E-commerce brands, including JD.COM, Tmall and Amazon China, are negotiating contracts for high-quality Australian products
Deposed Australian PM Tony Abbot and current Parliament member Andrew Robb sign the Australia-China Free Trade Agreement with Chinese President Xi Jinping and Minister for Commerce Gao Hucheng
Riding the wave of rapid consumer demand and a government endorsement under the current five-year plan, China’s e-commerce giants are unsettling their traditional brick-and-mortar competitors and turning the heads of global investors.
The battle for online supremacy is now set to spill over into Australia.
Buoyed by publicity over the recent bilateral free trade agreement and robust consumer demand for Australian products, China’s e-commerce players are moving quickly to partner with vendors in Australia in order to shore up their market share in the domestic economy.
Following consumer concerns over the safety and quality of products in China, there is an online battle amongst China’s e-commerce platforms over perceptions of trust and the race to become China’s online oasis for verified products.
The procurement departments of leading e-commerce brands, including JD.COM, Alibaba’s Tmall and Amazon China, are negotiating contracts for high-quality Australian beef, clothing, healthcare products, cosmetics, wine, milk powder and other lines of product to sell on their online platforms.
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Examples of the larger trend
The China-Australia Chamber of Commerce in Beijing has this year witnessed a rapid uptake of procurement requests from major Chinese e-commerce companies, and interest from Australian suppliers is also on the rise, said AustCham Beijing General Manager Nick Coyle.
In Australia, Asialink Business recently hosted an event with the CEO and Founder of JD.COM, Richard Liu, to celebrate the Australia launch of JD Worldwide’s service.
In the same week, Austrade hosted half-day events across Australia informing companies about the opportunities available to engage in China’s US$500 billion online retail market.
JD.COM, Amazon China and other online platforms offer an attractive value proposition for Australian vendors and especially in regards to market entry.
E-commerce provides a valuable platform to test market demand and develop brand penetration while bypassing certain regulatory barriers and the legwork of logistics and forming partnerships with distributors in China.
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The potential reward does come with risks
Listing on a major Chinese online platform offers enormous market potential but Australian suppliers must also manage expectations in regards to profit margins, and marketing expenses to ensure prominent online exposure. Vendors without a strong strategy to promote sales risk their stock sitting on the shelves of bonded warehouses rather than loaded into the cargo fleets of Tmall and Amazon delivery bikes.
“The reality is that for many companies simply listing a store on Tmall for example, may not generate brand awareness, visibility or cut-through measured by volume of sales conversions, when competing with tens of thousands of other stores,” explains Santiago Mateos, Director of International Business at Netconcepts China and an Australian based in Beijing.
Mateos recommends companies “to reach their target audiences with valuable and relevant content across multiple touch points to build awareness, trust and customer relationships. This includes a localised brand website and a presence on Chinese search engines such as Baidu and Chinese social media platforms.”
There are also alternative third-party platform options available for Australian suppliers. For example, in the food sector Walmart has a 51 per cent stake in the online B2C groceries platform Yihaodian and Benlai Shenghuo is another e-commerce platform attracting Chinese household grocery buyers.
The number of companies conducting cross-border e-commerce in China has already exceeded 200,000 and there are more than 5,000 online shopping platforms, according to the Ministry of Commerce and reported in June by state media outlet Xinhua News.
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Alongside traditional e-commerce companies there are other major Chinese online players on the verge of breaking into the commercial periphery of Australian businesses.
China’s social media juggernaut WeChat is opening an office in Melbourne, and China’s equivalent of Urbanspoon, known as Dianping, is establishing an Australia presence as part of its global expansion. Dianping is forming partnerships with popular international hospitality hotspots to cater to the surging demand of Chinese tourists for peer-reviewed and discounted dining options delivered in Mandarin.
China’s premier travel site C-Trip will also be targetting China’s cashed-up and transient nouveau-riche with its new business model to bring e-commerce to the lobby rooms of top-tier Australian hotels.The new online platform will allow Chinese tourists to shop for Australian products online, and deliver purchases to C-Trip affiliated partner hotels in Australia.
While its innovative strategy phases out the traditional international shopping experience, C-Trip is confident that its model will appeal to Chinese tourists’ preference for online shopping. It simplifies the shopping process for Chinese consumers with product listings in Mandarin, a Chinese online payment system and a selection of products catered to Chinese users.
Online innovation is fast-paced and fiercely competitive amongst China’s leading e-commerce platforms and Australia stands as a major battlefield for these titans of industry as they jostle to secure trusted global brands and drive online sales.
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