Wednesday 25 April 2018

Irish exporters look east for growing market in quality goods

Increased middle-class income has transformed dynamics in the Chinese market. Stock photo: Deposit Photos
Increased middle-class income has transformed dynamics in the Chinese market. Stock photo: Deposit Photos

Sarah Connelly

Irish companies should look east to find a rising marketplace for quality goods and services.

Increased middle-class income has transformed dynamics in the Chinese market. Until recently, competing on price was a serious barrier for exporters targeting China, but a shift in consumer preferences has expanded opportunities for overseas businesses.

With the review and comment sections of e-commerce websites increasingly influencing purchasing decisions, price is no longer the consumer's main priority; product quality has become almost as important. This has created opportunities for Irish exporters to invest in e-commerce and serve a growing taste for quality goods.

Irish companies and brands already have the advantage of being perceived by Chinese consumers as supplying premium products and services associated with a high level of quality. One such exporter, Felim Meade, MD of Emerald Green Baby, describes the commercial landscape that attracted his company to the region: "Everyone knows the Chinese market has huge potential. With the government's five-year plan for 6.5pc annual growth and its 'Belt and Road' initiative driving connectivity between Eurasian countries, the opportunities for growth are endless.

"The challenge lies in accessing China's potential in a cost-effective way. Emerald Green Baby has been selling in China for three years but spent years researching how to sell there. China is a very sophisticated and dynamic market, far more advanced than we are used to in Europe and America. The potential for e-commerce is clear: in China 51pc of goods are bought online and 80pc of online sales are done by mobile phone."

China is the world's top online shopping market, accounting for over 40pc of global e-commerce retail sales. Two of China's biggest e-commerce players played a major part in that growth. In 2016, Alibaba's profit almost doubled to $2.1bn and Tencent's grew 70pc to $2.7bn.

WeChat agency WalktheChat expects the cross-border e-commerce market to reach a 7.5 trillion RMB volume (€1 trillion) in 2017, demonstrating how appealing foreign brands are to local consumers. This year, the Chinese government announced it plans to establish more cross-border e-commerce pilot zones to support international companies' attempts to gain access to the Chinese market. While China's regulatory environment can still pose a challenge to cross-border opportunities, these pilots are an example of how the situation has relaxed in recent years.

Enterprise Ireland has increased support to encourage more companies to capitalise on the opportunities presented by the Chinese e-commerce market in 2018.

Several Enterprise Ireland client companies, including Emerald Green Baby, Ovelle, Irish Breeze and Clevamama, already sell on e-commerce platforms in China.

Irish companies considering China are encouraged to conduct diligent market research and visit the region to ensure they understand consumer preferences in their sector before committing to a plan.

Market research will also help companies to determine which e-commerce platform best suits their offering. Some local platforms are not well known outside China, but they are no less important within the market itself. Enterprise Ireland's Market Research Centre will help companies considering e-commerce expansion to China.

When visiting the region, Irish companies should aim to meet potential partners and distributors to get a practical sense of the market and explore demand for their products or services. Relationship building is essential to doing business in China and often must be done face-to-face. Many businesses credit interpersonal relationships as key to successful business in China. It is a reminder that, in some markets, personal connections and recommendations outweigh simpler considerations - like price.

Sarah Connelly is a Marketing Executive at the Enterprise Ireland office in Shanghai

Sunday Indo Business

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