Breaking into China market: a hard road for Australian business

Breaking into China market: a hard road for Australian business

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ELEANOR HALL: The rapid rise of China's middle-class offers opportunities for Australian businesses.

But, as many are finding out, it's not as simple as just arriving and setting up shop in the world's second-largest economy.

Businesses have had to negotiate the myriad of Chinese regulators and navigate the internet restrictions - better known as the "Great Firewall of China".

That's opened up an opportunity for a specialist digital business.

Business editor Peter Ryan has this special report:

PETER RYAN: Here in a modest Sydney hotel there are big ambitions from small-time entrepreneurs, keen to make money in China.

(Sound of a champagne cork popping)

It's a champagne celebration for Sinorbis, a digital company coaching clients on how to exploit the rise of China: its aspirational middle-class, rapid urbanisation and surging demand for high-quality goods and services from the West.

NICHOLAS CHU: I have seen over the last few years how huge the demand was from China for Western companies and services; but how difficult it was as well.

So we wanted for Sinorbis to close this gap.

PETER RYAN: Sinorbis founder and chief executive Nicholas Chu:

NICHOLAS CHU: A lot of companies and organisations think that they can just reproduce what they have been doing here in Australia or everywhere else in the world.

You don't have Google, you don't have Facebook, you don't have Twitter. You have to relearn how to do things online in China. 

PETER RYAN: So no Google, no Facebook, no Twitter: what do they have in China?

NICHOLAS CHU: You have counterparts like Baidu, you have Webb and ReChat in terms of social media. And you have YouQ, the equivalent of YouTube. 

PETER RYAN: And is this market going to be getting even bigger? It sounds like you're getting in on the ground floor?

NICHOLAS CHU: Yes, absolutely. It's already much bigger than the US market in many ways: 688 million internet users and still growing. 

We forecast that the commerce space will be twice the size of the US market in a couple of years. 

PETER RYAN: One big opportunity, fraught with cultural and regulatory issues, is the recent relaxation of China's one-child policy.

The prospect of middle-aged couples racing to conceive a second child before it's too late is a major but complex opportunity for Dr. Raewyn Teirney and her Sydney-based company, ConceivePlease.

RAEWYN TIERNEY: Yes, well I think it's really exciting and fabulous they've dropped the one-child policy and given couples more options to extend their family.

You know, it's a great opportunity for my product to get into China and giving people advice and a one-stop shop kit that will help them conceive naturally. 

PETER RYAN: This is clearly a very big cultural change in China. So what is Sinorbis doing to assist you get into that Chinese market?

RAEWYN TIERNEY: Yes, well it's very difficult getting into the Chinese market. They are going to be helping initially with setting up my website and a whole digital marketing campaign and social media campaign. 

PETER RYAN: What's your assessment of how difficult it is to break into China, given the tight regulation?

RAEWYN TIERNEY: Oh, extremely difficult trying to get the message across appropriately into China, which might be very different for Australia.

Sinorbis have helped me with a whole new Chinese name for my product. They have researched and have focus groups around my product that have given a better idea as to how to approach the female consumer in China.

PETER RYAN: But get ready for big cultural and regulatory hurdles and moments of disappointment, says tech entrepreneur Leo Coates, who made his first attempt to break into China four years ago. 

LEO COATES: It blew me away. I had all the textbook study and understanding that you can have in the world, thinking that business in China should be fairly straightforward.

However I found myself sitting down, eating McDonalds on the trade room floor, thinking: how on earth am I going to do this?

From the authorities, the complications with the language and the culture, right the way through just to pricing structure: I was in an absolute twirl.

PETER RYAN: For cashed-up Chinese, the big-ticket items are real estate, health supplements, travel, and education.

There's also growing demand for Australian wine - but only the best.

DANDAN CHENG: If the taste is good, they tend to look for the same brand or the similar one type as well. 

PETER RYAN: But Dandan Cheng, the Shanghai-based chief operating officer for Sinorbis, says Australian exporters need to understand that, when it comes to wine, it's all about image and status - not necessarily the drinking.

DANDAN CHENG: They want the package to be more inspirational and fit for their perception, as wine is more premium type of products, particularly when, compared with the pricing, with those wine from France or from California. 

PETER RYAN: So just putting a picture of a kangaroo on a wine label is not going to do it for the average Chinese?

DANDAN CHENG: Not really. I think kangaroo may not be attractive enough. But on the other hand, kangaroo itself or the koala: this is a good thing.

But it's still about the entire design, the feeling that the design itself can deliver the message.

PETER RYAN: Dandan Cheng says knowing how to drink the right way is important when dealing with local staff; and that Australian businesses need to get with the culture. 

DANDAN CHENG: There might be some drinking culture among Australian people. They have, like, a beer or wine together after work. And they just drink: they don't eat the food.

But typically for Chinese people, they need to have hot food as their supper. And they can have the drink meanwhile, but they need to have the food - and hot food. (Laughs)

PETER RYAN: Australians perhaps drink a little bit too much?

DANDAN CHENG (laughs): Probably. So why I give this example: Australian company, if they go into China and they hire local people there, you also need to understand this type of culture, right? Because we want to motivate the local employee there.

PETER RYAN: Of course, in China, saving face and not rocking the cultural boat might appear to be everything. But Sinorbis co-founder Allan Qu says doing business in China is not for the faint-hearted. 

ALLAN QU: For any companies, including Australian companies: if you really want to win the game in China you have to be aggressive: aggressive of a marketing strategy, aggressive about dealing with authorities, aggressive about competing with other foreign competitors.

PETER RYAN: It's known as "stoking the dragon" - or getting a slice of China's aspirational appetite, without getting bitten. 

ELEANOR HALL: And that report from our business editor, Peter Ryan.