E-commerce expansion opens up fresh opportunities in China

05 April 2016

Mike Arand / Business Development Advisor / China

E-commerce in China is growing the country’s consumer markets and providing plenty of opportunities for Kiwi companies to offer their products directly into the homes of Chinese families. Over the past 12 months we have seen many success stories, including that of Queen Apples who used the iPhone craze to package their apples as the “real apple” – selling tens of thousands of apples in a matter of hours. 

While New Zealand companies are getting smarter about using the New Zealand “pavilions” on platforms like Tmall to boost their visibility and reach customer sales, such platforms are continuing to look for ways to make it easier for consumers to get the products they want. 

Tmall – China’s largest e-commerce platform – recently announced that they are taking their online shopping system into the regional provinces. Tmall chose to use New Zealand products to help them to do this. 

Where once it could take up to three months for New Zealand products to be delivered to a consumer’s door in rural China, Tmall has shortened the delivery time to less than a week, making it possible to deliver fresh produce direct to rural areas. This provides fresh opportunities for New Zealand companies to export their products directly into the homes of millions of potential new customers in China. 

One industry that could see major benefits from Tmall’s expansion is aquaculture and fisheries. China is New Zealand’s largest seafood market, with exports reaching NZ$484.9 million last year, and a wider customer base should see this number grow. Last year, before the announced expansion, Tmall had 407 million active buyers searching the platform for bargains and premium products. That’s a lot of potential customers for New Zealand exporters but a company’s chance of success in China relies on much more than just e-commerce. Yes, it is a powerful sales tool, but it does not replace the fundamentals of understanding the market, understanding the consumer’s needs and motivations, having an on-ground presence, and developing and implementing a strong market strategy. 

While we would encourage every business with interests in China to develop a strong e-commerce strategy, this needs to complement an overall market strategy built on sound foundations of market research, consumer testing, understanding the unique business environment, and establishing a powerful in-market local network. 

China is New Zealand’s largest seafood market, with exports reaching NZ$484.9 million last year, and a wider customer base should see this number grow. 

It is tough to launch a business from a country of 4.5 million people to one with the largest population in the world. But our companies are adapting and for some this means teaming up with like-minded companies to collaborate more together. For example, six primary suppliers (Sealord, Synlait, Silver Fern Farms, Kono, Pace Pacific, and Villa Maria) have formed Primary Collaboration New Zealand and share an office in Shanghai. 

While many New Zealand companies may compete in their home market, they can share resources and knowledge about how to grow the Chinese market to the benefit of all parties. 

This better enables them to establish an in-market presence and also find creative ways to package their shared products on e-commerce platforms.  NZTE can help companies boost their scale and chances of the success. For example, our Accelerate China programme offers companies who are beyond the initial market-entry stage the chance to meet in-market specialists, distributers, investors, retailers and consumers to understand the cultural, branding and taste differences that dominate the market. 

Mike Arand is NZTE’s China Business Development Advisor and is based in Auckland.  

This column was originally published in the National Business Review.