It seems only yesterday that everyone was talking about the e-commerce market in China. Alibaba’s name was becoming ubiquitous, new marketing agencies were springing up everywhere, the ‘Daigou market’ was booming (remember the queues in Chemist Warehouse?), AuMake was listing on the ASX, and Australian health supplements, milk powder and skincare products were flying off the shelves into the hands of cashed up Chinese middle class consumers paying premium prices. What happened to all of that?
I only have anecdotal evidence to support this but it seems to have all gone very quiet. Perhaps it was the trade bans, or the diplomatic stoush, or the barrage of negative media (who can forget the SMH ‘Red Alert’ series in March 2023 which led with “Australia faces the threat of war with China within three years – and we’re not ready!”) or the sharp drop in international students caused by Covid, or the widely reported economic slowdown in China…..I can’t put my finger on exactly what it was that caused all of that noise and activity to end so abruptly, but it seems that everyone is now looking to diversify away from China.
In the meantime, whilst Aussie brands are searching for new markets, retail sales in China increased by 3.7% for the first half of 2024 with a similar result expected for H2:
- Food is up 9.6%
- Food service up 7.9%
- Cross border e-commerce is up 15% (that’s the interesting bit!)
I’m told by friends operating in this market that they are experiencing consumer confidence and strong growth across a number of product categories, including;
- Safe, natural, eco friendly products like home cleaning and personal care
- Haircare targeted at hair loss, scalp care and moisture control.
- Natural skin care and beauty.
- Healthy food and beverage options, functional drinks and health tonics.
- Australian wine, especially through non-traditional channels.
- Natural, clean ingredient supplements
- Outdoor, sports and active leisure wear
Of particular note is the movement of activity away from Tier 1 cities (Beijing, Shanghai, Guangzhou) to Tier 3 and Tier 4 cities due to wider internet coverage and improved transport infrastructure/logistics, together with the rise in popular live streaming and social commerce platforms like WeChat and Xiaohongshu which can now reach everyone.
If you know anyone who would like to look at China again to promote their products via ecommerce platforms, please ask them to contact me. Without the noise and the hype, we might be able to get a lot more done!
