I’ve been taking businesses into China since 2004. Over the past 15 or so years, I’ve seen the stellar growth of Chinese cities and the rise of a sophisticated, educated middle class, eager to buy goods and services from New Zealand. Along with the growth of a 300-million strong urban middle class, China has more billionaires than any other country in the world. So there’s a growing market for luxury goods in China as well.
New Zealand firms have done a great job of getting commodity products into China – think milk powder and logs. We’ve made significant inroads into some key consumer segments – infant formula, honey, and cosmetics are standout examples. Most of these products are sold via traditional sales and distribution channels. But there are big changes afoot. Chinese consumers are increasingly making their purchasing decisions via social media and using their Internet-connected smartphones to buy their goods and services online.
China has become the world’s largest e-commerce market. Over 40% of the world’s retail e-commerce sales in 2015 were made in China and over half of those sales were made on mobile phones. According to international consulting firm McKinsey & Co, more than 55% of Chinese Internet users have paid for goods and services by mobile, compared to 19% in the US.
That’s not the only difference. Over 40% of Chinese consumers buy food online, compared to 10% in the US (McKinsey, again). Fashion, apparel, beauty, cosmetics, infant and health are other top performing online retail sales categories. These categories are traditionally those where New Zealand firms have a good story to tell.
If you have any interest in exporting to China, then cross-border e-commerce is worth considering. Given the growth in online retail sales and the ability to sell products through this channel that can’t be sold in China otherwise (cosmetics not tested on animals, for example), the upside is compelling. Even if you’re already exporting to China via traditional channels, it may make sense to start exploring a channel where your customers are buying.
The New Zealand China Cross-border Electronic Commerce Foundation (NZCCC for short) wants to help you minimise the risks and maximise your sales – and learnings – from the China online retail market. If you’d like to know more, contact us.
Chris Lipscombe is NZCCC President and has formerly held economic development management positions within Porirua City and the Wellington region.