In a year marked by heightened geopolitical tension and outright military conflict, the thawing trade relations between China and Australia provide better news in terms of paving the way for multi-billion dollar trade.
After a four-year absence of a physical meeting between the country’s leaders, Anthony Albanese and Xi Jinping last month sat down for an hour-long chat and pledged to resume annual dialogue.
China already has removed the punitive tariffs on Australian barley and intends to abolish a 200 per cent impost on Australian wine. An unofficial ban on lobsters has also gone, while it’s expected that tariffs on other products including timber will also be normalised.
Imposed suddenly three years ago, the sanctions stifled $20 billion of Australian exports to the Middle Kingdom.
The renewed panda diplomacy has positive implications not just for banned products, but for the resumption of Chinese visitations and tourism to Australia.
According to the federal government, Chinese visitations are steadily recovering post-pandemic, with 79,040 Chinese travellers welcomed in the month of July.
(The number doesn’t include Adelaide Zoo’s giant pandas Wang Wang and Fu Ni, who are on loan from China and are likely to be here for longer).
Travel between Australia and China will also open under visas that will last for three to five years, to allow for easier business travel and to bring in more Chinese tourists and students.
One company poised to benefit from the liberalisation is the ASX listed Aumake (AUK), which is preparing to re-establish its physical presence in Australia after the pandemic forced a hasty retreat.
Since listing via the shell of the failed Titan Energy Services in 2016, Aumake has been fostering the promotion of Australian goods and services to the Asian market.
The low-key Aumake is busier than what its sub $10 million modest market capitalisation implies, having entered deals to bolster its presence in the inbound Chinese tourism sector.
The Parramatta-based Aumake sells its own-branded products in China, including health supplements and wool and skincare items – and is looking to expand this business though both online and offline channels.
Aumake co-founder and managing director Joshua Zhou says while Aumake was hard-hit by the pandemic, it managed to navigate the crisis and learn from it.
The hard medicine included reducing staff and negotiating the return of unsold inventory and closing the company’s 15 physical stores in Australia.
“As a result, Aumake has transformed its product development and market channel strategies and is leveraging its robust sales to introduce new brands and products,” Zhou says.
Aumake operates its eponymous social ecommerce marketplace platform, which connects Asian influencers and consumers with quality authentic Australian and New Zealand brands. This increases engagement with users and customers and allows the offerings to be reviewed transparently.
Aumake is also partnered with HK Huibeijia Brand Manage Co (HKH), which operates both online and physical stores across China. The latter includes more than 30 flagship online stores and more pop stores, with access to more than 1000 physical stores across over 20 provinces.
In an August 2023 strategic update, Aumake said it would hone its product development and marketing channels in anticipation of Chinese visitors returning to Australia.
“More specifically, Aumake is looking to outsource the operation of [its] retail outlets in Australia to selected licensees, such as tourism retail stores and Chinese community diagou stores,” Aumake chairman Stepehen Harrison said in the company’s 2023 annual report.
“This strategy allows Aumake to reach customers very efficiently with its branded products, without the need to open and run its own stores.”
In keeping with this charter, in November the company entered a non-binding agreement with the Hunter Valley-based Petersons Wines.
The idea of the tie-up is to offer premium tourism experiences for the Asian market, complemented with co-branded wines. Aumake also proposes a Hunter Valley marketplace to facilitate bookings (including customised tours) and showcase the region’s charms.
The company already is partnered with Grand Australia International Pty Ltd (GAT), which provides customised group and private tours for Chinese tourists in Australia. GAT is a key operator in the sector, having handled more than 50,000 tourists annually before the pandemic hit.
Aumake also unveiled a “strategic framework agreement” with China Animal Husbandry Group (CAHG), a Chinese state-owned agribusiness.
CAHG supplies the Amourlait brand of premium, NZ-made dairy products.
Aumake says it will restore the business connection with CAHG subsidiary BODCO Company, which supplies nutritional and lifestyle milk powder products globally.
In the September (first) quarter, Aumake reported cash receipts of $6.4 million, well above the June quarter tally of $297,000.
This performance was also a sharp improvement on the year to June 2023, when revenue fell 55 per cent to $2.67 million because of the absence of Chinese students and tourists in Australia.
As of the end of September Aumake had a slender cash balance of $764,000. But subsequently the kitty has been topped up with a $1.487 million placement to existing institutional and sophisticated shareholders.
“The additional funds will ensure the company is well placed to carry out its new operational strategy and capitalise on improving Australia-China relations,” Zhou says.
