China: a world of opportunity

The rapid development of "social commerce" in China was the key to this, John O'Loghlen, from the Alibaba Group told the Australian Dairy Conference in February.

The Alibaba Group, which was founded in 1999 by 18 people led by Jack Ma, a former English teacher from Hangzhou, China, is a vast network - or what it describes as an ecosystem - of online commercial platforms, computing services, social media sites, digital entertainment and financial services.

The business connects consumers to businesses, businesses to businesses and consumers to consumers through its digital platforms. The businesses are larger than ebay and Amazon combined and the gross merchant value of products going across the platforms is larger than Walmart.

Its financial services include a mobile phone app Alipay, which Chinese consumers use instead of cash and which is bigger than Mastercard.

Mr O'Loghlen said people were living on this platform and they used it multiple times in the day to buy products.

Alibaba has benefitted from the rapid adoption of the internet and smartphone in China, where ecommerce had grown unlike anything in the world.

But it is the emergence of social commerce - or brand marketing and transactions through its social media sites - that offer the big opportunity for Australia, said Mr O'Loghlen, who is the general manager business development for Alibaba Tmall.

He said the Chinese had a strong culture of reviewing products "very aggressively" - with some brands offering reimbursements for reviews to encourage this.

"So before anyone buys anything in China, they will do two things: they'll ask their friends for a word-of-mouth recommendation and then they'll go to online and review it actively," he said.

Australia and New Zealand were among of the top five selling countries into China on the sites.

"Australia and New Zealand are gifted with an incredible phenomena right now, which is the Chinese resident and student visitor to Australia," he said.

"You may have heard them being referred to in the media as daigou shoppers, effectively home shoppers.

"Chinese who moved to Australia or have lived here for some time sometime really put all those brands on the map."

This included brands such as Blackmore's and Fonterra.

"When I speak to colleagues in Europe and North America, they would love to have the penetration of Chinese in their communities that we do here because it doesn't exist anywhere else," Mr O'Loghlen said.

"We effectively have three million Chinese either visiting or living in Australia and New Zealand every year - half of them tourists and half of them residents and then they are affecting their friends and everyone else in China through their smartphone. We see this an asset.

"I think the smart brands and bigger businesses are really embracing the top daigou, and over time all the grey channels that have been used to get these products into China have been cleaned up and this is an incredible opportunity for us."

Mr Ma learned to fish and drive in Australia, so it was incredibly important to him.

Alibaba was not interested in competing with Amazon - it was focused on platforms for selling to Chinese, Indian and South East Asian consumers.

The range of businesses selling on Alibaba was huge, from multinationals to small boutique products, using the platform that best suited their size.

The products being sold were moving away from commodity products to branded products. "The Chinese want to live your lifestyle, they want to enjoy the Australian New Zealand experience, they want to wear it, they want to put it on their skin, they want to ingest it, their kids are going to come to school here.

"They are effectively becoming Australian and New Zealanders by experiencing these products.

"What may have been dry formula in the past, we see the future as being different types of formula and fresh products."