Tuesday 26 October – ACBC Victoria successfully held the third workshop in the China Export Program, a partnership event as part of the Victorian Government’s Global Victoria Trade Alliance.
We would like to thank our speakers from SW Accountants & Advisors, Managing Director Danny Armstrong and General Manager China, Toby Graham and from China Skinny, Mark Tanner for sharing their experience and wisdom surrounding this complex and multifaceted phase of the exporter’s journey.
The third session of a multi-part series, speakers guided guests through protecting your IP, structuring your trade and business, help on the ground including accessing distribution networks in China, due diligence checks and essential consumer knowledge to help you succeed.
Moderated by ACBC Vic CEO Virginia Birrell, we were pleased to host the Victorian Government’s Deputy Commissioner to Greater China Nick Henderson, who opened the session with an overview from the Victorian Government Trade & Investment Office in Chengdu and introduced the Victorian House project.
The session concluded with an insightful Q&A session, with advice to stay agile, flexible, knowledgeable, engaged and to make the most of Victoria’s unique relationship with China.
Key takeaways:
Structuring Trade, Getting Paid, IP, DD, and Distribution – SW
- Many aspects of the Chinese market change rapidly including value chains, regulation, and Chinese consumer demands.
- Maintaining good market research is critically important.
- Don’t be surprised if your understanding of the market is quickly outdated.
- Get the right advice from people with experience in the market.
- Avoid trouble related to registration – protecting your IP, trademarks, logo, patents etc.
- Capital cannot flow freely in or out of China – requires the support of SAFE.
- Structure your trade to optimise the chances of being paid:
- Consider currency (RMB or AUD?).
- Have a contingency plan.
- Leverage resources to assist you.
- Structure your business correctly – think about tomorrow, while everything might be going well now, sometimes relationships sour.
- Use bank support to manage risks:
- Payment sureties.
- Bank counterparty risk assessment
- Getting your documentation right
- The 3 main distribution channels are importers, retailers, and e-commerce.
- When finding distribution partners, performing individual or company background checks is a must:
- Start with the basics – statutory reporting & public record check.
- Going deeper – financial due diligence.
- All the way – quality assurance.
- Common difficulties include:
- Obtaining information.
- Rapidly evolving regulatory landscape.
- To get the right advice you need someone with boots on the ground.
- “Operating in China isn’t any more difficult than in Australia – it’s just different.”
The Importance of Market Research & Building Relationships – China Skinny
- China is more diverse than ever – it is important not to view China as one homogenous place.
- Look beyond the top-selling categories in-market to determine which categories perform best for foreign brands particularly.
- Eg. weight loss products account for 28% of market share, yet only 2% for foreign brands.
- Chinese consumers are sensitive to geopolitical trends but not overly – Australian diary preference has fallen since 2019 but still is high.
- Domestic brands are better at providing to Chinese consumer needs with rising domestic consumption. This is an understudied area for international brand marketing.
- Somewhat due to nationalistic marketing and government support.
- Mostly due to listening to Chinese consumers and understanding them, then adapting accordingly.
- Domestic brands are taking more risks, are more willing to fail and have a better market understanding. They ‘get’ the new technology and platforms that acts as an extra barrier to foreign brands.
Watch a recording of this event on the ACBC Insights Centre here.