China is the world’s largest and fastest growing e-commerce market.
And with an estimated 225 million middle class citizens – almost 10 times the size of Australia’s population – it is a market that is impossible to ignore.
Affluent Chinese consumers are hungry for high quality and ethical products from across the globe – including Australia.
The cross-border shopping boom has created unprecedented opportunities for Australian business.
The digital consumer landscape in China is rapidly changing, says Don Zhao, co-founder and executive director at Azoya, an e-commerce solutions provider that helps overseas retailers break into the China market.
“Customer behaviour and traffic has been changing fast,” he said during a recent visit to Sydney.
Since 2014 local e-commerce in China has been flat-lining, while cross-border sales have been rocketing.
“Consumers now have a wider more detailed knowledge of overseas brands,” Mr Zhao told Dynamic Export.
“There is a new generation of consumers who are keen to buy new good quality overseas products that are affordable.
“They are now more experienced with more demanding expectations from retailers.
“They want more diversity of products and more knowledge about those products.”
Big demand for niche brands
The Chinese government crackdown on corruption two years ago has turned consumer focus away from luxury goods to lifestyle “niche” brands.
“Cosmetics brands such as Aesop (an Australian skin care brand owned by Brazilian company Natura) are very popular with Chinese e-commerce consumers,” Mr Zhao said.
Azoya has already assisted a number of major Australian pharmaceutical companies such as Sigma Pharmaceuticals (Amcal), Pharmacy Online, Roy Young and Pharmacy 4 Less establish a strong e-commerce presence in China.
Mr Zhao was visiting Sydney to attend the recent Retail Leaders Forum, which featured a presentation from Sigma Pharmaceuticals.
“Our main focus in Australia has been on nutrition, mother and baby and beauty products,” Mr Zhao said.
“But Azoya is now looking to expand its Australian network into other sectors including kitchen products, cooking ware and fashion accessories.
“We have been having discussions with several companies including a major department store.”
Not all products are suitable
Before Azoya accepts a new brand, a full assessment must be made.
“We probably decline about 95% of enquiries,” Mr Zhao says.
“This is because not every business will be successful in China – not all products are going to be suitable to the market.
“We must assess their price competitiveness, their margins, company reputation and product categories.
“Most importantly we check their self-fulfilment capacity – how many orders they can fill each day.
“If it is less than say 200 orders a day that will be weak in terms of e-commerce capacity.”
China is a complex market
Mr Zhao says many Australian SME companies would struggle to compete in the high volume online China market.
“China is not an easy market, he admits. Businesses often underestimate the complexities … not only the consumer market but also government policies.
“Customers are very different in various regions of China and you have to be aware of those differences.”
Mr Zhao has ambitious plans for the Australian companies he represents to double sales in China this year with a target of $80 million firmly in sight.
Established in 2013, Azoya has signed exclusive agreements with the largest number of overseas retailers in China.
The company has assisted more than 35 overseas retailers in 11 countries, such as La Redoute, the largest online retailer of women's apparel in France and Feelunique, the largest online premium beauty retailer in Europe.
Azoya’s services include e-commerce cloud hosting, e-commerce platform setup, managed operations, warehousing and logistics, branding and e-marketing, RMB payment settlement and consultancy.