a Memorandum of Understanding in January 2018 to further promote confidence and co-operation in Asia-Pacific markets. Under the terms of the memorandum, the exchanges seek to promote market development by considering opportunities in a range of areas, including foreign investment, derivatives, depository receipts, listed debt, dual listings and exchange-traded funds.

The NZX says:

  • This global alliance supports NZX’s commitment to increase its international presence, and our desire to expand the reach and connection of the New Zealand market, because growth in New Zealand’s public markets will come from having a wider range of listed products and increased market activity. Global alliances we initiated and are continuing to build with the Hong Kong, Singapore, Shanghai and Nasdaq exchanges support this.
  • NZX and HKEX have continued to work together since the memorandum was signed in January 2018. In April, NZX Regulation recognised the regulatory regimes and requirements for the Hong Kong, Singapore and Toronto exchanges. This allows companies listed on these exchanges to seek a secondary listing on NZX.
  • Seeking new ways to retain and attract customers has been a priority for NZX. It is vital to growing New Zealand’s public markets. Over the past 12 months, we progressed alliances with global peers to ensure that an NZX listing connects New Zealand issuers with the world.
  • Our relationships with the Nasdaq, Singapore, Hong Kong and Shanghai exchanges, and the transformation in our service offering to issuers, ensures we are developing a product that is relevant and competitive.

China Business: Why you can’t contain China (NZ Herald)

We’re in the midst of important structural shifts, says former World Bank President Robert Zoellick. Tim McCready reports

“China has had enormous progress over 40 years. It has had the most historic reduction of poverty in humankind,” says former World Bank President Robert Zoellick.

Zoellick, who led the World Bank through the global financial crisis and served as a US trade representative under President George W. Bush, points out that while Asian growth rates have been healthy, they have not been able to return to the levels they had before the 2008 financial crisis.

At the recent Asian Financial Forum he sent a message that the Asian growth model that was so successful for many decades would need to change.

Zoellick says  Asian economic policymakers have traditionally had a longer time-horizon.

“The old model began by relying on manufacturing at the low end of supply chains. It then integrated upward — adding efficiencies, learning, productivity — but relied on the assistance of exports to developed economies.

“I think that perspective is especially valuable today because we’re in the midst of some very important structural shifts.”

Though Asia has accounted for two-thirds of global growth in recent years, markets are nervous as major shifts are taking place: the end of the quantitative easing experiment and transition to a tightening cycle, slower growth in real trade over the past decade compared to the 20 years before the financial crisis, productivity increases in Asia, and the ongoing trade dispute between China and the US.

“Trade policies and rising economic nationalism around the world have disrupted commerce and created a great deal of uncertainty,” says Zoellick.

“Traditionally, governments put tariffs on final goods, but from 2010 to 2016 they focused on temporary trade barriers, targeting cross-border supply chains for raw materials and components.”

But while President Donald Trump’s hefty tariffs may have been intended to help US manufacturers by making foreign goods comparatively more expensive,  in reality, import taxes imposed on intermediate goods like steel and aluminium are pushing up prices of products manufactured in the US.

Belt and Road part of a new era

Zoellick says Japan, South Korea and Taiwan all offer cautionary tales — a bias towards incumbency and instrumentalisation has slowed the innovation process — and a rapidly ageing population and lower population growth are changing the dynamics. “We can see some of those trends in China today as well.

“One of the main challenges is: will Asia grow old, before it grows rich and wealthy?” he asks.

He says the new Asian model will need to focus on new and different types of supply chains, to meet the changing needs — first off — of the region itself.

He points to the Greater Bay Area as an example of how this transformation has already started in Hong Kong and China.

The Greater Bay initiative, established by the Chinese Government, links Hong Kong, Macau, and nine other cities within the Guangdong Province into an integrated economic and business cluster.

The 11 cities have a combined population of close to 68 million people — greater than the world’s largest city cluster of 44 million in Tokyo — and a GDP of around US$1.4 trillion (NZ$2.06 trillion).

The 55km Hong Kong-Zhuhai-Macau bridge-tunnel system which opened last year cut the drive time between the cities from up to three hours, down to just 30  minutes.

Zoellick sees the Greater Bay Area as a huge opportunity, but says the challenge for Hong Kong will be not only the hard infrastructure — railways, bridges, roads — but some of the soft connectivity to move capital, information, and people.

