China is your marketplace

China’s e-Commerce trade is worth more than $US600 billion (about $762 billion) annually – and counting. Australian exporters are reaping the rewards but there are lessons to be learned.

As the wealth of individuals in the planet’s most populous nation grows, Australian exporters dream of cracking the Chinese market. Many a success begins with a fantasy but the reality is that China is a complex market. Government regulations are fluid, eCommerce shoppers have unfamiliar expectations, counterfeiters are ready to hitch a ride on your brand and it can be a challenge to simply ensure safe delivery to your customers.

TRADING IN CHINA

The 2015 China-Australia Free Trade Agreement led to a big increase in eCommerce between the nations. This benefited Australian manufacturers in several ways, including the fact that imports were no longer subject to some of the regulations that previously made trading in China prohibitive for many companies.

“It’s quite a complex system,” says Tim Brown, Cross Border Marketplaces Manager for Australia Post. “The good thing is that, from an Australian perspective, eCommerce has a couple of routes into China. You can sell to China from your warehouses in Australia and ship with us directly to your customer. When your volume gets to a certain level, you’ll start looking at putting products in warehouses in China, to reduce the first part of the fulfilment cost, and that’s something we can assist with.” BE MORE SOCIAL Having a presence on social media platforms that are popular in China – such as Weibo and WeChat – is critical for Australian exporters operating in China’s eCommerce market, which is the biggest in the world. There’s a lot of noise to cut through and investment in some local influencers to help with marketing may be required. About 70 per cent of Chinese customers use social networks for shopping information and inspiration, according to PwC’s report, eCommerce in China: The Future Is Already Here. On 11 November 2016, the Double 11 Global Shopping Festival hosted by Chinese eCommerce company Alibaba Group generated $US17.8 billion (about $22.6 billion) in gross merchandise volume in 24 hours, with Australia the fourth top-selling country.

ENSURE AUTHENTICITY

Beauty, baby products, skin care and food have been Australia’s boom categories, and for those goods (and other growth markets such as wine) the ability

“About 70 per cent of Chinese customers use social networks for shopping information and inspiration.”

to guarantee authenticity is vital. Chinese consumers, who, with good reason, are wary of counterfeit products, are increasingly demanding traceability from source to delivery. Alibaba Group and Australia Post have a pilot project running with PwC as a service provider to build a recognition framework for Australian suppliers. Blockchain technology is being used to digitally and securely trace goods from the manufacturer to the customer’s hands.

“It’s important for us to use this new technology to build trust in the supply chain,” says Maggie Zhou, managing director for Alibaba Group in Australia and New Zealand. “We want to safeguard these valuable, authentic products from the origin to the end, to ensure that consumers get the genuine products they’re expecting from suppliers in Australia.”

FOCUS ON RELATIONSHIPS

While such digital linking is impressive, old-fashioned business connections count for a lot in China, too. “Chinese business relationships really are relationships,” says John Humble, CEO of Melbourne-based company BWX, which manufactures skincare brand Sukin. His company launched into the Chinese market with intent in 2016, following some years of building awareness through the immigrant community in Australia and

daigou shoppers, who onsell to buyers in China (this remains an important part of the Sukin business).

Humble says it’s imperative to connect with strong partners in China and be on the ground frequently. “It takes a little bit of work and it doesn’t happen overnight. But when you develop those relationships, they’re terrific and it’s a great way of doing business.”