E-commerce has no boundaries and has enabled New Zealand to surpass one million retail parcels sent to China – through just one company.
NZCTA Member (& 2017 HSBC NZCTA Awards finalist) Trademonster, an e-commerce firm which helps New Zealand businesses sell product on Chinese e-commerce sites such as Alibaba’s Tmall and JD.com, has this month surpassed sending its one millionth parcel to China.
The Auckland and Shanghai-based company, which operates through NZ Post’s East Tamaki distribution centre, has experienced growth of 400 per cent in the two years it has been operating.
Trademonster founder and managing partner Gavin Liu Yang said the potential for cross-border between New Zealand and China was endless, and in its infancy.
“In China e-commerce has developed so fast in the past three to five years. In New Zealand, clearly, it’s slow moving for e-commerce and that is a big, big opportunity,” Yang said.
“For New Zealand, a lot of businesses have only just touched the market. Also, the majority of trade can only happen through cross border e-commerce meaning they cannot go through traditional trade, which is a much bigger market in China.
“Online e-commerce compared with traditional trade – there’s a huge gap, the business opportunities are tremendous in the next three to five years.”
The majority of New Zealand skincare brands such as Antipodes and Trilogy cannot sell product through bricks and mortar retail in China as strict laws prohibit the selling of products not tested on animals.
Approximately 95 per cent of trade between the countries has been without duty.
Yang said New Zealand was popular in China for its “environmentally clean image”, influencing consumer spending habits.
“Everything made in New Zealand, you can sell for a premium price in China.”
Trademonster works with 120 New Zealand companies including many small firms and Antipodes, Linden Leaves, Swisse and Thompson’s, BioBalance, Go Healthy, Goodhealth and Nutra-life.
Revenue for the company in the last financial year was $18 million and it is targeting sales revenue of between $35-$40 million in 2019.
Cosmetics and supplements were currently the most popular purchases among Chinese consumers, but he expected petfood and fresh products such as apples, milk and frozen meats would be popular this year, Yang said.
The free trade deal between New Zealand and China, established in 2008, has enabled an explosion of cross-border trading, The Agency 88 director Nick Siu said.
“The desire for Chinese consumers to have access to safe trusted products has led this growth from, we believe, a combination of daigou “suitcase sellers” who number an estimated 21,000 in New Zealand and the massive growth in tourism,” Siu said.
While trade between the countries was strong, Siu said the size of New Zealand and therefore its ability to meet demand, was an issue.
“A significant issue for New Zealand however is scale – being able to provide the volume that is required for the Chinese market is very difficult for New Zealand producers,” he said. “New Zealand needs to get more accurate in what it is marketing to China – rather than trying to be a solution to all – understand what is the true value proposition of the product and who that target market is in China.”
Demand for New Zealand products was strong but problematic, Siu said.
“The issue for New Zealand is that we can’t deliver the volume at scale. We can only ever be a niche supplier,” he said. “The trick is finding the niche before you start selling in China through a system like Trademonster. You need to find that magic thing that is valuable for an audience in China and match the volume that the New Zealand supplier can create.”
Trademonster has nine employees in New Zealand and 12 in China.
This article was originally published in the NZ Herald. Click here for the original article.