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Export to China – A conversation

Export To China Conversation

Export to China is a popular topic and there are many Know-Hows available. Too many to read. However, the “EXPORT TO CHINA – UP CLOSE CONVERSATION WITH FOOD & BEVERAGE AND CONSUMER GOODS EXPERTS” organised by ACBC (Australia China Business Council) on 16 July in Brisbane is different. It is a great CONVERSATION.

My pleasure to sit with Will Zhao – Head of China Operations, Metcash and Andrew Waddell – Global Retail Sales & China Brand Development Manager, Stahmann Farms Enterprises on the panel conversation.

Wen Gu, the CEO of the ACBC QLD Branch, moderated the panel conversation like a master conductor of an Orchestra. Over 60 attendees filled out the K&L Gates‘ conference room. They enjoyed the conversation and the networking.

There are many frank and wise discussions and I cannot list all of them here. Below are my takeaways from the Export to China conversation:

1. Start with a strategy:

Wen started the question “What are the top 3 things Australian companies should consider when developing their export to China strategy”. Will said “Money”- You need a budget to export to China. This is very true as a distributor in China. There are many cost involved. As an exporter, Andrew mentioned the “determination of the CEO”. Export to China is a long and difficult journey, the understanding and strong support from the top level are essential. I believe many export managers will agree with this. Hope more CEOs would hear about these comments.

As an export consultant, I listed top three things:”Getting to know China”, “SWOT analysis” and “Innovative approach” to develop your export to China strategy.

Getting to know China” is not to read “how to export to China”, but to do some data analysis to understand your consumers and clients. China is very big so you need to find the market sector that suits your products or services. To understand China, you also need to have culture awareness. It is not the Chinese etiquettes but the way how they think. Look into the culture and get some “soft power” to understand why they do that. The best way is to visit China and feel it using your skin and heart. If you do not have time visiting China, you can Learn from your peers, Austrade, TIQ and ACBC can all help you to know companies exporting to China.You need to put all the information you collected together and make your own judgement.

SWOT Analysis” is very useful if you use it properly – Three “R”s. Risk: Threat (RISK) is the most important. What will be the risk if you export to China? If there is no risk or you can afford for the risk, just DO it. Review: You need to review your SWOT periodically. China market are changing very quickly, so should your SWOT analysis. Reflect: Discuss your SWOT with an “outsider” and get their feedback. As a Chinese proverb said “You cannot see the real shape of a mountain if you are in the mountain”.

Innovative Approach“is important to export strategy same as to the products. You need find your niche market in China and using your “strength” to attack on the weakest-link. You can read more about export innovation.

All these three things are targeting on one goal for your export strategy – “Positioning”.

2. Try Omni-Channels and find a good partner

Wen’s 2nd question is about the pros and cons of three different channels: Daigou, E-Commerce and Bricks & Mortar.

Will is an export in E-Commerce and he gave very good inside of the three different channels. Daigou is useful for some businesses but not stable; E-Commerce is good on spread brands but 80% of E-commerce do not make money. Andrew talked about their own experience from E-Commerce to partner with a big China retail chain.

I totally agree what Will and Andrew said and suggested the best way is to try “Omni-Channels”. I raised the example of the Volley shoes opened 50 retail stores in China and now have 50/50 for online and offline sales. A very successful Omni-channel strategy. Another example is Blackmores recently had their board meeting in Shanghai and visited Alibaba’s “New Retail” model shop “He Ma Sheng Xian”. Currently, 90% of Blackmores sales are from Daigou and E-commerce, but the board plan to increase the sales from “New Retail” in China. Please read here for more details.

If your products are for B2B, then find a local partner is most important. How to find a good Chinese partner? We need another conversation on this topic.

I also introduced the concept of “Export Cluster”. A cluster is a group of people who collaborate together for a same goal. The export cluster can be an industry, an area or a consumer group. The purpose is to work with other Australian companies to leverage the competition power as a “cluster”.

