Exporting to China: a formula for success20th Dec '17
How both online and offline techniques led an Irish baby-food company to break into China
When Felim Meade and Brian Goff of Irish company Emerald Green Baby started exporting baby milk to China back in 2014, neither of them had ever run an e-commerce site or had any dealings with China.
What they did have was more than 50 years of retail experience between them and a heck of a work ethic.
Meade had run a chain of successful restaurants, Graham O’Sullivan, in his native Ireland and was on a trade mission to Taiwan when he stopped over in Hong Kong to visit a relative. “She was telling me how hard it was to get [baby] formula,” says Meade. “I had lots of contacts in the food industry and access to wholesale quantities.”
Many Chinese overseas (often students) are already wise to this trend and buy up small amounts of formula to send back. Other larger companies do this by the container-load. “We knew we could be somewhere in between. A sort of middle market,” explains Meade.
The pair tested the waters in Hong Kong for a year. “We knew we could communicate in English and use Facebook and there were no tariffs,” says Meade. “We could also get the product from door to door in 42 hours.”
To succeed, they ran Facebook campaigns and advertised on mother and baby forums, and by July 2015 had integrated online payment platform AliPay and gone multilingual. “We had a business, but our eye was still on the mainland,” says Meade. They made some mistakes along the way. For example, he laughs, “We translated our website into simple Chinese, but in Hong Kong they use traditional Chinese. They also look at websites differently [from the outside in], so we made all these mistakes but it was part of a learning curve.”
In 2015 they started “just getting on planes” and trying to break the mainland Chinese market. “It was meeting after meeting and with each one we got another nugget of information,” says Meade. “We used all our food connections, relatives, the Irish, French chambers of commerce, everything we could think of.”
“We learnt that the art of doing business in China is very different,” says Meade. “You never make a deal on a first meeting – and if you do, it’s a bad deal. They want to socialise a bit, have dinner with you, find out about your family. They take a much longer-term view of business.”
What the pair weren’t prepared for when they entered China was the sophistication of the market. “It’s so far advanced it puts us to shame,” says Meade. “Their use of social selling, integration of payments, the whole ecosystem of how people buy and how it’s all integrated is astounding.” This meant they had to up their game considerably. For example, he explains, “The Chinese consumer wants to talk to the retailer before they buy, as they buy and after they buy. You have to have customer service at all these stages – and if you don’t get a 4.5-5 out of 10 rating, they’ll flag you.”
Not only is the ecosystem different, says Meade. “Twenty-one per cent of all domestic purchases are done online and 81 per cent of these are done on a mobile phone, so you have to have customer service built into all of that or you’re dead in the water.” The pair found this out the hard way. “We wanted to set up on the [Alibaba-owned] Taobao platform, but because we didn’t have Chinese mobile phones we couldn’t.” So they hopped on a plane and got them: “It was expensive but worth it”. They spent the next six months selling to China, but operating everything from Dublin, answering customer service queries in real time.
Now the company represents eight different companies in other Irish premium mother and baby products. Meade explains, “We represent those companies in China, we register them, CIQ [China Inspection and Quarantine] them, get patent protection and do all the marketing and logistics.”
The company launched its WeChat store in February 2017 and since then has moved all logistics to Shanghai, with operations undertaken by the five-strong team in Dublin. “You absolutely don’t have to be in China to sell into China,” Meade says, “though constant contact and relationship-building is crucial”.
WeChat is only the first leg of the company’s latest strategy, says Meade, and it is cutting its teeth on O2O (online-to-offline), a Chinese solution to a Chinese problem, whereby products are available to touch and look at in store but orders are processed online and delivered the following day. The company will be going into 200 such stores by the end of the year.
Since its last China visit, Emerald Green has signed a number of deals, one of which Meade estimates is for €3m-€3.5m, and he expects revenue to increase dramatically to €5.5m in 2018.
Meade makes his foray into China sound a breeze, but when you look at the hoops they jumped through it’s clear there was some hard graft involved: “Everything takes longer than you think,” he says. “Don’t underestimate the importance of being on the ground.”