Trade with China post COVID19
China’s leading economic indicators point toward economic growth as consumer confidence rebounds into recovery mode. According to official data, China’s GDP grew 4.9 percent year-on-year in the third quarter, accelerating from 3.2 percent growth in the previous quarter. China’s economy is likely to grow about 2 percent this year, according to a recent statement from the Peoples Bank of China (POCB).
China was able to address and control the pandemic earlier than most countries and its recovery should help Hawke’s Bay exporters.
According to China’s National Bureau of Statistics, Chinese consumers increased their spending in August. Online retail sales also expanded over the first eight months of the year, with latest figures for industrial production showing a strong recovery.
B2C e-commerce continued its strong growth as Chinese consumers became more accustomed to shopping online. We also saw Chinese KOLs connect with consumers through use of social e-commerce using livestreaming to sell products online.
China’s rapid modernisation and construction of urban infrastructure continues to surge while new innovations in mobile payments and e-commerce have showed signs of flourishing during the pandemic.
But developing new customer relationships and staying in contact with key trade partners in China remains challenging while borders remain largely closed.
As China rewrites its power dynamics, exporters here in Hawke’s Bay need to prioritise budgets that preserve and boost their lifelines in the China market, especially as international brands begin to face more competition from Chinese brands.
Face-to-face connections and relationship building will remain important. In lieu of that, anyone doing business with China is likely to be connected using the social messaging app WeChat. The app, which has over one billion active users, is more than a messaging tool because it effectively replaces the use of email in China. WeChat allows users to manage mobile payment transactions using the app on their phone and it is used by businesses to draft and send agreements and close sales.
But our need to be engaged and to keep in contact with partners in China goes beyond WeChat. Networking and building a sense of trust remains key to any business opportunity in China.
Ensuring mutual benefit has been important to every trading partnership since the early days of the China Trade. It is easier to build and nurture partnerships when you can share resources, skills and rewards.
Looking ahead, local exporters will need to embrace strategies for digital engagement as a means of keeping track of opportunities and shifts within China’s marketplace.
One of the key trends that New Zealand brands and local exporters need to understand about China is the shift to online has accelerated. China knows that it is doing very well, and consumers are becoming increasingly proud of their own culture and success. China is already two to three years ahead of the rest of the world in use of digital apps. It is already very clear that China’s domestic tourism market will also remain strong at the expense of international travel. Another emerging trend is an emphasis on health, which includes a growing interest in health-related pharmaceuticals and natural skincare products. Covid19 has also heightened food security concerns, which puts local exporters in a good position to promote a Covid-free food chain.
Local food and beverage producers here in the Hawke’s Bay can seize on this as an opportunity to focus on the premium niche mindset and continue to seek new partners and relationships based on an informative decision-making process that includes making it clear who you are, where you are, how good your product is, and how you propose doing business together for a win-win relationship.
This is all part of getting-to-know-you and building a friendship based on mutual trust and respect. Remember, dining out and picking up the tab for your guests is reciprocal, not one way. If you have enjoyed being hosted in China then make plans now for when you can play host here in Hawke’s Bay, where it is easy to showcase and highlight the region’s key attributes. The time will come when your business partners in China will jump at the opportunity to get on the next plane and visit for themselves.
In the meantime, how can you promote your business to new partners? How can you create or add value to existing relationships? Sometimes that means reinforcing an emotional value as defined by your product story. Make the most of your brand’s local origins and sense of place, highlight the lifestyle attributes of your region, and share positive testimonials from business partners and customers.
It makes sense to continue to do business with China.
China currently accounts for around one third of New Zealand’s total exports. China will continue to outperform and with so many sales channels now converting to online, we need to continue our engagement with customers and seize the opportunity to develop digital strategies and stronger online relationships.
China has over 190 million consumers deemed to be in the upper middle-class bracket who are spoilt for choice. Do we concern ourselves about having sufficient supply to meet demand, or do we focus on creating good stories and building solid reputations around premium brands suitable for the top segment of the China market?
We also need to understand China – its culture and its markets – and how our products and services appeal. This requires two-way engagement. You can’t just show up and expect it to work. That first touch point may need to be online. Exporters in particular need faster access to buyers and more intel on the marketplace.
How do you remain agile and use online engagement to find positions of opportunity?
Two key milestones are approaching that could offer value for local exporters. 2021 will mark the 40th anniversary of New Zealand’s very first sister city relationship between China and New Zealand –– namely between Hastings and Guilin, while 2022 will mark the 50th anniversary of the establishment of diplomatic relations between China and New Zealand. Both events will receive significant publicity, which may provide an opportunity to share your China story with a wider audience.
Seeking out new business opportunities and staying connected with existing trade partners also means making friends with the media and using social media to ensure the public share the same passion that you have for your brand or business.
New Zealand is highly regarded and remains a positive talking point in China. If there is a mutually beneficial story angle in there then talk about it across Chinese media. Good public relations at a time like this will help local exporters buy mindshare and loyalty. It will also help you pivot and navigate an ever-changing landscape in the years to come.