Case Study 1: WeChatting all the Way
David is a sale executive in charge of seafood sales into China from a large Australian producer. Before he arrived at his current place of work, there were no employees of Chinese origins in the sales force. Made responsible for making further inroads into the China market, David quickly instituted the use of WeChat to communicate with customers and co-workers. WeChat is a multi-function social media mobile application developed by Tencent that began as an online instant messaging app. WeChat is the most frequently used app among China’s 731 million users. In fact, 79.6% or 581 million people use the mobile messaging app throughout the day. Users in China can send text and voice messages, share photographs and videos, search for, order and pay for a whole slew of products and services provided by third parties using the e-wallet function.
Before WeChat was introduced into the company, the majority of communication qith clients was conducted through email and David’s predecessor spent a lot of capital on marketing and branding the company’s products in China. Drawing on his in-depth understanding of how Chinese consumers and distributors operate, David re-directed attention to the company’s main customers, mainly price-sensitive distributors, using WeChat. An experienced user of the app, David set up and maintains a dense, personal and on-demand communication network with customers and provided them with real-time, responsive pricing. Clients are able to respond quickly using the voice rather than textual messages, a crucial and early distinction of WeChat from when it was started in 2011.
David explained that superficial understandings of Chinese cultural customs such as noting the popularity of seafood during Lunar New Year/Spring Festival is insufficient when dealing with client in China. Although seafood is a delicacy especially welcomed during special occasions, consumers remain price-sensitive amid a very competitive market. At the same time, supplies and quality of seafood can vary throughout course of the year. So a complex grasp of how the various factors – communication, supply, quality, pricing, cultural customs and competition –interact and affect each other is key to success in the export of Australian seafood to China.
One element that has made Australian exports less attractive is their comparison to largely similar products from New Zealand. A Free Trade Agreement between China and New Zealand came into effect from 1 October 2008 and has enabled our neighbour to offer many of the same products Australia produces at lower prices. In fact, “[s]ince the China-New Zealand Free Trade Agreement came into force, China’s imports of seafood from New Zealand have grown seven-fold (to $581 million)”. The China-Australia Free Trade Agreement (ChAFTA) was entered into on 20 December 2015 and the elimination of tariffs is staggered. For example, the 10 to 14 per cent tariff levied on abalone will only be eliminated with effect from 1 January 2019. This continues to have substantial effect on Australian exporters’ ability to compete for market share in China.
Another part of David’s strategy has been to ensure clients have up-to-date information on incoming stocks. To do this, he has instituted the use of WeChat right from the inspection stage in the company – during inspection the seafood is weighed and categorised with different categories priced differently. Staff inspectors photograph the lots and David often forwards this information to clients immediately. Part-marketing/enticement, part real-time information and part business process, the flow of information is almost instantaneous, invariably fresh and has, so far, provided David with outstanding results.
Trust is key to the relationships between the company and clients but it is equally important that his employer trusts him as they do not currently understand the language, Mandarin (Putonghua), he uses to communicate with clients. However, as David also points out, the prices he quotes for each shipment are ‘on record’ and available for anyone in the company ‘circle’ to view. Ultimately, according to David, it is the results that he continues to bring in that win trust from both employer and clients. David’s success appears to have convinced his employer of the contributions Australian-Chinese individuals can make to the business. It also paved the way for another employee with Mandarin language skills and a Chinese cultural heritage background to join the company.
Case Study 2: Aggregating Nimble Micro-Businesses
A former professional in the property market, Bing arrived in May 2012 as a business migrant on a provisional visa with his entire family. He began initially exported Australian wines, wool blankets in September of the same year and in the five years since he has established himself as an exporter of certain well-known wine labels.
The largest portion (79% between 2012-2014) of Australian business migrants come from China on business innovation and investment provisional visas (subclass 163, now 188) that allow them to reside in Australia for a number of years. Pending the successful meeting of specific business criteria (turnover, employees and capital) within the set number of years, migrants holding this visa are then permitted to apply for permanent residency.
The federal government adjusts the number of visas granted each year but in the 2014-2015 period the planned levels were 7,260. Altogether, business migrants form just 3.8% of Australia’s entire migration programme. The Department of Immigration and Border Protection (DIBP) states that the strategic priority of the business migration programme are to “attract high quality investors and entrepreneurs to invest in Australia” but as the 2015 Report of the Inquiry into the Business Innovation and Investment Programme notes the programme aims to:
Given the above-mentioned objectives, it is easy to understand business migrants as among those most motivated to harness their Australian-Chinese cultural fluency to bridge the export gap. Certainly Bing admits readily that as a business migrant he was pressured into rather unfamiliar territory and start trading as it is often the most likely way to gain permanent residence in Australia via the business migration program. But as Bing also reflects, the need to meet the requirements of the visa was beneficial because it pushed him into learning about trading and business in Australia, leading to his current success.
