With a population nudging 1.4 billion, China undoubtedly remains an amazing opportunity for Australian brands and products to grow their business. The size of this consumer market, along with China’s strong economic performance, a string of product contamination scares, local health warnings and a strong appetite for premium brands, has meant that Australian brands have flourished in China. In the eyes of the many Chinese consumers, Australia is seen as a clean and green environment that produces some of the best food products, vitamins & supplements, mother and baby goods and skincare products in the world.
As this opportunity matures, new challenges appear. Sophisticated counterfeiting operations in China, personal shoppers – referred to as Daigou’s – and a crowded market for Australian products in China mean that Australian brands have to work harder than ever to differentiate themselves as authentic, high-quality and trustworthy.
Counterfeiting poses a challenge for any successful retail product, but in China this threat is heightened with easy access to technology and cheap high quality manufacturing. This year the US Chamber of Commerce reported that 86% of the world’s counterfeit goods came from China and Hong Kong which it estimates represents a staggering $397 billion in counterfeit products.
In the past, many brands tried to authenticate their product offerings by using QR codes – these are totally insufficient. QR codes can take a consumer to a static web page which is one of the easiest things to replicate for any counterfeit organisation. A more reliable solution comes from GS1 – a not-for-profit organisation that develops and maintains global standards for barcodes. Integrated with the Shping platform, GS1 utilises a DataMatrix code, which is a way of serialising each individual product. When coupled with supply chain reporting and the Shping app’s blockchain and geofencing technology, this can deliver a sound anti-counterfeiting solution.
Daigou Buying – Grey Imports
A new e-commerce law in China will go into effect on January 1, 2019, further regulating the Australian products that enter the Chinese market. The new rules are generally seen as positive for the sector, but they will certainly change the way Australian brands do business in China.
One practice that definitely won’t benefit from the law is Daigou buying. Daigou – which means “buying on behalf of” – are shoppers who buy luxury products in Australia and other countries outside of China, where those goods cost less and don’t incur China’s high import tariffs. Daigou have increasingly been promoting themselves on social media channels like WeChat, but they’ll now come under scrutiny for their undocumented practices. I think we will now see some of the more prominent Daigou evolve to be social influencers with their large social followings. They will potentially partner with brands and retailers to reimagine themselves as overseas brand ambassadors, which will ultimately cease the sale and delivery of items into China from Australia.
With so many Australian brands in each category in China and counterfeiting operations latching onto the success of Australian brands, how do Australian brands differentiate to the mobile-savvy consumers in China? One of the ways we at Shping have seen brands successfully navigate these waters is by building trust through transparency and engaging the consumer at the point of purchase while they are making their buying decision. Here’s an example of how brands do this: One of our clients is a famous Australian milk brand that is one of the leaders in the highly-competitive Chinese milk market. To ensure they were able to differentiate their product they wanted to ensure Chinese consumers could validate the authenticity of their products, see an audit trail on the temperature of the milk in transit to China and be able to tell the story of their brand at the point of purchase to build trust. All of this had to be done on a mobile phone to appeal to the mobile-savvy Chinese consumer. . With our shopper marketing app Shping, which leveraged the unique datamatrix code on each bottle of milk, we were able to connect consumers with this information and deliver an engaging experience that built trust with the customer. Beyond this single engagement, the brand was able to nurture this trust in an ongoing one to one relationship with the consumer through Shping’s inbuilt lifecycle marketing and rewards program.
If you are looking to launch a product in China or just trying to build more trust with your Chinese consumer of an existing product then reach out to one of our consultants to see how Origins Trace could be helping you.