Chinese e-commerce fruit ripe for the picking

In 2000, there were 94 million internet users in China but that number will pass one billion in the next several years. Australian businesses need to do the math and take China out of the too hard basket.

Australian producers are missing huge and growing opportunities in China because they simply do not understand the transformational impact that China-based e-commerce and social media platforms have had in the past several years.

It seems extraordinary that Australians can be so backwards about these opportunities. We are, after all, a nation of technology-loving, early-adopting, smartphone-using, Facebook-procrastinating, eCommerce-buying, technophiles.

Australians happily live by a new and fast-changing set of digital market rules. We love this stuff.

So why, when these same rules are applied to a different market - albeit one where a billion locals speak with a double-byte tongue - do we have such difficulty comprehending?

China is a giant blind-spot for many Australians. Unless you work in the resources industry, or in niche pockets of the financial services sector, China is in the too-hard basket. This really is quite negligent.

Australians’ US-centric focus works against us at times, and this is one them. Occasionally it's necessary to look at the world outside of the Googlesphere to find out what’s really going on. And let’s face it, China is far, far beyond the Google sphere of extraordinary influence.

Google search is great but what about Weibo?

Australian marketers spend huge amounts of time and energy digging through the algorithmic entrails of Google search (or Facebook, or Twitter, or eBay or Amazon) without giving a second thought to the algorithms that make Baidu tick. Or Weibo, WeChat, or Alibaba.

Anyone with half an eye on the marketing or IT sectors can tell you what Baidu, Weibo or T-Mall are and what they do. But almost none of them can tell you how to use them effectively.

This lack of understanding is costing us big time. With a Free Trade Agreement on the horizon (and likely to be signed by the end of the year), it is past time for Australian businesses get an understanding of the online platforms that are at their disposal.

Sam Clohessy a co-founder of the Beijing-based online marketing and e-commerce services outfit called Web Presence In China (WPIC), and has returned to Perth as managing director of its recently established Australian operation.

Clohessy lived in Beijing from 2008, and started the business with an American and a Canadian (the company now has offices in Beijing, Shanghai, Vancouver and Perth.)The business partners founded WPIC as demand for quality foreign goods has surged in recent years.

It is not just the fast-growing numbers of wealthy mainland Chinese that is changing it consumer habits in China, but the proliferation of e-commerce engines like Baidu and Alibaba as well.

Clohessy’s company is a full-service marketing, technology, logistics outfit. He is focused in Australia in recruiting food producers, encouraging them to establish new B2C routes directly to the dinner plates of China’s new wealth. His personal interest is in food, because that’s where immediate opportunities apply.

But the digital rules are the same, whether you are trying to sell pre-paid abalone from Tasmania or tourist destination services in Cairns, he says.

And Australians are far behind our rivals. We are neophytes compared to the Americans and the European engine rooms. And we are nowhere near as good at this stuff as our kiwi cousins who have been killing it through B2C channels for quality food products, assisted by the incredibly effective Pure New Zealand branding.

Same rules but different

I spoke to Clohessy about what it takes to succeed in selling online in China. It turns out the rules are pretty much the same as here. But different. Here are the highlights.

Findability is everything. Well, almost everything. If people can’t find you online, then they can’t buy your products or services. Just like the real world. But to be found in China, you need to forget everything you know about search and learn a new way.

In order to be found, your website needs to be hosted in China. And you need to forget Google (it’s market share is teeny tiny.) All that ridiculously expensive SEO consulting you have paid for will count for precisely zero. To repeat, in order to be found, your website needs to be hosted in China. You need ICP registration (Internet Content Provider). This is not difficult.

You website needs to be in Chinese. It needs to be professionally translated. Messaging needs to be adapted. Just like the Australian who laughs at the Chinglish translations of a Chinese company new to Australia, your poorly translated web site will be laughed at.

Don’t bother translating portions of your existing website into Chinese, because you won’t get found (because your existing website is not hosted in China!) Your China website must be at least 95 per cent Chinese language, or it won’t get found (even if it hosted in China!)

You will want your website in at least 95 per cent Chinese language for two reasons. First, so Chinese consumers can read it (a common misconception in Australia is that most Chinese people can read and write english. No, they can’t.) Secondly, you want Chinese search engines to find it.

Forget language buttons on your website that offer bilingual pages. They don’t for work for search in China (doubly so if hosted offshore) meaning the consumer will need to search for you in english. And they won’t.

Investigate e-commerce shopfronts. Alibaba’s TMall is a great example. The cost less than you think. But be professional. Spend the money to get your local language messaging right. That includes the local language branding and product look and feel.

And finally, be premium. If there has been a single overarching theme in China in the past five years, it has been the growing demand for among affluent Chinese for quality foreign products.

This is especially true of food products. Australia is already branded as a clean, green producer of safe, quality food products. There is huge demand for Chinese consumers to buy direct from Australian food manufacturers. They are less interested in having that food handled by China-based wholesalers. Food safety issues are a big and growing concern for Chinese middle-class consumers.

The China’s food bowl fantasy

There remains incredible scope for Australian food producers to take hold of the premium foods market - especially on the back of the Free Trade Agreement. But Clohessy advises that premium sellers should take advantage of China’s sophisticated ecommerce platforms, and take the margin that Chinese handlers would ordinarily take.

New Zealand food producers have been incredibly effective in this area. The Pure New Zealand brand in the past two years has made great inroads in the China B2C e-commerce markets, particularly in fresh dairy, and premium meats and seafoods.

Clohessy is critical of the Australian Government’s trade representatives in China for not giving better advice about these online channels.

One problem in relation to China is that Australians generally don’t fully understand scale. They think they do, Clohessy says. But they don’t. So talk of Australian agricultural as becoming China’s food bowl is a fantasy.

If Australia just focused on the Shanghai-Zhejiang-Jiangsu areas on the east coast (which boast 15 of the 20 richest cities in China (including Hangzhou and Nanjing) it could quadruple production and still not meet demand. Which means the smart money will be at the premium end of the market.

Clohessy says Australians should add a zero to their ambitions. When Tourism Australia boast about its 350,000 Weibo followers, it needs to get things in perspective. Ryan Griffiths, an Australian soccer player who helped Beijing Guoan FC win a title a few years back has more than 700,000 Weibo followers and only joined the network in recent times.

In 2000, there were 94 million internet users in China. In 2004, there are 640 million users, and that number will pass one billion in the next several years. The Chinese are prolific eCommerce buyers, and China has sophisticated eCommerce platforms and distribution networks.

Australian businesses should do the math, and take China out of the too hard basket.

James Riley has covered technology and innovation issues in Australia and Asia as a writer and commentator for 25 years. Read more from James Riley atwww.InnovationAus.com or follow him @888riley on Twitter.