When queried as to the biggest obstacles and issues with his journey from provisional business migrant to successful businessman and permanent resident in Australia, Bing pointed to the initial lack of familiarity with the Australian market, business environment and language. Given the time frame of 4 years granted to provisional business migrants, sourcing suppliers was made even more difficult because of these obstacles. According to Bing, most business migrants are middle age individuals, so picking up a new language is not easy matter for them. Therefore, timely and accessible information from official government web sites, translated into Mandarin, would be most useful in overcoming this obstacle.
The second obstacle Bing mentions also has to do with the visa conditions. He explains that in order to develop the market in China for the products he has newly sourced, ideally he would visit China regularly and often, stay for long periods of time. No matter how familiar one is with market conditions for one category of product, additional market development needs to be conducted for each product and service to be exported. Accounting for the extended stays in China while his family is based in Australia is an issue.
Today, Bing’s business sells directly to customers in China using a digital platform he started. He relates the story of how the digital platform began in 2013 as a common objective to share resources between Chinese business migrants. This coincided with the explosion of export of Australian goods to China via the daigou (akin to a personal shopper) model. The idea was eventually aborted, in Bing’s opinion, for a lack of investment of time, finance and will as establishing the platform as a sales channel needed to be done primarily in China.
Noting the expansion of digital business models in China, Bing adds that the Australian authorities should encourage business migrants to innovate business models rather than insist on traditional business models. He cites the example of wine sales to illustrate how the objectives of the business migration have been reached. Somewhat agitatedly he asks rhetorically:
how else would the Chinese know about Australian wines?
Why do retailers not promote New Zealand wines?
Without the promotion of business migrants, who would know about Australian wines?
Further, Bing continues, the health supplement brands, Swisse and Blackmores are household names in China, largely due to the efforts of personal shoppers (dai gou). So much so that Chemist Warehouse and Swisse now have their own ‘shops’ on Alibaba’s online T-mall (天猫). Business migrants do the same for different groups of products, investing even more time and capital into export. This is a new business model that is an improvement on the traditional business model where exporters needed to transport goods, set up distribution channels and then pursue sales. Currently, Bing has over 2,000 individual micro-businesses (微商) who promote, exchange and sell products through his digital platform. These individuals, dai gou and business migrants are the ones who excel at spreading product information and bridging（传播以及桥梁）export gaps.
Australian enterprises and producers, Bing adds, are conservative and tend not to work with people who have no substantial history in the industry they are producing for. At the same time, official agencies like Austrade are focused on assisting large businesses and have no interest in this small and scattered (小和散)exports by dai gou and business migrants. All parties need to be educated to respond nimbly if export to the volatile Chinese market is the goal.
Case Study 3: “Australia is my other home”
Judy is one of the 57.32 % of our respondents who exports wine to China. As many of the professionals and business migrants we spoke to revealed, there are many levels to wine export determined largely by price-points i.e. low, mid and high. The exporters who deal mainly with low to mid price points tend to focus on volume and are unafraid to import and experiment. Judy, whose business is based in Guangzhou, imports wine from many parts of the world to attract her high price-point consumers of wine, i.e. existing or aspiring wine connoisseurs.
Judy’s story is not unusual, like many of her contemporaries she first started as an employee learning the ropes of the wine export business from a company based in Melbourne. However, her initial role was as an accountant. Still, when her employer wanted to expand into the China market in 2008, Judy was pressed into being the co-ordinator as she was the only employee able to speak Mandarin and familiar with Chinese business practices. This led eventually to her being promoted to General Manager, where she was fortunate enough to receive sponsorship to pick up further wine appreciation courses in Europe by the same employer. She returned to work with them after graduation but realised that her ambition to start her own wine label could lead to a conflict of interest she eventually left her benefactor in 2013.
Today she imports 90 % of her stocks from Australia (South Australia, Western Australia and Victoria) and supplements the gaps with imports from France. Judy tells us that at one stage she had 30 individuals doing sales for her business, however, as with many Chinese businesses, Judy has turned to the efficient ‘word-of-mouth’ services of WeChat. Using the WeChat Circle feature, Judy has an exclusive group of 90 people or so who help her promote the wines she brings in on commission. Rather than a retail outlet, which is one option other respondents have talked about, Judy has set up her own e-commerce site in the last 2 years and with consistent exposure and marketing through attendance at exhibitions and expos, trade has been steady. So WeChat is now the main avenue for sales.
When asked what the biggest obstacles are that she’s met with, Judy cites two. First: issues with packaging of wines from the Australian end. This has led many times to goods being held up at customs. To overcome this obstacle Judy’s company has stopped directly importing wines and use a broker instead. For Judy this means she can focus on her core mission, which she describes as sharing with her elite clients the knowledge, understanding and appreciation of quality wine. In line with that objective, Judy is now well on her way to obtaining her Master of Wine qualification.
