Why China’s retail revolution demands shift in seafood marketing

Published on
December 11, 2015

The distribution of foodstuffs in China is changing very fast and anyone seeking sales of seafood ought to pay close attention to how the opening up of online commerce is increasing customer access to products.

Most companies and state marketing agencies still operate in China on the premise of business to business (B2B) but China’s retail and marketing of seafood is rapidly opening up to allow more of a business to consumer (B2C) relationship.

The Internet in particular has changed the way consumers access products in China and this needs to be reflected in how exporters and international seafood trading organisations seek to target sales in China.

Seafood exporters looking for sales in China can’t afford to ignore the march of online commerce in China where traditional retailers are increasingly fighting for profitability due to online competition.

It’s likely that those who succeed and those who don’t will decide who wins in the Chinese seafood market. Smart national agencies like New Zealand are already putting huge staff and marketing budgets in play to exploit China’s e-commerce experience for food producers.

The primary goal is to increase awareness of Kiwi products among consumers – hence lots of online marketing campaigns and promotions on popular Chinese e-commerce sites.

Other countries are content merely to increase volumes of seafood exported each year to China. But this is no longer good enough. As Chinese consumers gain ever-greater access to food products through online commerce it becomes crucial for seafood producing/exporting nations who want sustainable growth in sales to China to come up with marketing plans and budgets.

The evolution of cross-border e-commerce opens up a whole new world of possibilities to Chinese consumers who can now buy products directly from abroad thanks to new policy initiatives. Only in the past year Chinese shoppers got access to Amazon’s international websites thanks to a deal with the Shanghai Pilot Free Trade Zone and Shanghai Information Investment Ltd (SII) – in effect the first cross-border e-commerce market on China’s mainland.

Previously Chinese consumers were limited to goods listed on Amazon’s operation in China. As part of its new deal Amazon – which also sells seafood in China – promises to deliver goods to Chinese consumers within a week. By importing through the Shanghai Pilot Free Trade Zone (commonly known as the Shanghai FTZ) exporters to China can theoretically at least bypass the traditional bureaucracy and registration processes which often makes China a tough nut to crack for smaller exporting firms.

American retailer Costco has already taken advantage of this new policy to launch a store selling US food products on Tmall International with orders are fulfilled via the bonded online shopping model. Tmall International (tmall.hk) was launched by Alibaba in early 2014 to serves as a platform for cross-border e-commerce, handling logistics and payment for overseas suppliers like Costco. Another similar platform is Kuajingtong: it sells goods for overseas suppliers but is also handling logistics, warehousing and online payments for big Chinese e-commerce sites like food-focused Yihaodian.

China has promoted cross-border e-commerce as a new source of growth and revenue for the nation’s exporters –and importers. As part of this plan, the slow-starting pilot Shanghai FTZ was launched in 2012, but hazy regulations meant the first few years saw little traffic. Now that’s changing as some of China’s biggest e-commerce companies – like Amazon and the giant of them all, Alibaba, one of the world’s largest companies by capitalisation.

The free trade zone isn’t a gated industrial park - spanning 46 square miles, it takes over an hour on the city’s ring roads to get from the Lujiazui financial hub to Pudong International Airport, which are both in the FTZ along with Jinqiao manufacturing zone and the Waigaoqiao bonded area near the port.

What’s crucial about this is that an importer can get product into the country and manage the process and storage and dispatch of these imports in a much more efficient and predictable manner. Importers can store goods at the FTZ for as long as they want, and can sell goods within the FTZ. Hence reaching Chinese buyers is easier: clearance of Chinese customs is only done once goods are to be shipped outside the zone. Hence a seafood importer-distributor can much better anticipate and manage demand. All of this reduces lead time to Chinese customers and removes much of the time-sensitive nature of shipping giving importers a lot more flexibility over timing and modes of transport.

Some larger seafood exporters have chosen to ship to partners with their own stores on Tmall inside China. Few international seafood firms are rich enough to set up online commerce operations in China. There are big challenges: successfully exploiting e-commerce sites like Tmall in your own right requires significant investment of money and time as well as marketing support.

But with the Shanghai FTZ opening up it’s now possible to take more cost-efficient routes to market.
China’s e-commerce market is one of the most dynamic in the world and has tremendous potential. But seafood suppliers need to keep pace with the opportunities that these new channels to the Chinese consumer offer.

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