By Raj Wilson
With the rise of China’s online shopping malls, an increasing number of Australian companies are looking to use these platforms to sell their products to China’s burgeoning consumer classes.
The country’s e-commerce sector is expected to surpass RMB 6.5 trillion in total volume this year, and official figures released in January revealed over half of China’s 1.38 billion population is now online.
This means that the number of Chinese consumers online is now more than 32 times the number of Australians online.
While this presents an unprecedented opportunity for Australian exporters seeking new customers, some recent regulatory reforms have emphasised how quickly the sector is changing and caught some businesses off guard.
Although the China Australia Free Trade Agreement (ChAFTA) improved market access for a large number of Australian products, recent changes to e-commerce channels shows the regulatory regime behind getting these products to market in China is still evolving.
Not surprising, given the scale and pace at which e-commerce is growing in the country, the Chinese Government is seeking to more closely regulate the sector, and has brought in some rule changes on cross border e-commerce.
In April, it introduced a ‘positive list’ of 1142 categories of products (listed in two documents, available here and here) that are permitted in cross-border e-commerce, and changed preferential tax policies on many of these categories.
For Australian exporters, a number of the 1,142 products on the positive list are of note. Wine, honey, vitamins, cosmetics (such as lipstick, eye makeup and nail polish) and many dairy products such as milk formula, butter, dairy spreads, cheese and yoghurt, are all listed – meaning they can continue to be sold via e-commerce.
Customs clearance forms and registration requirements for cross border e-commerce products were also brought in line with products imported under general trade.
The rapid way in which the changes were announced caught a number of international businesses (and Chinese distributors) off guard. Consequently, a new Chinese Government circular released late last month established a 12-month grace period until May 2017.
The new regulations have caused some short-term confusion, with a number of Australian businesses still unsure how their online sales will be affected. But the fact that Australian products most in demand by Chinese e-consumers are included in the positive list – and that the Chinese government did respond to businesses’ initial concerns by granting a grace period – is good news.
Moreover, products that are not on the list, such as fresh milk, can still be sold into China through other channels.
So despite the short-term uncertainty created by the new regulations, the reality is the opportunities for Australian producers remain strong. And China’s phenomenal e-commerce growth is showing no signs of slowing down.
The Chinese Government has set the target of connecting 1.2 billion people to high-speed mobile internet by 2020, highlighting not only the sheer volume of internet users China will soon have, but also just how ‘mobile active’ they will be.
Many internet users in China have skipped the desktop phase entirely, and are accustomed to accessing sophisticated, mobile-optimised e-commerce platforms through their smartphones and tablets.
The rise of online shopping giants JD.com and Alibaba-backed Tmall, Tmall Global and Taobao, have signalled a new era of cross border commerce, meaning consumers can now quickly and easily purchase well-regarded international products that were previously inaccessible. Alibaba has recently announced it will establish an office in Australia to service the Australian and New Zealand markets.
Recent research by Google shows that Chinese consumers are shifting to international e-commerce platforms to access attractive offers, a broad range of products, and higher quality service and payment systems.
Effective use of these online platforms in China can give Australian producers access to a new and significantly bigger consumer base.
At a recent series of e-commerce workshops held across Australia by Asialink Business and Food Innovation Australia Ltd (FIAL), Rod Arenas, FIAL market development manager, said e-commerce is already presenting a significant opportunity to a number of Australian companies, especially in the agrifood sector.
“Australian made food and beverage products are internationally recognised as clean and premium,” Arenas said.
“Demand for Australian food and beverage products is at an all-time high among Chinese online shoppers.
“The key advantages for Australian exporters are our global reputation for quality, safety and traceability, as well as our proximity to Asia, which means longer shelf life in-market for products.”
Australian supermarket Woolworths launched an online store on Tmall Global earlier this year, marketing its Select and Gold labels in China.
Swisse, recently acquired by Hong Kong-listed Biostime International for $1.67 billion, is another well-known success story in China. It is now the number one online vitamin brand in China, with a flagship store on Tmall launched in March this year.
The evolving nature of China’s e-commerce opportunity highlights the need for Australian companies selling products to China to continually stay up-to-date and informed, and adapt their marketing and sales strategies as the sector grows and changes.
Even seemingly minor and under-publicised reforms can very quickly affect established sales channels, marketing strategies and profit margins.
For small businesses starting out on China’s e-commerce platforms, having an agile strategy that can adapt to law changes is vital. If not, you risk getting left behind as China’s e-commerce juggernaut goes full steam ahead.
Raj Wilson is the director of marketing and external relations for Asialink Business and has over 20 years’ experience in assisting Australian and international businesses to achieve results in Asia.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
