Australian businesses are eager to cash in on the massive Chinese market – but with even big-name brands like Amazon struggling there, what hope is there for smaller Australian firms?
Plenty, if Maggie Zhou has her way.
As Australia and New Zealand managing director of Chinese e-commerce giant Alibaba, Zhou established the local operation and has spent the last three years positioning the company as a facilitator of Australasian e-commerce into China.
“Many of the brands are [popular] here but are very new to the China market,” Zhou told Information Age from the floor of the company’s recent Alibaba E-commerce Expo in Sydney.
“There is no brand awareness for them to go to China directly, and it is really hard to break through. We created this platform to help them lower the barriers and connect them with partners in our ecosystem.”
Since Zhou’s Alibaba signed a partnership with Austrade in September 2016, over 2,000 Australian brands – and 700 more from New Zealand – have jumped aboard the Alibaba bandwagon, pushing onto its Tmall online-shopping site.
Within two years, Australia had become Alibaba’s third-largest overseas market and delivered fairytale results for brands like Chemist Warehouse – which leveraged Alibaba’s Tmall Global and Chinese logistics network to turn over more than RMB100m ($A21m) during last year’s Double 11 Shopping Festival alone.
Exhibitors from 127 regional brands turned up to play to Alibaba’s strong Chinese customer base – with particularly strong showings from healthcare and beauty brands like Antipodes, Bees Brilliance, Camelbak, CQAUS, Eimele, Genzon Water, Innerhealth, Jerseyjoy, and others.
Popular Chinese key opinion leader (KOL) Lia Baby was on hand, showing around 60 Australian brands to her 2.2m followers in a Taobao live-streaming session that went until 2am.
Sinophile Australian retailers have been pushing to cash in on the ‘daigou’ phenomenon – which has seen an estimated 150,000 Chinese personal shoppers buying and shipping Australian products including, controversially, baby formula.
Many daigou already use Alibaba’s services to provide personalised shopping services, but Zhou has been working to bring them onside by repositioning them as ‘merchandisers’.
“A daigou is to deliver things from A to B,” she explained, “but merchandisers should be very professional about the brand story – what is the feature of the product, what is its function – so they can tell a story to Chinese consumers.”
Alibaba is leaning heavily on technological innovation to improve the way those stories are told.
New technologies such as augmented reality, artificial intelligence and Internet of Things (IoT) devices, for example, were being demonstrated as ways to enhance the shopping experience for Alibaba customers – as was the ‘snap to shop’ visual-search capability that Alibaba debuted with Australian online fashion brand The Iconic.
Mirroring the strategy of Amazon – which recently closed shop in China after failing to gain traction in the market – Alibaba has expanded its back-end services into standalone businesses that have been massively successful.
The event hosted simultaneous conferences for the company’s Alipay payments system and Alibaba Cloud platform – a fast-growing rival to Amazon Web Services and Microsoft Azure that led the APAC market with 19.6 per cent market share in a Gartner evaluation this year.
Making Chinese visitors feel at home…
Alibaba’s strong technology base, social-media popularity and e-commerce nous have helped it build a massive brand-driven ecosystem, which was poised for a further boost with a $US10b to $US15b ($A15b to $A22b) Hong Kong IPO that has been delayed due to the ongoing protests in that city.
Despite its e-commerce might, however, the firm isn’t out to take on Australian payments giants at their own game.
Alipay, which uses QR codes rather than conventional credit cards, secured early support from Tyro but struggled to break through in Australia until last December, when the Commonwealth Bank added Alipay functionality to its 94,000 Albert point-of-sale devices; NAB, ANZ and Westpac are following suit.
Chinese tourists spend over $10 billion in Australia every year, and providing Alipay allows them to transact here using a familiar and well-integrated payments platform.
The company has leveraged its growing payments network to build interactive mobile guides for tourists, which point them to Alipay-friendly local restaurants and merchants – “a mini tour map”, as Zhou says.
A Sydney-based pilot earlier this year boosted AliPay payments by 20 per cent, leading Melbourne to sign onto the scheme in July.
… and bring their favourites back with them
There is a long-tail strategy at play as well, with evidence suggesting that the experiences of Chinese tourists to Australia are shaping their long-term brand loyalties.
According to the recent Australia China Business Council’s Australian Brands in China (ABC) 2019 index, the top 10 Australian brands in China are all alcohol and tourism mainstays such as Adina Apartment Hotels, Qantas and Virgin Australia, XXXX, Lindeman’s Wines and Bundaberg Rum.
Australian goods are also popular with shoppers at Alibaba’s Hema supermarket chain – providing a lifeline for expansion-minded Australian companies that lack the brand, capital or business know-how to take on the Chinese market directly.
That path is littered with the corpses of ambitious but ill-prepared contenders like Uber, Groupon, Home Depot, Nike and Walmart – who fail to appreciate the importance of aspects such as scaling, language, cultural sensitivity, market research and effective partnerships.
“The challenge is building the capability for these merchants,” Zhou said, “and we will do more education workshops and networks to help businesses learn from each other.”
“People are excited about these opportunities, and I am looking forward to their success.”