For many Australian businesses, China is a land where fortunes can be made but many find it difficult to survive.
Many have been lured by the country’s booming cross-border e-commerce platforms and middle-class growth that is forecast to hit 550 million by 2022.
But alongside the opportunities, there are many stories of foreign businesses unable to compete; finding it difficult to survive its often unforgiving business environment.
Fiona Hall and her family have grown cherries in Orange, New South Wales for more than 40 years.
The 2018 season was their first venture into the Chinese market, partnering with other growers to market together as a union to improve competitiveness and dilute risk.
“We grow cherries and pack and distribute through our company BiteRiot for 20 growers,” Ms Hall said.
“But we rely upon our partner who has set up distribution over in China.”
Here today, gone tomorrow
In addition to his own cherry orchards in central-west NSW, Vincent Chen is also the importer, wholesaler and marketer of BiteRiot in China.
Foreign produce is considered a high-end product and Chinese consumers have a set of expectations, including a farm to table turnaround of no more than 36 hours.
To do be able to do this, Mr Chen established a quality control and logistics facility in China to ensure quick and reliable delivery times.
“If fruit departs in Sydney in the morning, it lands in Guangzhou at about 6pm,” he said.
Seasonal produce like cherries are only available at certain times of the year, can only be picked when they are ready, and are required to undergo a fumigation process to prevent the spread of the Queensland fruit fly.
To balance these demands with consumer expectations and to maximise profitability, cherries are sold through weekly pre-sale deals on e-commerce platforms before the fruit is about to be picked.
“We can only work on an estimate basis to balance both sides and without a reliable packer, like BiteRiot, it’s nearly impossible to do this,” Mr Chen said.
Brand building
Bob Mac Smith began a canola seed pressing operation with his brother, Peter in 1991.
Since then, their business MSM Milling in Manildra, has grown 1,000-fold and exports to many countries including China.
“We began more than 10 years ago selling oil in bulk but we realised that we ought to develop a brand to give a commodity like canola [oil] some shelf value,” Mr Mac Smith said.
“But for the product to have credibility in the Chinese market, it needs to have domestic presence [in Australia] as well.
Brand and marketing manager, Genya Miller, helped develop the brand, Auzure, and built a whole campaign focused around connecting consumers in China to canola farmers in Australia.
“The Chinese consumer greatly scrutinises the products that they source,” she said.
“They buy online through cross-border e-commerce [platforms] where they are guaranteed products are verified, that what they’re buying is what it is, and is directly from farm.”
Though sold exclusively online, building Auzure’s reputation required a lot of time spent on the ground in China building relationships with the buying team at Kaola, the company’s chosen e-commerce platform.
“I speak daily to our contacts at Kaola and my WeChat is forever busy with questions from their end users,” Ms Miller said.
In China, many urban households complete their grocery shop online and in some major cities like Shanghai, Beijing or Guangzhou, the time elapsed from when an order is placed to being packed at the cross-border warehouse to delivery can be as short as 30 minutes.
Export Council of Australia acting chief executive, Heath Baker, said the practicalities of exporting to China can seem a daunting task but can be thought of like a formula.
“There are a whole bunch of hoops you need to jump through … but we show people where they are and what the process is to jump through them,” he said.
“There might be a certain path if they’re exporting food and agricultural products, a different path if they’re manufacturing products … [and] there are strategies for all of them and it’s our role to help businesses get out of Australia.”
Practising patience
There are many common traps for businesses to fall into when exporting for the first time.
NSW Department of Industry senior export advisor, Brent Bannister, said the biggest one is simply “believing the process to export is quick”.
“It is the most common trap I see people fall into … [not doing] the research necessary or engaging with the experts out there to help them,” he said.
Peter Mortimer said he made that mistake when he landed in China to sell his premium, cool-climate wine brand, the eponymous Mortimer’s Wines, for the first time.
After collecting more than 1,000 business cards on his first visit to the Chengdu Trade Fair, Mr Mortimer was surprised to find not one of the 30,000 buying agents in attendance followed up.
“We didn’t get one single bite … and quickly realised we’d have to build our business in China the same way we do in Australia,” Mr Mortimer said.
“Establish yourself on a small scale — and you can only do so on a small scale — then you look to expand.”
Mr Mortimer said an important part of building brand recognition in China comes through marketing to the 1.3 million Chinese Australians.
“The first thing [Chinese consumers] ever do is seek out your integrity often through family and friends they know in Australia … to make sure you are Australian, not a Chinese company ripping off an Australian company,” he said.
“You put the same amount of work into selling a pallet of wine over in China as you do to selling a carton here in Australia, clearly a path we want to follow.
Source: ABC.net.au
