I was fortunate enough to attend New Zealand’s first Alibaba E-Commerce Expo and Conference this month. This was a fascinating event launched by Alibaba, a giant Chinese conglomerate focused on e-commerce. The event had two main aims:

  • To help educate small New Zealand businesses looking to export to China via their platforms Tmall and Taobao; with a number of presentations and panel discussions providing a wealth of information and feedback.
  • To showcase New Zealand brands to Chinese buyers known as “Daigou” (professional shoppers that buy goods in other countries, mainly in Australia and New Zealand, to deliver to consumers in China). Thousands of Daigou attended the event, browsing and promoting the exhibitors via chat forums, with over 100 New Zealand brands on show.

The overriding message I took away from this event, that was reiterated by most of the speakers at the conference, was not to underestimate how quickly Chinese consumers are evolving and maturing. Like consumers the world over, Chinese consumers want products that are authentic, cutting edge and offer a point of difference.

Another interesting message was the rise of Key Opinion Leaders (KOLs), or “influencers”. A KOL is an expert in a specific area that can be used to market products. Increasingly, KOL’s are celebrities who promote health, beauty and fashion products to young Chinese. These young Chinese consumers are often time poor, working in the infamous “996” culture (a working schedule of 9am until 9pm, 6 days a week), and looking for a way to cut through the huge volume of online advertising they are bombarded with. KOL’s are an increasingly important part of any new brand’s marketing strategy, but can come at a significant cost.

Despite these challenges, the export market remains incredibly successful. China is New Zealand’s biggest trading partner and the value of New Zealand exports to China are growing at an average rate of 20% a year.  While the 10 top exports to China are still commodity products (logs, milk powder and sheep meat were three largest by value in 2018), consumer products are a fast growing segment.

Source: Stats NZ

The information provided at the Expo and Conference had some specific implications for New Zealand companies looking to export goods in China:

  • While New Zealand’s ‘clean and green’ image is still very powerful, it isn’t enough to guarantee a product will be successful in China, and New Zealand products need to offer more than simply being ‘clean and green’.
  • Products specifically designed for the Chinese market, that have had limited success in their domestic market, will be greeted with some scepticism. The Daigou channel is an important cross-check to ensure brands and products are genuine and desirable.
  • The Chinese e-commerce market is very cluttered with a wealth of brands from all over the world competing. It can be difficult for new products to get noticed.

Events such as this provide us with invaluable knowledge that are applicable to many New Zealand listed companies. They provide us with greater conviction when making our investment decisions, thereby helping us to deliver superior long-term investment returns.