Former NZTE trade commissioner to China Damon Paling has recently shared his outlook for New Zealand exporters in China this year.
Towards the end of 2019 economists predicted a 5.5 percent increase in GDP for 2020. For majority New Zealand exporters, the primary challenge remains to successfully engage with the approx 100 million Chinese consumers who are now earning over USD 30,000 per year.
Paling stated, “Notwithstanding a slowing Chinese economy and the ongoing US-China trade negotiations, consumer retail spending likely rose by around eight percent in 2019, which bodes well for 2020. Chinese consumers are not drowning in debt and spending remains strong amongst the 20- 30 year olds, which is favourable for those New Zealand exporters focusing on this demographic”. The middle-class youth consumers in tier one and two cities are adopting healthy eating and healthy lifestyles, this further adds to profitable commercial opportunities for a broad range of New Zealand food and beverage exporters.
Requests by e-commerce platforms to have ‘exclusive listings’ has challenged New Zealand exporters, especially those working solely in the cross-border e-commerce channel. “The State Administration of Market Regulation (SAMR) in China currently has more than a dozen e- commerce enterprises under investigation for alleged violations against e-commerce and anti-monopoly laws. It is worth keeping one eye on how this story develops”, Paling indicated. Social commerce platforms will start feature more and this evolving sales network should be handled with the same importance as any other crucial account. Enablers for success in social commerce include importation via General Trade, full-time Chinese talent in market, and competitive pricing.
Customer engagement through short format video has exploded over the last two years and there is no indication of lessening in 2020. As brand stories are further localised, New Zealand exporters should consider exploring how they can appropriately connect with Chinese cultural heritage in their branding/packaging.
“To effectively engage in marketing a long-run average spend of 15 percent of gross sales is likely
required. The challenges therein include the split between trade spend and digital spend”, Paling
Conventional department stores and shopping precincts aren’t what they used be. In person shops are reinventing themselves to provide experiences you can’t get online; the buying of goods or services happens via the simple scan of a QR code, which takes consumers from offline to online with seamless payment
A disjointed market combined with the importance on the consumer experience suggests that mergers and acquisitions in retail will continue. Generally New Zealand products are well ranged in the premium imported supermarket sector, hopefully this can flow down to hypermarkets in 2020.
The supply of dairy, meat, and seafood into China’s food sector is solid. Hopefully New Zealand food and beverage exporters, can start to access the quickly growing food delivery channel. This sales network is growing at more than 30 percent per year.
Operating a Wholly Foreign Owned Enterprise
Maintaining compliance will stay as a foundation to success while trading in China. The areas that usually the most important include business ethics, governance, labour law, taxation, cyber-security, and relationships with the Chinese government.
Because of consumers advancement to engage with healthier eating, expect updates to the National Standards. Management of Type-2 diabetes is a priority amongst the general population, for central government as articulated in ‘Healthy China 2030’ exporters will most likely be asked to provide increased information to customers on the glycaemic index.