Breaking into China

BREAKING INTO CHINA

Entrepreneur Jessica Rudd reveals how she has cracked the hyper-competitive Chinese market and what’s next.

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PILLAR: ENTREPRENEUR Australian companies looking to break into the Chinese consumer goods market need to go back to basics and sell a piece of our lifestyle, successful entrepreneur Jessica Rudd says.

Rudd, a former lawyer and author, says cracking the market and capturing China’s growing middle class isn’t easy – companies need to know what they are selling.

“So, when I am selling certified organic coconut oil, it’s not because Australia is known as a place that has amazing coconuts, it’s because China trusts Australia. China likes what we have to offer and looks at our lifestyle of kids running around a backyard, walking barefoot on a beach or eating mangoes on the back doorstep. That is the lifestyle they want and cannot provide for their children.”

The companies that will succeed, she says, are those that look and ask, “How do we replicate that, give them a slice of that in something that is a marketable format?”

Rudd, daughter of Thérèse Rein, one of Australia’s most successful female entrepreneurs, and former prime minister Kevin Rudd, lived in Beijing for five years and witnessed the demand from friends living there – both expats and locals – for Australian products, initially baby goods.

It wasn’t until she returned to Australia in 2014 that she set about creating her business, Jessica’s Suitcase. “I’d never worked in retail in my life, I didn’t know what an SKU was, so it was a whole new experience,” she says. “I decided I wouldn’t sell what I wouldn’t use on myself, my child or my family.”

Rudd started the business with a friend, Chantelle Ye, importing Australian products into China in 2015, through an online store on Alibaba’s Tmall Global site. “In the beginning it was a lot of begging, going around talking to businesses and saying, ‘Could I please have some of your product and I will take it into the world’s largest market and I will pay you top dollar for it’,” she says.

One of the first products she launched on the site, a certified organic pawpaw ointment, saw 16,000 tubes sell out within two months. “Now things are slightly different, people are quite interested in being in Jessica’s Suitcase,” she says.

After securing new brands last year, such as Penfolds and Freedom Foods, and new skincare lines such as QV and the organic range Sukin, sales have soared.

Rudd says she is frustrated by companies that say, “There are one billion people in China and if I get one per cent of the market, I will be rich”.

“Everyone wants a China strategy, and Alibaba has made that easier. However, we are not just competing with Chinese products on the shelf, we are competing with the world for this share of the market. If you want to be recognised, you have to work hard.”

China looks at our lifestyle of kids running around a backyard, walking barefoot on a beach or eating mangoes on the back doorstep. That is the lifestyle they want and cannot provide for their children.

Jessica Rudd

She says to be successful with Chinese consumers, businesses need to have a presence on all social media sites. “Set up a WeChat page, Weibo; I do live streams from my kitchen – they (the consumers) love it. On one occasion the translator I booked didn’t turn up, so I did the live video on my own, repeating the few words in Mandarin I know. But it was authentic and that’s what they (Chinese consumers) want.”

Rudd says businesses embarking on the Chinese market should engage influencers, also known as KOLs (key opinion leaders). However, she warns, don’t rush off and try to get the likes of celebrities such as Fan Bingbing. “You won’t be able to afford her.’’

Instead, she says, if the product is an educational toy, find a parent who is a blogger to talk about emotional development.

“It’s better to get someone who might only have 16,000 followers but who is talking directly to your target market.”Rudd says starting at that level is smart, because then followers will recommend the product to each other. “You have to be engaged in what is going on in social media in order to get cut-through,” she says. “You need to constantly come up with new things to say. But, remember, someone may be hearing it for the first time. The best way to do it is to keep up with the news in China. I am not talking political news, rather what people are discussing on breakfast television.”

She says this shows the audience that you’re “current” and can provide a Western experience on the topic.

Logistically, Rudd uses bonded warehouses throughout China and a third-party logistics provider here in Australia. Earlier this year, eCargo – a listed e-commerce technology and logistics company that helps Australian brands sell online to Asian consumers – acquired a 45 per cent stake in Jessica’s Suitcase, making Rudd eCargo’s second-largest shareholder.

She says the future for Jessica’s Suitcase is a question she asks herself most days. “Operational questions take up my day-to-day, so it’s important for anyone running a business to step back and think big,” Rudd says. She hasn’t ruled out creating her own brand, as well as helping other brands create China strategies similar to Jessica’s Suitcase.

When asked if geopolitical tensions between China and Australia would dampen trade, Rudd disagrees. “The Australian business community has had a relationship with the Chinese business community for a lot longer than these two countries have had diplomatic relations,” she says.

The Press is a publication by PwC Australia, aimed at sharing expertise, capturing insights and working together to solve important problems.

This article first appeared in Edition 6 of The Press
By Amanda Gome, Editor, The Press

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