Finance Finance News Alibaba partnership connects Aussie businesses to $1.3 trillion market

Alibaba partnership connects Aussie businesses to $1.3 trillion market

A new deal with e-commerce giant Alibaba could help Australia's struggling retail sector. Photo: Getty
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A new industry partnership with Chinese e-commerce giant Alibaba has opened up a $1.3 trillion market for Australian businesses. 

The Australian Retailers Association (ARA) announced on Thursday that a new partnership with Alibaba – often described as the Chinese equivalent of Amazon – would make it easier for Australian retailers to access millions of Chinese customers.

Shoppers spent US$853 billion (AU$1.3 trillion) on Alibaba’s online marketplace in the 12 months to March 31, 2019.

And given domestic consumption is weak, that massive consumer spend will encourage plenty of Australian businesses to make use of the strengthened ties, according to Queensland University of Technology associate professor Gary Mortimer.

Professor Mortimer told The New Daily that working with Alibaba was a “smart way” to break into a market that’s otherwise difficult to crack.

And he said the announcement was particularly good news for companies selling vitamins, baby milk formula, and “any form of Australian-produced skincare products”.

“Those types of products do exceptionally well,” Professor Mortimer said, referring to Swisse, A2 and Blackmores.

The benefit Australia has is exceptionally high food processing quality controls – and that’s why those types of products are so attractive to the Chinese market.”

Chinese consumers are less worried about accidentally buying counterfeit products when they shop Australian brands, Professor Mortimer said.

And some treat them as status symbols, too.

“We know we’ve got a growing Chinese middle class which is looking for aspirational products,” Professor Mortimer said.

“And to have an Australian branded product in your kitchen or your bathroom tends to, I guess, highlight to your friends and family and neighbours that you’re obviously quite successful.”

ARA’s announcement comes just weeks after the world was offered a fresh glimpse into the size of China’s consumer market – a sight that would have left Aussie retailers drooling with envy.

Known as Singles’ Day, November 11 is a massive 24-hour shopping event in China.

It started out as an anti-Valentines’ protest, but was co-opted by Alibaba in 2009 and converted into a bigger version of America’s annual Black Monday sale.

And, this year, shoppers spent US$38.4 billion (AU$56.6 billion) in just 24 hours.

Australia was the fourth largest exporter of products to China on the day – after Japan, the United States and South Korea – and the platform already sells products from more than 2000 Australian brands.

But Professor Mortimer said Australia’s retail sector – which just experienced its worst year since the 1990-91 recession – would naturally want a bigger share of the pie.

“You may be producing or manufacturing in Australia and selling domestically, but having an alternative revenue channel may, in fact, be a smart move,” he said.

“It may prop up Aussie businesses that are struggling to gain traction in the domestic market … and I think Australian businesses should leverage that opportunity while they can.”

Professor Mortimer added, however, that businesses could see their products counterfeited by local producers if they export to China – something which could tarnish their brand’s reputation.

Meanwhile, ARA executive chairman Russell Zimmerman told The New Daily the association would be running a series of events over the next 12 months to help Australian retailers sell their products on Alibaba’s online platform.

And he said Alibaba would help Australian businesses boost their sales among domestic Chinese tourists, by connecting them to its payments service AliPay.

“The Asian consumer has a big appetite for product out of Australia,” Mr Zimmerman said.

“They know it’s well made … it’s good value for money in many cases, it’s gone through quality controls, and they know it’s genuine.”

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