Aldi has announced that Chinese customers will soon have access to cheap produce and weekly deals when the retailer expands into the region next year.
The popular German retailer will begin selling wine and parts of its non-chilled grocery range into China in the second quarter of 2017 reports Fairfax.
In a statement to SmartCompany, Aldi revealed it had been active in the Chinese market, undertaking “detailed feasibility studies” on market entry options.
“This work has resulted in the decision to commence retail operations in the China market, initially with an e-commerce retail offering, providing new and exciting business opportunities for Australian manufacturers,” the statement reads.
The majority of products sold through the online service will be sourced from already existing Australian suppliers, giving these suppliers access to 1.4 billion Chinese shoppers.
“ALDI has enjoyed strong and long lasting relationships with many of our Australian suppliers since our first stores opened in 2001,” an Aldi Australia spokesperson said.
“Our growth across the country has provided increased business for these suppliers, allowing them to invest this back into their own operations and contributing to their success. We look forward to further expanding these relationships as we develop further opportunities in Asia.”
Retail expert and associate professor at the Queensland University of Technology Business School Gary Mortimer told SmartCompany Aldi’s move to the Chinese market is in line with their usual “conservative approach”.
“Aldi likely wanted to only move into a region it was comfortable in, as there would be distinct cultural differences between the European/Australian market and the Asian market,” Mortimer says.
“The company moved to Australia because we share a lot of similarities with European markets. Now it sees how close we are with China, so they are now comfortable making that move.”
As for the online only offering, Mortimer says this is a common move for businesses testing the waters of a new market.
“Most businesses start with an online offering before launching physical stores, so they can see if it’s viable,” Mortimer says.
“I do think there will eventually be a need for a physical presence in China.”
Another reason that Australia will act as Aldi’s springboard is the reputation our products hold in overseas markets, says Mortimer.
“Australia has a very strong reputation with brands being clean and pure, and having high quality,” he says.
“This is especially true around some products, mainly baby food and dried milk products, Australian brands are quality.”
Aldi said in the statement it had been undertaking discussion with suppliers around what products to include in its offering to the Chinese market, settling on wine and a “non-chilled grocery range”.
“We know there is a strong demand among Chinese consumers for Australian manufactured products and our goal is to provide a competitively priced alternative for shoppers seeking quality groceries,” said an Aldi Australia spokesperson.
“We believe our unique offer of high-quality Australian products at unbeatable prices will be an attractive proposition for Chinese consumers.”
Mortimer believes this move will be great for suppliers who want to get their products into the Asian market, but it could also have an impact on Aldi’s Australian presence.
“Aldi is already the seventh largest food retailer in the world, and as it grows into China, its volumes will increase and it will achieve a greater economy of scale,” Mortimer says.
“This will let it put more products on shelves, but I don’t think that’s where prices will drop. In its general merchandise, weekly discounts, and apparel, I think those prices will come down if it goes well for them in China.”
This move could also put Aldi a cut above Woolworths and Coles, as Mortimer says neither has indicated an expansion into the Chinese market.
In the statement, Aldi says it will “continue to invest in its Australian expansion” simultaneously.