Hi Treit,
I was basing my hypothetical scenario off of Mr. Solomon's statement to Johngalt's post #4766 wherein he said:
"We have contracts in hand to build more APT based on the success results of the 1st farm."
This to me clearly suggests multiple partners ready to start a fish farm. I agree with you that such partners can, as you said, "go to Australia to taste the fish and monitor the timing of maturity and sales." Yet, clearly, according to Solomon's statement these very partners have decided they want to wait until the first Chinese fish farm is up and running despite whatever research they may have conducted in Australia. It is because of this that I thought they may likewise want to wait for the full cycle to finish, that is, till the fish are all sold, before jumping in. The fact that there are multiple partners involved also implies they each are apt to have different benchmarks they are waiting for in regards to the prototype farm. My suggestion that they might wait until the fish have all been sold was simply the most conservative model.
As far as moving 500 tons of fish, I agree completely that this is a drop in the bucket from a national consumption level. But each of the partners, presumably, is going to situate his/her farm in a unique location and will each need to break into the local markets they find themselves in. It is these local buyers that I was referring to when I said they'd probably want to limit the size of their orders until after they have proof this new supplier, namely, the SIAF partner, is reliable and has good fish. So I wasn't talking about the partners' wanting proof that the fish tasted good, but instead these local buyers who obviously aren't going to be investigating companies in Austratlia to determine whether or not they should buy from a local seller. Likewise, of necessity, all these local buyers want fresh fish since the shelf life is so short. As such, initially at least, it seems feasible that the fish farms may take, say, 30 days--a complete guess--to sell out their whole 500 tons through multiple repeat sales to local buyers who have no facility to keep the fish alive once they purchase them. But however that may play itself out, it will require time and negotiations both with local buyers and with setting up or hooking into a delivery system. So it doesn't strike me as unreasonable that one or some of the partners waiting for the first fish farm to prove itself will want to see how quickly this facet of the business can be executed before jumping in. (Of course, any day another partner could show up and just wants to get underway as a result of doing dew diligence with the Australian models.)
As for that other quote from Solomon, namely,
"... the key to success ... will be to consolidate our marketing and distribution network."
I agree with you completely that what he's talking about is an over arching system that will itself add more revenue to the company. But they'll be no getting around cracking into new local markets as a stepping stone to establishing this much larger and more comprehensive system that they are envisioning, especially since it will be the parnters, presumably, not SIAF, who determine where they want to establish their farms.
Anyway, I have no desire to defend my hypothetical scenario as such, but since it seemed to me you misunderstood some aspects of that scenario, I thought a few comments might clarify what I had meant. Beyond that, though, I have no doubt that you (and many others) have a better grasp of the business metrics of the company than I do as that is not my strong suit.
Steve
commentIt seems'm not quite sure just what you were disagreeing with in my previous postsuspect we're in greater agreementwas putting for that hypothetical scenariohave no interest
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