As Chinese demand for Australian products shows no signs of slowing, small Australian businesses are looking at how they can better tap into this huge international market.
But there are a number of key factors that determine whether a small business is capable of making the jump from local to global.
One of the most important issues is connectivity and the ability to service customers that can’t just walk into a store if they have an issue with the product.
Another important issue is whether the business can afford to make such an investment before the revenue starts to come in from new markets.
Karen Pouye, founder of Whizbang.TV and a recent winner of the nbn™ Glocals Competition, says that while the connected world can open new revenue streams or a larger market, it can also benefit a small business by saving costs.
“Easier access to your potential customers means saving both time and money in unnecessary travel expenses,” Pouye says.
But the Chinese market is a different beast, and getting to know that market is another challenge for small businesses.
Pouye, who produces instructional videos for manufacturers and retailers, found that some of their assumptions about the Chinese market were incorrect, and had to change their approach as their off-shore customer base grew.
“Originally, we believed that the Chinese businesses would be interested in ‘affordable’ product videos, however we learned that [they] were more interested in increasing the status, credibility and perceived quality of their products,” she said.
“We discovered that if we wanted to go global, and particularly to China we needed to raise our bar somewhat in regards to the quality of our videos.”
Paul Davidson, co-founder of Koala Eco, an Australian based natural cleaning products business, told Business Insider the size of the Chinese market means that there are many distribution channels and niche markets to consider, but there are barriers to overcome first.
“The language barrier is also a significant challenge,” Davidson says.
“It’s important to find local Chinese partners to work with who both understand the market and have the contacts to bring our product to market.”
For Australian businesses, the appetite from the Chinese market for these products is generally still strong.
The consumer spending habits of China’s rising middle class has been a key driver of the country’s economic growth, and that consumer spending has been unleashed on the global market as more people shop online.
Recent research by FedEx Express in Australia that polled 1,000 Chinese online shoppers found that 84% were likely to buy at least one Australian product in the next 12 months, and 81% had bought an Australian product online in the past.
Targeting that market is a strong strategy, with research from the Economist Intelligence Unit (EIU) think tank finding that up to 35% of the Chinese population will be upper-middle or high income earners by 2030 — up from 10% in 2017.
However, Davidson agrees with Pouye that being able to connect with local partners or mentors that have experience with the Chinese market is important for small businesses operating on limited resources.
“Any small business owner will tell you that time is the limiting factor,” Davidson says.
As one of the winners of the nbn™ Glocals competition, Davidson has been receiving mentoring from CT Johnson, Managing Director at Cross Border Management.
“Having the mentorship means that we are able to move away from trial and error to having a clear strategy [to] focus our efforts on those areas that will provide us with the most value for effort,” Davidson says.
Since winning the nbn™ Glocal competition, Andrew Cox, owner of the Kemu Café on Australia’s Central Coast, is growing his business online, taking what he has learned from the mentoring program to the broader Chinese market.
“We want to take our business more online, working internationally and getting our health and ethical messages to a far greater audience,” Cox says.
“A connected Australian business has huge opportunities to scale to an audience of billions instead of limiting reach through traditional retail or physical models.”
And the nbn™ broadband access network was one of the catalysts for his expansion plans in recent years.
“Fast internet has helped us do more online, particularly with working as a team,” Cox says.
“As with any small enterprise, time in the day is limited so we need to focus our efforts… We are developing a more online model with lower overheads and more flexibility in terms of when and where we work.”
As well as building on her own general business aspirations, Pouye has also seen the impact of better connectivity on her business bottom lines.
“Increased data speeds mean faster work and as time is money, this equates to higher profits,” she says.