China’s economic rise has been well documented, and give opportunities to Australian Business in China. There are now 350 million middle class consumers and with rising disposable incomes comes changing expectations and standards. There is a strong drive towards ‘international’ products and services, in-fact the label ‘international’ and more specifically ‘Australian’ has become a byword for quality in a marketplace commonly associated with counterfeit goods and poor quality Chinese customer service.
32% of the Australian exports to China
This is evidenced by the fact that the Middle Kingdom is Australia’s largest export market with a whopping 32% of the nation’s total exports. It’s not just about exporting though, with inbound Chinese tourist numbers increasing year on year and Chinese property investment at a record high.
The discerning consumer is demanding change and Australian businesses are set to continue to benefit from their positive reputation and business acumen in China, both in terms of selling in China and selling to Chinese in Australia.
Australian Business in China
A two-way investment relationship
Australia is China’s sixth largest trading partner; China’s fifth biggest supplier of imports and its tenth biggest customer for exports. A two-way investment relationship is developing between the nations with preferential trade agreements benefiting both parties.
It is important for Australian businesses to be decisive and seize the opportunities presented by the growing middle class, changing consumer patterns, and this two-way investment relationship. The conditions are more favorable for significant lead generation in China now than ever before.
An Attractive Proposition
With its relatively close geographical location, similar time zone and strong trading links Australia is arguably in the most beneficial position to expand its reach and tap into China’s 1.4 billion strong population. Indeed, the population of Shanghai, at 25 million, is greater than the total population of Australia. It goes without saying that only a small slice of this pie can yield extraordinarily lucrative results.
In China EVERYTHING is online
With China’s marketplace booming it’s vital to seize your chance and invest in building your brand in the most effective way. The answer in China is digital. With an internet penetration rate of 55% there are now 800 million users online. With the growth of cross border e-commerce and Chinese-specific platforms catering for consumers, it’s vital to build a presence and reputation on the right platforms in order to reach your target community.
No Google, Youtube, Amazon, or Facebook. Instead, businesses need to operate on major platforms such as Baidu, Youku, WeChat, and Tmall to tap into the 800 million potential customers spending an average of two hours a day online.
In China, you need to invest in digital marketing
Five years ago a more traditional offline approach would have worked in line with an online presence.. now with everything moving towards mobile and online business in China, digital has become essential.
The digital economy is growing at seven times the rate of the traditional economy. Chinese consumers go online, and they then research extensively before making final decisions. I would argue that the average Chinese consumer is more cautious than anywhere else in the world. This is because they have often been cheated by local, cheaper companies.
For example, if you are not visible on Baidu based on a certain set of keyword searches you are essentially invisible with 70% of all online research through this search engine. A quality WeChat account is expected as a platform for content sharing and engaging with followers via group and personal messaging. Similarly, without generating a reputation on the right Chinese forums such as QQ, Baidu Tieba, and ZhiZhu it will be hard to develop your business as a trustworthy investment.
Australian business in China utilizes Cross Border E-Commerce
E-commerce is a huge movement in China and is set to benefit savvy Australian firms that can tap into these large, engaged communities. ‘Alibaba’ is the largest e-commerce giant in China after founding a series of platforms that connected; business to consumers, business to business, and consumer to consumer directly.
Their flagship platform Tmall launched its own division, ‘Tmall Global’ specifically to host international brands selling to China. Companies can benefit from Alibaba’s extensive delivery network, storage, and distribution facilities.
The other huge trend is ‘social commerce’, this is the combination of social media and e-retail with large networks such as ‘WeChat’ launching their own ‘micro stores’ for businesses to sell their products or services to their 750 million users. The Chinese like to share details of their purchases and see the views and opinions of others in this more collectivist society.
For a company to grow they need to realize the importance of online reviews and ‘social commerce’ for its branding and reputation.
A lot of Opportunities for Australian Businesses in China
Australia’s Key Markets:
Chinese Student Boom
Almost 50,000 Chinese students started courses in Australian universities, colleges, and schools this year, up 23 percent from last year, making students from China more important than ever to the booming education export industry.
The new figures mean that international education is now worth nearly $20 billion a year, fuelled by increasing levels of wealth. The first priority for families is education for their Children in the fiercely competitive Chinese society. Receiving an international education from Australia is considered to be highly prestigious, English is also a growing priority, and being immersed in a native-speaking culture is important for both parents and students. Chinese students made up 29.4 percent of all international students enrolled in the country this year, the highest level ever reached.
Property & Attracting Chinese Investors
Australia is the largest property market for Chinese Investors Globally. $24.3 billion was invested in 2014-15, that’s more than triple the United States and six times the level of investment in Singapore. Real Estate is a hot topic in China with investors looking to make quality investments in Aussie Property to secure their wealth and finances.
The whole research process by investors is conducted online, they will search on Baidu, the largest search engine in China with a 70% market share, for information on the best agencies, locations, and property developments. There are also dedicated threads on popular Chinese forums for discussing investment opportunities. It is a case of building your reputation and visibility online on the right platforms to generate leads. This is vital as experts expect Chinese investment overseas to triple by 2020.
