The Chinese middle class’ rising desire for “clean and green” Australian products

Australian brands are taking advantage of China’s growth by marketing products to the growing Chinese middle class.

China’s economy is changing from an infrastructure and fixed asset investment economy to a consumer economy. Urbanisation, more private enterprises, a growing labour market, and policy initiatives are giving people access to better standards of living, better jobs, and better pay. As well as this, government reforms are in play to allow shared wealth among all Chinese to help flatten any potential gaps between classes, ensuring a more equitable society.

This is relevant to Australians because it means that the Chinese middle-class consumer is arriving. A few hundred million people will have more money to spend on products and services.

According to figures from the Economist, private consumption in China is growing at 7.7 percent per annum (versus Australia at 2.5 percent), and it has a long way to go; private consumption per person in China is just US$2,900 versus $34,000 in Australia.

Where will this growth hit?

Let’s take a look at Blackmores, the vitamin supplement company. Its sales growth in China jumped tenfold this year alone. Shares were sitting around $45 back in February. They’re now pushing towards $140 per share.

Christine Holgate, Blackmores’ CEO, attributes part of this growth to the development of a strong brand proposition and support from brand marketing across the group. This has had a positive influence on the heaving mass of online shoppers in Shanghai and Beijing who are buying trusted, high-quality Australian brands.

In even more recent times, Swisse Wellness was sold for more than $1.5 billion to a Hong Kong company, another example of the confidence and growth of Australian consumables in China.

And it isn’t just vitamins and health supplements. Australian products are known to be high quality and “clean and green,” and with the current exchange rate, Australian-made products are looking very appetising for shoppers in China.

The sheer volume of people in China who are growing up and have money to spend outweighs anything that we’ve seen in the past. McKinsey Quarterly estimates this group to be three times the size of the U.S. baby boomer market.

India reveals a similar story. I reached out to our Mumbai office to find out how India is dealing with its own astronomical growth, and the figures that came back are impressive: rising income per capita, decreasing poverty, and unparalleled numbers of school enrollments that all lead to similar predictions as in China. India’s population will surpass China’s in 2022, so the mass of people moving into the middle class will be something to watch in the next few years.

And when a few hundred million people have more money to spend, a lot of brands will be noticed and consumed.

With an influx of brands competing for the hundreds of millions of dollars in China, where will your brand be, and how will you stand out to get attention in comparison to already established brands?

Riding the “clean and green” wave

Blackmores and Swisse, which both have trusted, strong brand values, are riding the wave of positive perception towards Australian products. But it is not a job done and dusted. Like every good investment, it takes cultivation and close management to continue to evolve brands and stay relevant. For example, in April, Blackmores partnered with a strong Chinese brand ambassador, Li Na, the Grand Slam tennis champion, to help build brand awareness and trust.

In China’s evolving economy, the opportunities are immense and brands must be relevant and agile to be noticed. They need to evolve to stay significant whilst also being true to their core DNA and offering. Australia is positioned well to take advantage of opportunities that abound in multiple sectors. Agribusiness is one area in which Australia is poised to succeed, with potential to become the food bowl of Asia due to government reforms helping to build the pathway. Education shows a similar story, with year-on-year increases in university offers as a result of Australia’s world-class education system.

The good news for Australian brands is that it’s not too late to get involved, but they need to be doing something about it now.

Evaluating foreign markets, building brand relevancy, establishing value and trust, developing service and product innovations, and going to market can all be started and cultivated by talking to the right people.

If Australian brands are not thinking about new customers in the region, they should be. If they don’t know where to start or how to build on what they have, then get in touch with people who can help.

This is a chance to be part of the consumer economy, or else face missing out altogether.

This blog was originally published by Marketingmag.com.au (October 2015).

Header image courtesy of flickr user 11×16 Design Studio.