Australia Post chief executive Christine Holgate has some unconventional advice for businesses looking to export products to China.
“Go see a fortune teller, get yourself a photo with the president and you’ve nailed it,” Ms Holgate told an audience of small businesses at Australia Post’s Crossborder Ecommerce Expo last week.
That advice stems from Ms Holgate’s own, remarkable experience when she was chief executive of vitamins company Blackmores and was invited by then prime minister Tony Abbott to attend the G20 in Brisbane in 2014.
Ms Holgate’s sales team urged her to try and get a photograph with Chinese president Xi Jinping at the high profile summit of global leaders, in a bid to boost Blackmores’ sales in China. At the time, the company was generating sales of under $1 million for the year despite spending around $10 million in the country on staff and marketing.
Advice from a fortune teller
“Because everyone told me I didn’t stand a chance, I went to a fortune teller,” Ms Holgate said. “The fortune teller told me I had to wear a piece of green, so I wore a white dress with a green necklace”.
Wearing her green necklace Ms Holgate chatted with Qantas chief executive Alan Joyce, BHP Billiton chief executive Andrew McKenzie and ANZ chief executive Mike Smith as they waited to enter the G20 event.
“[Mr Joyce] said ‘Who do you want to meet tonight?’ He wanted to meet Barack Obama, Mike Smith from ANZ said Angela Merkel,” Ms Holgate says. “I said ‘I only just need a photograph with Xi Jinping’. He said ‘You are off your head, he will be covered by security guards’. I said ‘Tony Abbott promised me I am going to meet him’.”
However much to Ms Holgate’s dismay, attendees were forbidden from taking electronic devices including phones into the event.
“I had this white dress on… it had one of those slip pockets,” Ms Holgate said. “I don’t know how it happened, my mobile phone jumped out of my handbag, into that slip pocket … just as I got through security and handed my bag in.”
Tony said ‘Pass me your phone, I’ll take the photograph’. I said ‘Tony, no, I think I would like two leaders not just one’.Christine Holgate
In what Holgate describes as “a miracle”, Mr Jinping arrived at the room and Mr Abbott beckoned her to meet him.
“Tony turns to the president and says ‘She wants a photo with you, she has her phone in her pocket’,” Ms Holgate said. “Now forgive me Aussies, anyone who has Asian blood will understand what I did next. Tony said ‘Pass me your phone, I’ll take the photograph’. I said ‘Tony, no, I think I would like two leaders not just one’. So I passed the phone to Alan Joyce and Alan Joyce took the picture.”
The following week, Ms Holgate visited China with the Blackmores board, where team members had distributed the photo widely. At Shanghai Pharmaceutical, a local chemist retailer which sells Blackmores products in China, the photo of Ms Holgate with Mr Abbott and Mr Jinping was blown up to “the whole size of the whole wall”.
That year Blackmores sales in China reached $50 million and the following year they surged to $500 million.”Was it the photograph or was it wearing a piece of green?” Ms Holgate asked the audience.
Speaking at the expo with Chinese fortune cookies provided at the entrance and a koala mascot dressed in Australia Post livery, Ms Holgate outlined her advice to small businesses looking to export to China and South East Asia.
Push for small business exports
Australia Post’s research shows 60 per cent of Australian businesses which sell online don’t sell overseas. Of those that do export overseas, only 15 per cent sell to China with most selling to the United Kingdom, United States and New Zealand.
“If I am frustrated about anything its that there are incredible opportunities not just in China,” Ms Holgate said. “We are in the best possible space and yet we still don’t have enough Aussie companies really expanding in the region.”
With Australia Post’s revenue from letters continuing to plunge, falling 10 per cent to $1.1 billion for the second half of 2018, ecommerce is increasingly important for the post office as well as small businesses.
Annette Carey, Australia Post’s executive general manager for for international services, said exports from Australian businesses are “absolutely critical” to Australia Post.
“You have domestic ecommerce and Australia Post has a really strong network,” she said. “We are using that internationally as a hook with our Australia Post Global business and strategy to integrate into our Australia Post Global platform to offer us the best lines in China.”
Ms Holgate said while the China Australia Free Trade Agreement is “very important” it doesn’t assist small businesses with the restrictions going through China’s ports.
“Health products, food products trust me you cannot get those products simply into the retail market,” Ms Holgate said. “To sell into the retail market often they say you have to test your product on animals. There is a fantastic opportunity in the retail market but the biggest opportunity is through the free trade zones.”
Ms Holgate warned small businesses not to discount their products.
“Do not fall in a trap to the wonderful Chinese distributor who wants to invest in your business because he is just going to buy your stock and discount it,” she said. “You fall into a world of pain. Don’t make the same mistakes some of us have already done. Keep your price at a premium.”
Ms Holgate recommended small businesses engage Chinese university students studying in Australia.
“You don’t have to spend a fortune on consultants,” she said. “We are small and medium businesses, we have to use our cash carefully. Just go down to the local university and you will find fantastic young people with all the skills and knowledge. Don’t waste your money on marketing agencies get yourself some students who know how to use WeChat.”
She also plugged Australia Post’s joint venture with China Post as a simple way to export to China.
“We are the only company in Australia that has a joint venture with the Chinese government,” she said. “We now have customs inside the warehouses and the ports. This is a significant benefit to anyone trying to bring product into the country.”
Lessons from Blackmores
Ms Holgate recommended businesses look to poach staff from Austrade and said when she was at Blackmores she recruited the head of Austrade for China.
“Steal from Austrade and EFIC [Export Finance and Insurance Corporation] and your business will go a long way,” she said. “These organisations are full of very good people.”
Ms Holgate established Blackmores as a wholly owned foreign entity (‘WOFE’) to enter China, a structure she descried as “worth the pain”.
“My honest view was you have to persevere and stay there and keep investing in the challenging times as well as the good times.” Christine Holgate
“I personally am not into big joint ventures, not in life or business, it is hard enough being married to someone,” she said. “Imagine how hard it is having a JV in a foreign country. Going the WOFE route is the route to go.”
Ms Holgate also touched on the challenges Blackmores faced when in 2016 the Chinese government tightened restrictions on health and food products, including the company’s infant formula, with little warning or notice.
“That was an interesting moment in time,” she said. “My honest view was you have to persevere and stay there and keep investing in the challenging times as well as the good times.”
Diversification is important Ms Holgate said.
“Don’t put all your eggs in the China basket,” she said. “I just think it is a huge opportunity, it does take huge perseverance.”
By Cara Waters