You also need to realize the buyer’s profile and what incentivizes them; they are drawn to the Australian lifestyle, for quality education and to benefit from property and land ownership rights.
Chinese tourists are very attracted by Australia, it’s often perceived as a luxury destination for big-spending visitors. Over 150 million Chinese travelers made overseas trips in 2016 and this figure is expected to grow this year.
Tourism & Australian Business in China
Australia with its favorable location, accessibility, and association with quality shopping (a key part of the average traveler’s itinerary) is set to capitalize on this with 1.1 million visitors from China in 2016 alone, this represents a 23 % increase from the previous year.
Mike Baird, a member of the Sydney China Business forum said; “The Chinese are perfect for business because they like to stay for a long time, and they also spend a lot.” This is fueled by the growth of the ‘Dai Gou’ or personal buyer who travels abroad and bulk buys to re-sell amongst their community. Indeed Chinese tourist spending increased by 15% in 2016 according to AU news.
With about 20 million births per year, China is one of the world’s biggest markets for baby food and infant formula, representing around 23 percent of the $41 billion global market, according to a study published by Euromonitor International. Concerns about the safety of domestic supplies and the circulation of counterfeit Chinese products have led to rising demand for imported baby formula among urban middle-class families.
Formula is a Good Australian Business in China
The formula is not just imported but also purchased overseas, local Australian merchants have experienced an increase in Chinese shoppers purchasing formula whilst visiting the country. Brands will often tap into their Australian heritage with names such as ‘Auscess’, ‘Augood’ or ‘Goldroo’.
The Chinese phenomenon of ‘little emperors syndrome’ goes some way to explaining this Chinese desire for the highest quality formula. As a result of the infamous ‘one child policy,’ there are large families supporting a single child, they are therefore famously spoiled and well looked after. The official message from the Chinese state to promote this style of population control has been ‘one child, but of a better quality’, this results in a higher quality of Australian baby formula being purchased for the ‘little emperor’ too.
The most significant Australian export to China is beef. Reuteurs reported that in 2014 half of the total amount of beef imported to China was Australian. The Chinese demand for beef is increasing as the diet of wealthier consumers changes to include protein of a higher quality. Australia is almost romantically associated with Beef in China and buyers will pay a premium for an Aussie steak.
F&B : Australian Business in China
Pork and Chicken dominate the meat market here because of their lower price. Quality beef is not produced in China currently which creates a strong demand for overseas suppliers such as the Australian Agricultural Company Ltd or Nippon Meat Packers.
Australia has become associated with high-quality beef products in the Chinese market. Jean Yves Chow, a senior livestock analyst, said in an interview to Reuters;”there has been a bigger jump in China’s beef imports from Australia because they blocked beef imports from Brazil due to mad cow disease.. China doesn’t buy from the U.S. because of the same issue. You don’t have many options but to buy from Australia.” Factors such as this established Australia as a key importer of beef into the Middle Kingdom, particularly when taken in context with a number of high profile, health scares in domestic food production.
The solutions for Australian Business in China
You need to improve your visibility and reputation online to generate leads.
1) Create a quality website (in Chinese)
This should be optimized for Chinese keywords, hosted on a Chinese server and with a .cn domain. You can incorporate links to your social media by embedding QR codes into the site. It also needs to be optimized based on keywords searches with the correct meta descriptions, titles tags and references to increase your visibility.
2) Visibility on Baidu : important for Australian Business in China
This is the key to any campaign. You need to be seen on the largest search engine in China with 70% of all online research conducted here. This is achieved by producing quality articles in Mandarin Chinese, receiving backlinks, and creating a ‘buzz’ on forums. It takes time if you are completely new to China but is seen in the natural search results drives the best leads and connects you with the consumer.
You can also combine this with paid advertising links to increase your profile.
Every serious company is on WeChat, the platform has even become known as the ‘WeChat Times’ because of how reliant the Chinese are on articles and content posted here for their news. It’s more for branding purposes than driving leads but really important as a content feed and for engaging with followers and potential consumers. It is a good way to build loyalty around an Australian brand’s exclusive offers and promotions used to grow your follower base.
4) Forums , Q&A, influencers …
The other approach is to build up a reputation on Chinese forums by starting positive threads about your business and engaging with relevant topics. Forums may be out of fashion in the west but in China, the forum results will often come up before an official website. It’s vital to create a positive sentiment here and manage your reputation. Share great content and answer questions on Q/A forums such as ZhiZhou.
Your reputation as a quality, Australian brand is everything in China, you need to differentiate yourself using these online methods.
Business in China
From my experience, the decisive business approach taken by savvy Australian companies is the main reason for their success. In China, everything moves fast and you need to move quickly too. Getting ahead of the competition is vital, the barriers for entry into China actually presents huge opportunities for companies who really embrace digital strategy in order to grow their business online.
We are a specialist digital marketing and lead generation agency for China. We can help businesses grow in this lucrative market and seek to find long term partners and projects. For more information please contact our experts for details of our case studies.