“Policies will have to focus on new cross-border logistics networks and the barriers that impede them, such as new infrastructure to facilitate trade, services, environmental conditions, energy access, standards, rules and a whole series of soft infrastructure issues, such as customs and tax procedures,” he says.

Zoellick says China’s Belt and Road Initiative could be an important part of the new Asian model — if it is correctly developed.

“Frankly, the world is still unclear about the real purpose of Belt and Road. Is it a move for geopolitical dominance across Asia?

“Is it a plan to export overproduction from some of the materials industries in China? Or is it a new corridor for development? How will other countries benefit?”

He says although it is important to focus on the new regional opportunities and obstacles of the Belt and Road Initiative, Asia must stay global in outlook. “For example, even with President Trump’s protectionism, consider the US economy.

“The private sector will continue to be the engine for innovation in the United States — whether it is big data, different business models, or biologics in medicines — Asia must keep linked into that to remain competitive and adaptive.”

A trade leadership vacuum

Zoellick says another important factor shaping trade in Asia is the way President Trump has seen the US abandon its previous role as a key player developing new rules for global trade.

“After some 70 years of a US-led system, I suspect that much of the world has taken the public good aspect for granted,” he says.

“People sometimes reacted against US behaviour and didn’t always agree with it, but because the United States is an innovative economy working at the cutting edge, US officials had to press for new norms and rules to help adapt the international system — in areas such as services, intellectual property rights, transparency, anti-corruption, investment, and even currency manipulation.

“When you consider developments in big data, along with things like personal sensors and innovation in medicines, they can have huge effects on health and are significant business opportunities — but only if the world develops the appropriate legal framework.

“Traditionally, the World Trade Organisation could help do this. But today the WTO is adrift.

“It will not be able to negotiate new rules unless the United States, European Union, China and others can reinvigorate the WTO.”

Zoellick says China might offer an alternative system, but if they do, the world is more likely to end up with a managed trade system.

“The big powers will emphasise national champions, political priorities and sovereign protections over a rule of law framework in which markets will operate relatively freely,” he says.

“That has very large implications for the small and medium-sized economies that have benefited enormously from a rules-based system over past decades.”

The ongoing trade war

Zoellick says that for the near term, he expects to see friction, accusations, and negotiations between China and the US become a fact of life and add to ongoing uncertainty.

But some of the tensions between the two economic giants go beyond Trump and are concerns held across the American political spectrum and among voters.

“A transactional deal would not address the fundamental issues which are causing widespread concern in the United States — including questions about the Belt and Road Initiative and the ‘Made in China 2025’ strategy, which has created anxiety that China intends to dominate advanced technology.

“These concerns are part of the political debate in the US,” he says. “The US cannot decouple from or contain China, but it can work together with China to make sure the rules are followed.”

Zoellick says that although Trump is a protectionist by nature, he will be sensitive to the market.

As he begins to think about his re-election — and particularly if the US economy slows down — he is more likely to do a deal.

“However, if there is a deal, I think we have to recognise that it is more  likely to be a truce than a solution,” Zoellick says. “Part of my concern is that I’m not sure President Trump thinks in systemic terms.  He thinks in deal-making transactional terms.”

China Business: Taking a fresh approach (NZ Herald)

The fresh food e-commerce business is growing in China as Tim McCready reports

Chinese e-commerce giant Alibaba Group launched the sale of fresh produce in 2016 with the introduction of its Hema supermarket chain. These stores have been established as a test bed for what Alibaba calls the “New Retail” concept: the blurring between shopping online and offline.

In order to keep products fresh, Hema’s fresh grocery items are packaged in small quantities — with just enough food portioned out for a small Chinese family.

The supermarket — which doubles as a warehouse and logistics facility — encourages shoppers to buy online using their mobile phones. Alibaba’s smart logistics technology means that as long as the consumer lives within a 3km radius of the store, products will make it into their hands within 30 minutes of ordering.

Last year, Hema supermarkets in Beijing and Shanghai launched a 24-hour delivery service — again with a 30-minute delivery window.

“We found that New Retail doesn’t only merge online with offline, but also connects day with night,” said Hema CEO Hou Yi. The around-the-clock offering includes most items in store, aside from some fresh produce. Cooked meals are available for delivery until 1am.

Hema’s presence in China has expanded rapidly, with the chain now in 80 locations across the country.

