Astounding market momentum from the Daigou potential has led to buyers outside of the Chinese market to utilise a selling point from distributing local Australian products to China. The booming forecast and potential consumer power have led to an increase in Australian businesses tailoring to the Daigou target market.
Is it true that Australian brands excite Chinese customers?
In 2018 the market value of the Daigou business was estimated to profit over $850 million dollars; with the most popular purchases being baby formula, skin care, and health care. This is due to the high standard of Australian made products, ensuring quality, and green sustainability to the table. For people using the platform, it comes down to the notion of quality and trust, and Australian brands emit the reputation of natural goods and quality. This is why baby formula is seen as such a strong pillar for the industry.
However, for other categories e.g. skin care, health care, the notion may be not true. ConnectX works closely with Australian brands and distribution channels, having witnessed dozens of brands emerging monthly. Many of these brands in the Daigou industry are Chinese lead companies who understand the market rules more so than Australian led ones.
These businesses are willing to invest a great deal of their money and time in the Daigou business; trying to familiarise with the distribution network that the industry brings including live broadcasts to the influencers social followers, B2B and individual sales.These influencers are veterans in their fields, understanding how to build the brand image through word-of-mouth marketing, consumer reviews, and celebrity/influencer promotions on Chinese social media. Many Australian brands have been tailored for the Daigou market, and have become well-known to the Chinese markets more so than to local Australians.
On the other hand, Australian brands still strongly believe that the ‘Australian Made’ verification tag will bring organic excitement to Chinese consumers which it previously had. However, as the market transforms and competition increases it costs a lot more to stand out amongst the crowd. The Chinese consumer power is changing and they are swamped with ‘Australian Made’ products and have already formulated their brand loyalty to what they know and trust rather than what the Daigou industry markets them.
Building brand value has been seen as the key rule in the market.
There are hundreds of Australian made brands in the Daigou market, many being emerging businesses that have had rapid growth in the short term (established within 3 years). These businesses spend a great deal of investment on marketing & advertising, boosting sales for months. However, we have found this kind of growth is not as sustainable as we thought.
Brands use celebrity influencers and KOL to generate sales boosting, which is quite important in the strategy map; normally the sales boost could last 3-6 months, however some of them not creating the brand loyalty they need to sustain themselves in a long-term brand growth.
The market place is impetuous and businesses are expected to see sales conversion in the short run to be classified as a success, leading to relatively low thresholds in the market. Daigou distributors stock up on Chinese celebrity endorsed products, which works for a truncated time. After the short run of popularity, the distributors are forced to sell the remaining stock at a lower price, sometime even lower than the official retailer, leading to disorderly value within the market.
The brand value is what the consumer rates not necessarily what it is valued at market price. Case studies have shown the effects of advertising and the revenue can only be sustainable for a few months. The brand value is what establishes itself in the market. Great brand value creates the demand for the G&S, which entails much more than what it actually is worth or costs; thus, investment on brand management is necessary.
It was a pity that increasing Australian brands focus more on using Chinese KOL (or relevant marketing strategies) to boost the sales rather than improve the quality of their brand.
So ask yourself a question before entering into the market: Quick unsustainable revenue or brand loyalty? Do you want to control the market or be yielded by the market?
Solution: How do we build brand value?
It would be the production of high-quality products. Australian local health products have a great reputation internationally on their natural products approach. As an effect Australian brands represent this value and would not tarnish the culture that has been built up within the community.
Secondly, it is suggested that you do not only look at short-run benefits, but also aim at investing in long term marketing goals. One way is to build a sustainable brand portfolio on a social media platform designed for your target market. In China, effective social media channels include Baidu (Chinese searching engine), Weibo(Chinese Twitter) and the Redbook (beauty and travelling review). These channels are holy grails for the Chinese community and are sought for in their efficiency and effectiveness.
Lastly, the brand image should not be limited on social media, but also the production of your advertising film, the image on big panel media (outdoor media), and the quality of engagement with your customers. In addition, it would be the interaction and communication you have with your Daigou community. It all comes down to building the relationship of trust and this can be done through communicating the uniqueness, history and story behind the brand. The more genuine you are, the better it will assist in creating the connection needed behind the brand and the consumer. So go out there and venture onto your next Daigou expo to connect with your audience.