The largest e-commerce company in the world – Alibaba Group – is keen to attract Kiwi exporters to their Tmall Global platform, allowing them to create an online store and sell directly to Chinese consumers (without having to create a physical presence in China).
Some 14,500 overseas brands (80% of them selling in China for the first time) can be found on Tmall Global, which is extremely popular with Chinese consumers wanting to buy foreign brands cross-border.
With the opening of its Australia-New Zealand Headquarters (and the signing of a Memorandum of Understanding with the New Zealand Government), Alibaba Group wants to draw New Zealand merchants to the platform.
How to open an online shop on Alibaba’s Tmall Global
Entry to Tmall Global is currently by invitation only, and is all about selling authentic, high quality goods. New Zealand businesses must either be directly invited by Alibaba, or can apply through authorised ‘Tmall Partners’ (TPs). TPs are third-party businesses that have an existing relationship with Tmall, and a number of these operators have popped up in New Zealand as a result of Alibaba’s focus on this market. Finding the right partner with the relevant industry experience is an essential component of success.
You can find details on the entry process, the different types of stores that can be opened, and the documents required to get started on Tmall Global’s website.
Kiwi merchants should either ship packages straight from New Zealand (by direct mail or consolidated shipment), or store their products in bonded warehouses within free trade zones in China for shipment to consumers. Choosing the right model will depend on sales volumes and other considerations, as each model has different logistical, regulatory and tax implications that should be explored.
For smaller businesses (with no existing ties to China) the direct mail model can be a practical, low-risk way for companies to dip their toes in the market. If successful, the model can then be scaled.
Challenges: some fundamentals
A key challenge for Kiwi businesses entering the e-commerce ecosystem is to stay relevant in a saturated market. Businesses need to focus on a clearly defined target market, and make sure they have a unique selling point above and beyond ‘brand New Zealand’, which is simply not enough anymore.
A Chinese social media strategy (incorporating the likes of WeChat) is also crucial to generate trust – as Chinese consumers are inherently distrusting of new products, particularly food – and because a large portion of e-commerce sales originate from social media.
Chinese e-commerce laws are changing constantly, and tend to follow the Chinese government’s strict compliance with quality and safety standards. Rules can change quickly and with little warning, so it pays to monitor changes to e-commerce policy closely, as well as the ever-evolving trends in e-commerce marketing (particularly in the social space).
NZTE is a good place to begin when seeking information on these sorts of changes.
Intellectual property (IP)
It is crucial businesses get their trade mark registered in China before they market their brand on any e-commerce sites. China is a ‘first to file’ country (in other words, whoever registers the brand name first, gets it), so businesses should do this before they speak to a potential business partner, start any marketing activity in China, or even attend a trade show. This will safeguard against the risk of their brand being misappropriated by a bad-faith trade mark squatter. Trade marks should be registered in English, as well as in Chinese characters.
More generally, don’t overlook the importance of ring-fencing your IP in China before launching a product via digital channels.
If you’re looking to do business in Asia, we have an Asian Business Banking team that can work with you to get the banking services your business needs, and connect you with key contacts and networks in Asia.