Australian SMEs will get a direct line to China after Prime Minister Malcolm Turnbull inked a deal yesterday with executive chairman of e-commerce giant Alibaba, Jack Ma.
The “strategic collaboration” agreement with Austrade involves a number of measures to use digital content to expand the number of Australian products available for sale through Alibaba’s popular shopping platforms.
The drive into China from Australia has so far been the domain of big lifestyle and consumer product companies, like vitamins brand Blackmores and infant formula provider Bellamy’s. But as Prime Minister Malcolm Turnbull leads the Coalition’s “innovation” narrative, the focus on smaller operators broadening their horizons is becoming more important.
But what are the priorities of the Alibaba deal, and how do SMEs get involved? SmartCompany understands the focus will be on companies ready to export – so operators with a business model and plan that is ready to take to the Chinese market will have the best chance of utilising the scheme. However, there is still a lot of detail to work out.
Here are three things from the announcement that small businesses need to know.
1. Details are still in the works
The goal of the partnership is to expand the number of “fresh Australian produce” and goods and services to Alibaba’s 434 million online shoppers. This includes exposure to the shopper database of Alibaba brand TMall. Alibaba managing director for Australia and New Zealand, Maggie Zhou, has announced a number of new sales initiatives this week around selling Australian wine and seafood into China via portals on the site.
The deal also includes a dedicated channel for Australian products on Youku.com, one of China’s leading online video platforms listed on the New York Stock Exchange.
However, the process for businesses to become involved in Austrade’s initiatives remains unclear at this stage. SmartCompany contacted Alibaba for comment on the timeline of the new initiatives and was told by an Alibaba spokesperson that “Youku and Austrade are yet to determine the launch date of the Australian channel on Youku.”
The campaign is scheduled to run for two years, meaning that the project should be up and running quickly. A spokesperson for Austrade told SmartCompany the department will now “work with Australian industry associations and state and territory governments” to provide marketing materials to Alibaba.
2. The search goes beyond health and beauty products
Beauty and lifestyle products have been the most successful operators in the Chinese market so far, with the likes of Chemist Warehouse successfully leveraging TMall to sell ‘clean and green’ Australian brands into the country.
The new deal has flagged an interest in different types of Australian exports. As Austrade’s senior trade commissioner in China Michael Clifton said in a statement on the deal, the focus of businesses will now extend to “e-health, financial services, sporting event management and assisting innovative startup companies”.
Dr James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology Sydney, says the pivot towards a broader range of categories addresses one of the major challenges small businesses have faced in their entry to China – access.
“Small operators have always struggled to get beyond the border and into supermarkets,” he told SmartCompany.
“The more visibility that small businesses can get in China, the better.”
Laurenceson adds that small operators should understand they are entering a sophisticated shopping landscape.
“Sometimes we forget just how far China is ahead when it comes to e-commerce,” he says.
“They’re not catching up – we’re lagging behind.”
3. Alibaba will touch down in Melbourne
Alibaba’s Australian managing director Maggie Zhou spoke about the platform’s plans to establish a physical base in Australia this year.
“Alibaba Group plans to open an office in Melbourne later this year and the agreement signed with Austrade today represents a landmark moment for Australian companies,” she said in a statement.
“Our local team will be dedicated to providing businesses the information and tools they need to advance their international growth.”
This physical presence will complement Austrade offices in Australia and China that will be working with state and territory governments to role out the plan.
Laurenceson says the move is a “pretty fundamental” change in the landscape for small business looking to capitalise on new markets. Business owners should understand that the regulatory framework is constantly evolving, “but those blockages are temporary ones,” he says.