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Insight
July 2, 2014
Aussie Importers and their Eastern Odyssey
Australians are increasingly importing from Asia. Business View talks to designer, Christina Re about her journey east, the impact it’s had on her Aussie-based business, and how she believes Asia provides scope for growth and the opportunity to create beautiful products.
If present trends continue, by 2021 there could be more than two billion Asians in middle class households1. For Australians, with a total domestic market of less than 23 million, this is a dazzling statistic.
The good news for Australia’s would-be importers is that there are opportunities for businesses to import goods made in factories throughout Asia that may be difficult to source elsewhere.
The perfect design
As a child, Cristina Re collected pretty note sets, cards and stickers and created handmade gifts for her family and friends. When she graduated from Swinburne University with a degree in design she was already on her way to turning her talent and passion into a unique business.
“I began by designing a line of cards, stationery and invitation kits,” she says. “Then a number of my friends got married and asked me to design their wedding stationery. This was in 1994, when the only designs you could buy off the shelf were very traditional. I saw this as a potential niche.”
Soon after, she introduced a range of ‘DIY’ stationery that enables customers to create their own invitations and other items using her designs. This proved to be popular and, as her business continued to grow, Re expanded into lifestyle products with her own bath and body range, then into homewares, including designer tableware. Today, she has 15 staff and turns over between $2.5 million and $4 million a year.
“Having a good business banker and a supportive team at NAB who believe in my product has really helped us to develop the business,” says Re.
Major department stores account for the majority of her business. Rather than use distributors, she has a central warehouse and employs representatives around the country.
Growing competition
“We were manufacturing in Australia until about five years ago, when the competition became too tough,” she says. “Major competitors in the market started mass-producing similar designs to mine for a lower cost. The only way the business could survive was if I outsourced the manufacturing to China. I had no choice in where to get the ceramic products made – no one in Australia had the facilities to create my designs.”
Re began her move into Asia with rigorous research followed by visits to local trade shows. “We were extremely impressed by the Canton Fair,” she says. “It was truly magnificent in terms of choice and the quality of the items we found there.”
She drew up a shortlist of possible suppliers and began visiting factories all over China.
“We have so many different product categories that we need to use a number of different factories,” says Re. “We also have two or three factories producing the same product. That gives us back-up in case of an emergency and also the capacity to negotiate.”
Her priorities are always the same – the quality of the product and the integrity of the business. “We only deal with businesses that treat their staff fairly and ethically, and where everything is documented and above board.”
The main challenge is long lead times, which requires planning four to six months ahead, and even further ahead around Chinese New Year. As most of her projects have a deadline, Re needs to be sure that everything is right first time.“
Some of our shipments include thousands of products and there’s no time to return anything that I’m not pleased with,” she says. “I always go to the factory to do a final check for the big collections and I like to be there in person when we’re working on one-off projects so I can be sure they’re clear about what we want to achieve. We have a production manager who speaks Mandarin but the language barrier can still result in misunderstandings.”
Re believes Asia provides scope for growth for Australian businesses as well as an opportunity to create beautiful products. “The opportunities are there but you must be prepared to understand the culture, to build very good relationships and to travel.”
Researching the market
Asia consists of so many different markets that it can be hard to know where to start. “Singapore is considered to be a gateway into south-east Asia, just as Hong Kong can be seen as a gateway into China,” says Richard Kennerley, State General Manager, NAB Business Queensland. “Both are very important global financial centres, have strong expat communities and are probably the easiest to deal with if you’re new to Asian culture.”
Kennerley points to Austrade, chambers of commerce, industry groups and NAB as valuable contacts. “They can all put you in touch with people who have experience of working in Asia and can help you gain an understanding of relevant Asian markets,” he says.
But it’s a mistake to think you can do business in Asia from a distance. “Strategic alliances, partnerships and manufacturing capabilities are all built on trust and mutual respect,” he continues. “These can only be developed with regular visits and face-to-face meetings.”
Research is also important to establish the form these meetings might take. For example, the Chinese consider long banquets to play an essential role in building long-term relationships while many Australians feel they’re a waste of time. The Chinese way of negotiating can sometimes seem slow, but it’s worth remembering that, through Chinese eyes, Australians can sometimes appear impatient. But what’s true for Beijing may not be true for Indonesia, Taiwan or Malaysia – or other parts of China.
“Another big mistake is to think in terms of a single ‘Asian culture’,” says Kennerley. “Asia is a very complex, diverse, dynamic and multicultural region and it’s vital to understand just how dramatic those cultural, social and political differences can be.”
Sound business principles
Attractive as they may be, the potential benefits of doing business with Asia shouldn’t obscure the need for sound business principles. “As with any business venture, you need a very clear understanding of what you’re trying to achieve and a well-thought-out, realistic plan for achieving it,” says Kennerley.
Venturing anywhere outside of your domestic territory introduces a new set of risks, both financial and non-financial. And, again, these will vary according to the country you’re dealing with, your industry sector and whether you’re exporting to Asia or manufacturing there.
“At NAB we pride ourselves on helping customers who are looking to develop their businesses in Asia to understand all of the risks and how to mitigate them,” says Kennerley. “We have a very specialised team in Australia, coupled with a strong network of offices throughout the region, so we can provide support and advice every step of the way.”
1”China’s Emerging Middle Class: Beyond Economic Transformation” (Cheng Li, editor), Washington, DC: Brookings Institution Press, 2010
This article was first published in Business View magazine (May 2014). For more articles and interactivity, download the iPad edition of Business View for free via our new app NAB Think.