Consulting firm iResearch says China’s fresh food e-commerce industry grew by 59.7 per cent in 2017 to 139.1 billion renminbi (NZ$30.13b), noting that fruit is the most popular food item purchased online. Dairy products and vegetables ranked second and third, respectively.

More players are moving into the fresh grocery space. China’s second-largest e-commerce retailer behind Alibaba,, last year launched its 7Fresh supermarket chain. Like Hema, 7Fresh focuses on fresh food, and promises 30-minute delivery to locations within 3km of a physical store. During its trial period, said more than 10,000 customers visited the 7Fresh supermarket each day. now plans to open 1000 grocery outlets in the next three to five years.

“Our goal is to expand 7Fresh supermarkets into every first and second-tier city and the surrounding areas of those cities,” says Wang Xiaosong, CEO of 7Fresh.

Another fresh produce e-commerce platform, MissFresh, was founded in 2014, and now operates in 20 Chinese cities, specialising in one-hour deliveries of produce.

In September last year, MissFresh completed its Series D fundraise, raising US$450 million (NZ$661 million) from investors that include Goldman Sachs and Tencent Holdings Ltd.

At the time of the raise, founder and CEO Xu Zheng said MissFresh planned to set up 10,000 front-end warehouses in 100 cities around China, which will allow them to provide one-hour deliveries of fresh produce to 100 million families.

The funds from the raise would be used to develop the company’s supply chain, cold chain logistics infrastructure and its smart retail technology.

Food safety, traceability and provenance

Along with a focus on fresh food and fast delivery, supermarkets in China are placing an increased importance on demonstrating food safety and provenance to consumers.

This stems from various food safety incidents in China — most notably the 2008 melamine milk scandal — which have created deep distrust from consumers in food supply chains.

Detail on the origin of products can also help them to stand out as premium products in the minds of the consumer.

Alibaba’s Hema supermarkets encourage customers to scan QR barcodes that accompany every product with their phone. This allows them to receive further information: including how to prepare it, recipe ideas, and its provenance.

Details of the journey of a fresh food item from farm-to-store can include pictures of the distributor’s business licences and food-safety certificates, information on when a particular crop was harvested and the date the item was delivered to the store. For products that need to be kept at a particular temperature — such as meat and fish — the system can provide details on how cold the inside of the delivery truck was during transit.

To further bolster the confidence customers have in its products, Alibaba joined a consortium of four Australian and New Zealand companies last year, to introduce a food traceability system based on blockchain technology.

The consortium — known as the “Food Trust Framework” — includes New Zealand’s dairy giant Fonterra and New Zealand Post, along with Australia’s Blackmores and Australia Post.

A joint statement said of the initiative: “it will use an immutable central ledger to achieve end-to-end supply-chain traceability and transparency throughout the supply chain to enhance consumer confidence and build a trusted environment for cross-border trade.”

The supply chain traceability cross-border trial recently concluded. An Alibaba spokesperson says:

“Following the success of the trial, Alibaba Group will continue to invest in and develop solutions to provide brands and consumers increased confidence and assurance in the supply chain for products sold from New Zealand to Chinese consumers.”

Rural growth

It is estimated that 27 per cent of China’s internet users are based in rural areas, and e-commerce giants are keen to tap into this market, with plans underway for massive development and expansion into inland regions.

Last year, received approval from China’s Civil Aviation Administration to test a drone delivery network in the northwestern Shaanxi province.  The company also announced plans to build 185 drone airports in Southwest China., which has already been operating drones for deliveries since 2016, says it hopes the new drone airports will allow agricultural products from Sichuan to be delivered anywhere in China within 24 hours. “Due to the high costs of logistics, agricultural products sell at a higher price in cities while industrial products sell at higher prices in rural remote areas,” says CEO Liu Qiangdong.

Alibaba has established a “Rural Taobao” initiative, that aims to sell products to regional customers at urban prices, and create efficient supply chains for rural produce.

As part of the project, Alibaba has established a network of 30,000 e-commerce service centres that enable villagers to purchase products online.

General manager of Rural Taobao Bill Wang says: “We want to improve the living conditions of China’s rural regions. To do so, we need to provide high-quality goods, personalised services, smart logistic solutions and prices comparable to that of the cities.”

These moves from e-commerce giants align with the Chinese Government’s National Strategic Plan for Rural Vitalization from 2018 to 2022, which calls for significant progress in rural rejuvenation. The plan has ambitious goals to close the gap between urban and rural areas, eliminate poverty and improve governance in the countryside.