The other obstacle, according to Judy, who generally markets mid to high level wines is the business style of Australian wine makers. Australian wine makers are usually very direct and instead of spending effort convincing customers of the quality and class of their wines are too keen to get on with negotiating prices. Chinese buyers tend to be less direct and uncomfortable with such forthrightness. They also prefer to try various wines and compare before committing. This was why, Judy reveals, her experience of having lived in Australia and China enabled her initially to understand both cultures and successfully negotiate sales for her employer.
To illustrate the difference in approaches between Australian and other winemakers, Judy relates that on one occasion where a group of customers from China arrived at a formal wine event in France without the required suits. The French winery representatives promptly brought these Chinese customers to Valentino and purchased a suit for each prospective customer. In doing so, they deeply impressed these customers and earned their devotion. Thus wooed by the French winery these customers went on to place some very large orders. As Judy puts it, Chinese customers remember how they are treated and thus, stay loyal “很不忘本”. Judy adds that French labels are also much more adept at using their cultural capital to market their wines, impressing Chinese clients a lot more than Australian winemakers. That is the reason, Judy believes, some customers ask for $1 wines from Australia.
Another example of this difference in business style comes from when she was still working for someone else. On this occasion, two containers of very expensive wine was stuck at customs in China and Judy and a colleagues were tasked with selling them as soon as possible. The prospective buyer was very late for a dinner meeting and her Australian colleague was angered and insisted on leaving. Judy counselled patience and flexibility as she understood the practice of some bosses in China to habitually keep others waiting and knew that the buyer was actually in need of the shipment of wine they were selling. Their patience and the two containers of wine were eventually sold without problem.
There is, according to Judy, a need for suppliers to improve their knowledge of China, rather than rely only on their products to do the talking. Again, the French do things very differently, treating major clients to luxury holidays and meeting with them to discuss the wine at least twice a year. In doing so the French demonstrate an understanding of the obligation that their VIP treatment places on Chinese customers. French wineries are also willing to invest and recruit local people. Although she intends to extend the range of French wines she represents, Judy insists she “won’t let go of Australian wines [because] Australia is my other home”.
To compete, Judy suggests the smaller wineries in Australia to collaborate on a platform to hold wine-shows and use WeChat. It is important, she stresses, if winemakers don’t have the cultural knowledge to hire Chinese-literate employees to use WeChat. However, she cautions that it is not sufficient to have Chinese employees but also that they have the requisite knowledge and ability to translate capably.
Case Study 4: Cultural Translator
Gina is in her early 30s and is originally from Guilin, China. She has been working with a major international firm based in Perth for a number of years. She first came to Australia to pursue her studies in accountancy and moved to Perth in 2012 when her then partner found work there. Gina is very active in Australian-China related activities and events and heads one of those initiatives. Initially she started getting involved initially to widen her social circle and networks in Perth.
Recruited by one of the big 4 accountancy firms, Gina, became part of the Chinese Business Practice Group and was “always the first one to be called upon” when any of the work involved China. The array of activities she undertook included the translation of documents, research of trends and business development. Gina makes clear that the role she played was one that she proactively pursued, spotting a gap in consultation and speaking to the partners to ask for the responsibility.
The training she received allowed her to move into her current role in an Australian-owned international corporation. Looking back, Gina admits “my knowledge of Chinese business practices and language helped me a lot in my career” and has been the “major advantage and value proposition in my career”. Today, Gina is in charge of strategy and product development, with specific focus on the Chinese market.
Asked how, if any, difference exists between how Chinese and Australians conduct business, Gina observed that Australians are generally more transparent and straightforward when conducting business in a regulated market. Dealing with the far less direct Chinese, however, one needs to “read between the lines”.
When the issue of trust was raised, Gina responded with the neologism, ‘tweakovation’ (tweak + innovation), to describe how Chinese manufacturers can take an idea and improve on it by tweaking. She gives as an example the mobile instant messaging app, WeChat, which Gina regards as a ‘tweakovation’ of WhatsApp. As such, she concedes that products, brands and ideas can be borrowed and improved upon very easily in China, making trust a major issue for Australian manufacturers contemplating entry into the Chinese market.
Queried about what she thought was the biggest obstacle in her career, Gina mentioned the bamboo ceiling as a future obstacle, having seen senior colleagues grapple with the problem of tacit racial discrimination. Finally, she also acknowledges that after 10 years in Australia despite constantly keeping herself updated on trends in China via various social media channels such as Toutiao (今日头条), Sina Weibo, WeChat official accounts and annual visits to China, not living there will eventually puts her at a disadvantage. Nonetheless, she continues to see her bridging role between Australia and China, acting as a cultural translator, as essential to her future.