China is the largest e-commerce market in the world, with over 460 million online shoppers and US$750 billion in sales in 2016.
According to Goldman Sachs, China’s online retailing is expected to double by 2020.
The rise of the Chinese affluent and upper middle-class in combination with the disruptive purchasing power of Chinese millennial consumers means that this demand is unlikely to slow down anytime soon. What’s more, it opens significant opportunities for Australian businesses.
Shopping festivals and the demand for international products
China’s e-commerce environment and consumer behaviour is unlike anywhere else in the world. For one, there’s the proliferation of online shopping festivals that entice consumers to go on a spending spree. The most famous example of this is Alibaba’s Singles Day – which is the world’s largest shopping event. In 2017, shoppers spent more than $33 billion within 24 hours, topping the combined Black Friday and Cyber Monday sales. Valentine’s Day, Woman’s Day and Children’s Day are other examples of the occasions that China’s ecommerce giants have turned into a reason to shop.
Yet, it’s not just local brands that are involved in these massive retail events. In 2017, there were more than 60,000 international brands selling their products during the 24-hour Singles Day frenzy. Australia was the third-highest selling country (outside of China), behind the United States and Japan. So who is driving this demand for international products?
Millennials – the driving force behind the demand for international products
Chinese millennial consumers are the driving force behind future growth in spending. According to BCG, consumption by young Chinese consumers is growing at 14% per year – which is twice that of the older Chinese generation.
This new generation is more willing to spend on quality products and leisure activities to enhance their lifestyle. They also aspire to own more. As the world’s most brand conscious, they have a strong emotional connection with brands that ‘fit their personality’.
What Australian products are in demand?
For Chinese consumers, Australian products are almost synonymous with health and wellbeing. According to Bain & Company Report, Chinese consumers were 1.6 times more likely to associate Australian brands with health and nutrition than the US, Germany, Japan and South Korea.
It’s no surprise then that Australian health foods and supplements are in high demand in China and have a competitive edge.
In recent years, we have also seen a growing demand for premium products and services. Online searches for milk products, skin care and cosmetics have been increasing. This is because there is a general perception that international products are of higher quality.
What’s more, with China’s infamous milk powder scandal, heightened safety concerns have led to a preference of foreign brands over domestic ones and parents are willing to pay a premium for them.
Laying the foundations for your business success in China
While natural health and food products from Australia have an inherent advantage, it doesn’t mean that they will sell by themselves as soon as you list them on Tmall or any of the other Chinese e-commerce sites.
As previously mentioned, Chinese millennial consumers are very brand conscious, and they have a lot of choices. Add to that rampant issues with counterfeit products and it’s no surprise that Chinese buyers do extensive research online before purchasing from an unknown international brand.
For Western businesses looking to capitalise on this growing market, taking control of their brand presence in China is therefore key to long-term success. A Chinese website that is adapted to the local digital ecosystem and can be accessed in China is a great start.
Not only will it ensure that Chinese consumers can find reliable information about your brand and quality standards, but it also gives you the opportunity to list your official online and offline distributors, helping to build trust and confidence in your offering.
Social media marketing through a WeChat official account is a great starting point for getting some initial brand reach and building an engaged following of repeat customers.
Nicolas Chu is CEO & Founder of Sinorbis, a company offering innovative digital marketing solutions for Western organisations doing business in China. www.sinorbis.com