Six strategies for Australian businesses entering China’s eCommerce marketplace
The Alibaba Group’s inaugural eCommerce Expo that was recently held in Melbourne provided Australian businesses valuable insight into entering and thriving in China. It also reminded them of two key features of the China market – its massive size and highly complex landscape.
China has an estimated 700 million eCommerce users, a growing middle class population and an advanced eCommerce ecosystem that puts it far ahead of even the United States of America. Non-Chinese entering the China market will find it a mind-boggling one, not just from a language and cultural perspective, but also around how business is conducted there.
And so Australian merchants who are serious about selling there have to really understand China’s eCommerce marketplace. Here are my six strategies for Australian businesses entering that marketplace, based on Australia Post’s experience in China and takeaways from discussions at the Alibaba eCommerce Expo:
Every Australian business needs a partner in China and it has to be the right one. I cannot emphasise this strongly enough. Your partner should understand where you want to take your business, how to make the most of your marketing budget and whether your timelines are realistic. In the eCommerce space you’re competing globally and not just with a couple of other Australian brands. It’s easier to say, “I just need 1% of the Chinese market” than to actually get it.
Every stage of your China journey will also require different partners. New entrants will need help with simple issues around regulations, labelling or logistics. More established companies will face complex issues like subsidiaries, China offices and domestic competition.
Your business will also need a different partner in each city. China has 31 provinces - each with a very different set of regulations. It’s impossible to find one single partner who can cover the whole of China and I haven’t heard of any business that has successfully done so.
While Alibaba’s initial positioning was around eCommerce, today’s conversations are about the consumer journey from online to offline. The combination of both is critical. If you are a new entry in the market, online would be the way to start, but as you mature in your engagement with China, you must think about offline as well. It’s about giving consumer the choices they want and value.
Australia Post entered China 11 years ago through a joint venture with China Post. Yet we only started seeing real returns over the last two years. Last year, we doubled our business and this year we’re on course for five times the business. But it has taken time and a lot of patience.
Australian businesses that have spent time in China will know the importance of engaging heavily in social media, finding the right partner and offering the right product at the right price. And then overlaying that with an understanding of how Chinese consumers view overseas products - it’s very different from how non-Chinese consumers view Chinese products.
If you want to do business in China, you have to actually visit China. When I’m there, I spend a lot of time talking to companies in the industry and different partners across media, logistics, marketing and even recruitment. Understanding how they view the China market will give you additional insight into doing business there.
I also read the Chinese papers because their view of the world is very different from what’s in the Australian papers. You won’t have full visibility of what China is truly about if you’re only reading Australian papers.
China is on its 13th five-year plan. It has 45 years of economic development during which it has advanced to where it is now. The blueprint clearly states which industry will focus on each five-year plan. The last five years prioritised international expansion and going green. So my advice to any business moving into China is to familiarise itself with that five-year plan.
In China, bigger and faster is always better. This is something Australian businesses need to think about. China has a very short timeline and it accelerates at full speed, which is sometimes tough for non-Chinese companies to understand and keep up.
The good news is that Australian products are highly sought after because of their reputation for being clean, green, authentic and valuable. Ride on that reputation and you’re halfway there.
This article is provided for general information purposes only and is not intended to be specific advice for your business needs.