20 Apr 2017
" That initial platform is the hardest to establish but once you’ve got that, you’ve got something to build on."
Richard Meyrick, Owner and Executive Director at Vitality
Over the last seven years the wellness company has been expanding in Asia, learning many lessons along the way.
Meyrick - owner and Executive Director at Vitality – sat down with BlueNotes to speak about the accumulated wisdom he has gained first-hand from venturing into the Asian region.
We started by asking how he got his start in Asia – and how the region has changed.
Meyrick: When we established Vitality Brands Group more than 13 years ago in Australia we had a global marketplace in mind.
We were focused on Asia as our primary export region because of its proximity to Australia and the region’s understanding of the health and beauty sectors.
Over the last seven-to-eight years we have been building a foundation of demand for our products, and Asia now accounts for 5 per cent to 8 per cent of our business.
That initial platform is the hardest to establish, but once you’ve got that, you’ve got something to build on.
In terms of change, in China there have been a lot of government announcements, rulings and regulations on issues like product registration, free-trade-zone practices and there are now myriad pathways into the market, which is making it more accessible. It has been quite fast-moving in the last 12 to 18 months.
Cooper: Which markets in Asia have you prioritised and why?
Meyrick: China is obviously a big market – with a growing middle class – so we have prioritised China, Hong Kong and Taiwan, which are all markets with strong demand for quality Australian products.
In those markets it is also possible to have business models that can easily be scalable.
Digital technology and the growth of online consumption mean when consumers place an order for a product, they pay almost instantaneously.
This means funds can flow through the supply chain quickly, thus funding a company’s growth. If everyone is getting paid promptly, in terms of working capital management, it makes growth more achievable.
Cooper: What role do regional centres like Hong Kong or Singapore play in your business?
Meyrick: To our current online business they are not so critical due to the many logistical options available, however regulatory changes, like the free trade zone changes we saw last April, can impact this very quickly, making regional hubs the centrepiece of your logistics.
For offline (bricks and mortar) trading they are likely to become quite central to our capacity to provide the timely customer service critical to dealing successfully with modern trade retailers.
Meyrick: I had the opportunity to network with other business leaders and bankers which was valuable because it meant everyone could tap into a huge pool of experience and wisdom.
This has generally been accumulated out of the school of hard knocks, which is the most valuable experience of all.
From meeting other people on this trip I realised we have learned an enormous amount. I think those key learnings can be summarised into five points:
Cooper: Where do you think the greatest opportunities in Asia are?
Meyrick: Asia is a massive region and aside from China there are other large markets like India and Indonesia. When your business is medium-sized you have to focus on one at a time.
Our focus is on China. There is demand for health and beauty products there, growing spending power, and a shift to a younger demographic that means there is a greater proportion of 20- to 40-year olds with a strong disposable income. This is perfect for our product offer.
Cooper: And the challenges?
Meyrick: There is never any shortage of challenges. There are the obvious ones like cultural differences, and the communication challenges with different languages.
In different markets there can be different seasons, so your timings have to cater to that, which can be a real positive for your business or it can make things even more challenging.
Also, online and digital technology has accentuated the importance of a robust supply chain and managing lead times to deliver within the customers’ expectations.
Having a sophisticated, nimble and efficient supply chain is important, especially if demand spikes, which can happen in a large market like China, very quickly.
Building a health and beauty brand often requires a strong program of education, which has to be done in another language, and another culture. You have to be able to adapt and use all available technology and locally sourced resources to achieve that effectively.
Along with building the brand is also protecting it: fakes and copies are an issue and you have to protect the authenticity of your product.
There are also challenges with building your own team on the ground. Building such a team as you grow, means you have to manage issues like different cultures, managing from a distance, and maintaining consistency with the home market operations.
Cooper: Knowing what you know now, what would you have done differently?
Meyrick: We have certainly learned a great deal and those leanings will no doubt continue as we grow. In real-estate terms there are the ‘three Ps’: position, position, position. My three Ps are partner, product and price.
If you are not offering value for money it will be a challenge. Consumers will allow for the cost of transport, duty and taxes, but beyond that you have got to be careful you are providing value for money.
Cooper: What advice would you give to other Australian companies expanding in Asia?
Meyrick: Research is important.
It is important to plan and test your business model before you try to expand. Because of language, communication and interpretation what you thought was going to happen can happen very differently. You need to test the business before you try to push more through the funnel you have created.
Again, you need to have a long-term focus, and not be seduced by the scale and the opportunities. Many people do not realise you have to take small steps and take the time to build and get it right.
It is too easy to be blown away by tales of ‘overnight successes’ that have actually been 20 years in the making.
And last but not least, you’ve got to make sure you are having fun because building a strong and lasting export business is a lot of work and a lot of travel, and learning about their ways, culture and tastes. If you aren’t enjoying the journey, it will wear you down.
You must have partners you get on with, and you have to embrace the whole experience – that is really important for our team. If you try to do something you’re not enjoying your lack of enthusiasm and energy will surely spell disaster.
Jane Cooper is a contributing editor at BlueNotes.
ANZ has worked with the Export Council of Australia to develop a free online tool designed to help Australian businesses plan for international growth.
Be Trade Ready allows businesses to benchmark themselves against other Australian exporters, design business plans, forecast revenue and time for ROI and calculate capital requirements to fund expansion.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
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