3. Sell what they want not what you have

We all know we should sell what the consumers want in theory, but few of us are doing this.

To answer Wen’s question “What Chinese consumers are looking for?”, Will listed Health and good value products, but he also frankly pointed out many Australian suppliers are so naive and think they can sell everything to China. In Fact, Will said “China doesn’t need your products!”. It may sounds surprising but it is true. There are so many domestic and imported products in China, your product is just one of the many. Andrew gave an excellent suggestion “fill the gap”. He said the local partners know better what their consumers are looking for. As a supplier, you just tell them what you can offer and they will pick up the products they need to “fill the gap”. Andrew also advised that you need to change the package and even your products to suit their needs.

Chinese consumers are looking for healthier foods and they are also looking for authentic foods. Taste is always the No.1 factor for foods. However, personal taste are different. In China the taste is so different from north to south and from west to east. If you understand the needs of your consumers, you get the sales. Chinese consumers are also looking for new products. The Chinese millennials, especially, like something “cool”, not “Me Too”.

4. Create an authentic brand

“How to build a brand and marketing Australian products in China” is another good question from Wen. Will gave the example of how “Bundaberg Ginger Beer” grow from one container per year to 20 containers per year by building its brand online and offline step by step with a long term strategy in mind. Andrew warned Australia suppliers do not use the traditional “sales skills” – over promise, exaggerate and pretend to be perfect. Andrew told the audience “Just tell the Chinese partner the truth” because “they are very smart and  will tear you off layer by layer to dig out the truth.” Well said, Andrew.

I didn’t say much about the brand because both Will and Andrew had made it very clear – Long term and be honest. These are echo what I put in my blog “How to build a brand successfully in the export markets”.

Bundaberg Ginger Beer is an Aussie icon brand. I searched their story today and found even such a famous brand made some mistakes in China market and learnt a lesson in a hard way – “that you really need to take your time” according to Bundaberg Brewed Drinks CEO John McLean.

At the end of the day, people buy “brand” not “goods”. You can only build your brand in a long term. Be patient and “take your time”.

5. Overcome the challenge

Most people want to know “what is the biggest challenge Australian companies face today and how to overcome”, so Wen asked the panels for the answer. “Price”, Will answered without thinking. Then he explained how many Australian companies try to tell him their products “are the best”. Will urged Australian companies get rid of arrogance and procrastination. “You need to pick up your phone at 3am and discuss online campaign with E-commerce marketing department, otherwise you will be out of the campaign which will start tomorrow morning”. Andrew nodded and added that “nature & clean” is Australian’s gift. It is good, but not good enough. Price is their biggest challenge as well. You need to face the fact that Australian products are expensive and find a solution with your local partner.

I said the biggest challenge is “too many”. Too many competitors, too much information, too many experts and too many buyers …- Too many can cause you to lose focus. China is such a big and diverse market and changes so quickly, exporting to China you really need to be focus on what you are good at. To overcome “to many”, you need to know what is your export positioning.

6. Be Collaborative and innovative

There are couple of questions from the audiences. Here are the two which have common concerns.

The first one is how to build brand without expensive marketing campaign. I suggested them to start from door step and desktop. By promote locally and online to make their brands to be known by Chinese tourists, students and visitors. Fishing where the fishes are. For readers, you can find more in my speech at the Moreton Bay Region Food & Agriculture Cluster  “How to Pitch Asian Consumers?”

Another question is about the biggest failure of Australian business in China. I pointed out that “Made in Australia” has been immoderately used. Many Australia companies think they can sell their products with a premium price just because they are “Made in Australia”. Andrew agreed and said “You cannot sell your products with higher price only because you have “Koala” and “Kangaroo” on your package.”

MC Sheldon Brady had a very good summary and highlighted the key points from the “Export to China Conversation”.

At last, after hearing all the conversation and reading above takeaways, you just need to DO it and DO it collaboratively and innovatively.

Learn from doing and get help from others.

Take your time.

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