The Chinese middle class’ rising desire for ‘clean and green’ Australian products
Australian brands are taking advantage of China’s growth by marketing products to the growing Chinese middle class, writes Dave Sutherland.
China’s economy is changing from an infrastructure and fixed asset investment economy to a consumer economy.
Urbanisation, more private enterprises, a growing labour market and policy initiatives are giving people access to better standards of living, better jobs, and better pay. As well as this, government reforms are in play to allow shared wealth among all Chinese to help flatten any potential gaps between classes, ensuring a more equitable society.
What all this means is that the Chinese middle class consumer is arriving, and it will have an impact on you. A few hundred million people will have more money to spend on your products and services.
According to figures from The Economist, private consumption in China is growing at 7.7% per annum versus Australia at 2.5%, and it has a long way to go; private consumption per person in China is just US$2,900 versus Australia at $34,000.
Where will this growth hit?
Let’s take a look at Blackmores, the vitamin supplement company. They’re talking sales growth in China jumping 10-fold this year alone. Shares were sitting around $45 back in February. They’re now pushing towards $140 per share.
Christine Holgate, the CEO, attributes a part of this growth to the development of a strong brand proposition and support from brand marketing across the group. This has a positive influence on the heaving mass of online shoppers in Shanghai and Beijing that are buying trusted and high quality Australian brands.
In even more recent times, Swisse Wellness has now been sold for more than $1.5 billion to a Hong Kong company, another example of the confidence and growth of Australian consumables out of China.
And it isn’t just vitamins and health supplements. Australian products are known to be of high quality and ‘clean and green’, and with the current exchange rate, your products are looking very appetising for shoppers in China.
The sheer volume of people in China who are growing up and have money to spend outweighs anything that we’ve seen in the past. McKinsey estimates that it is three times the size of the US baby boomer market.
India is a similar story. I reached out to our Mumbai office to find out how they’re dealing with their own astronomical growth, and the figures that came back are impressive; rising income per capita, decreasing poverty, and unseen before numbers of school enrolments all lead to similar predictions. India’s population will surpass China’s in 2022. The mass of people moving into middle class will be one to watch in the next few years.
And when a few hundred million people have more money to spend, a lot of brands will be noticed, and consumed.
And with an influx of brands competing for the hundreds of millions of dollars in China, where will your brand be, and how will you stand out to get attention against the already established brands?
Riding the ‘clean and green’ wave
Blackmores and Swisse, both with trusted and strong brand value, are riding the wave of the positive perception of Australian products. But it is not a job done and dusted. Like every good investment, it takes cultivating and close management to continue to evolve brands, to stay relevant. Blackmores recent example is partnering with a strong Chinese brand ambassador, Li Na, the Grand Slam tennis champion, back in April, to help build brand awareness and trust.
In China’s evolving economy, the opportunities are immense, and brands must be relevant and agile to be noticed. They need to evolve to stay relevant whilst staying true to their core DNA and offering. Australia is positioned well to take advantage of opportunities that abound in multiple sectors. Like agribusiness, where Australia is placed to be the food bowl of Asia, and government reforms are helping build this pathway. And in education, with year on year increases in university offers due to our world-class education system.
The good news for you is it’s not too late to get involved, but you need to be doing something about it now.
Evaluating foreign markets, building brand relevancy, value and trust, developing service and product innovations and going to market can all be started and developed by talking to the right people.
If you’re not thinking about your new customers in the region, you should be. If you don’t know where to start or how to build on what you’ve got, then get in touch with the people that can help.
This is your chance to be part of the consumer economy, or face missing out altogether.
Dave Sutherland is executive director client services at Landor.