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Pathfinder lessons and learnings

Those who have successfully engaged with the Chinese market provide valuable insights into how an SME...
BRUCE BILLSON: Christine Holgate, thank you so much for making some time available to us today. You now lead the government-owned postal service, but had a well-earned reputation for what you did with Blackmores, and particularly your move into China. What did that experience teach you?
CHRISTINE HOLGATE: You know, I think one of the most important lessons when you’re with any business going into China for the first time, Bruce, is that you need to be patient and have a bit of resilience. It’s an incredible market, and a massive opportunity, and a country which loves Australian brands. But it’s not a straight journey on the roads of highs and lows, but it’s amazing when it happens.
BRUCE BILLSON: So no overnight success, no easy wins, quite a journey, and a lot of perseverance.
CHRISTINE HOLGATE: That’s right. You know, one of the things people often say to me is, if you sit back and reflect on that moment, what would you really say? And I would say, you know what? We had a really clear strategy. We were really purposeful what we were doing. But we also had a chairman and a board who were backing us and had that patience. Because unbeknown to us, just as we started that journey, something massively changed in the market, and the borders got closed. So unless you really have a clear view of where you’re going, what you’re prepared to invest, things to go up and down on that journey. But wow, an incredible, incredible journey. Fantastic results.
BRUCE BILLSON: And so a real considered strategy, but where conviction seemed at the heart of it with a real embedded belief that this is what was needed for the business. Not a summer romance, or have a bit of a look and see, but a real committed strategy.
CHRISTINE HOLGATE: Absolutely. I think sometimes people forget that Marcus, when leading Blackmores, had been in Southeast Asia for 25-plus years before I arrived. And so we took all those learnings from doing business in ASEAN before we thought about going into China. And we made sure we had strong businesses, and they were performing well. You have to do a lot of research before you enter market. You know, Asia itself is a very complex, big, different market. Each country has very different needs, often different languages, and often different regulations. So for China, it’s really important that you actually to understand the needs of that local market, the entry points into that market.
And that means employing a strong, local team to do that. In China you have the free trade zone as well as the retail market. And although you and I both know about ChAFTA, and the Chinese free trade agreement, import tariffs have been coming down. So even though they’ve come down, many functional food and vitamin products and health products aren’t actually allowed in the retail market, still, because dosage levels are quite controlled, or ingredients. So you actually have to enter the market by the free trade zones. And that’s an incredible opportunity. Those free trade zones today are worth $1.5 trillion in value. Now, Bruce, that was something four years ago only just started.
So if you think about that as a whole marketplace, they estimate the value of vitamins and functional foods, as my last company, is now worth over $50 billion in China alone. So what an incredible opportunity. But it’s complex. You need patience. You need to understand that market. And you really need to have a board backing your strategy.
BRUCE BILLSON: And a good alignment between the clean and green healthy image of Australia, the complementary foods, the wellness products, and traditional Chinese culture and traditional medicines, herbs in the diet– that was a nice alignment. But the cultural differences and relationships– that was something, again, that you’ve shared with me previously. Talk to me through how important relationships are.
CHRISTINE HOLGATE: Undeniably. You never have to go to China and persuade people to take natural health products. It’s part of their DNA. But you know, Australia, apart from lovely clean and green, we actually have the highest manufacturing standards in the world. And I think sometimes we forget this, for those of us who are working in it. When we’re working in it, we may even complain and say, the barriers are so high. But actually those very same high regulatory standards actually become our competitive advantage in an international market. But you know, you can’t just build a business overseas by just doing it by email and on the phone. You have to go and build strong local relationships.
And you have to demonstrate that local understanding of the consumer and pay respects to the government and the regulation that’s in place in that market, whether it’s China or any international market. We both know, Bruce, that relationships are critical if you’re going to build a win-win, long-term, sustainable business.
BRUCE BILLSON: And you’re bringing all that experience and wisdom to a new role now at the helm of Australia’s government-owned postal service, but a positioning as a great ally for SMEs looking to go into new international markets. What’s the strategy there? And share with us how your experience is helping to inform that approach at Australia Post.
CHRISTINE HOLGATE: Australia Post has many opportunities, and many of them right here in our domestic market. But you can’t help but think, look out to the world. 98% of global growth is happening beyond our shores. Too often do I see farmers, for those who aren’t struggling in the drought at the moment, but too often do I see farmers here in Australia think about how can they actually diversify away from just one or two major retailers, supermarkets. Nothing against those supermarkets– they’re really important for us– but we all know if we have more choices, it’s better for our business. And Asia provides an incredible opportunity just up the road from us. Let’s take Indonesia.
Very soon that will be the fourth biggest economy in the world. It’s closer to Australia than many other parts of Australia is. You know, fast-growing middle class. It’s a family-orientated market where again, as that middle class grows, what do they need? They want better food. They want better health, financial solutions, infrastructure, building, all things that Australia are really good at. And so just this burning big growth just up the road.
BRUCE BILLSON: Some delicious possibilities in international markets. Thank you, Christine Holgate, for sharing your insights and your experience with us today.
CHRISTINE HOLGATE: Thank you, Bruce.
Those who have successfully engaged with the Chinese market provide valuable insights into how an SME seeking to pursue business opportunities in China should go about it.
Patience and resilience are two qualities required when moving into the Chinese market. So says Christine Holgate, CEO of Australia Post, who has had extensive experience in this area as former CEO of vitamins firm Blackmore’s.
Having a clear, purposeful strategy is a key to success, as is ‘understanding cultural differences, local customs and how the local political and economic systems work’ (Menzies et al. 2014).
While there is no doubt that entering the Chinese market can be lucrative for SMEs, careful and thorough planning is a must. Accessing the right sort of support, knowing what the obstacles are through detailed research and learning from others’ experience how to overcome them means that the opportunities available in China are not necessarily easily attained.
If this is an area you’d like to take your SME, ensure you seek out as many sources of support as you can find, and be prepared to put the time and energy into developing relationships on the ground in China.
The opportunities are there – you need to decide if you have the time and resources to invest in making the most of them.

Your task

Describe the key elements of Blackmore’s China strategy that were essential for success. In the comments, share how you might apply these learnings to your own SME if you were to pursue a new market in China.
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