Chinese baby boom crucial time for brands

“There is a bit of a mini baby boom going on with the increasing relaxation of the one child policy,” he told the Infant Nutrition Council conference in Auckland.

“This is an important time to establish brand relationships and consumer relationships.”

Alibaba is the biggest e-commerce company in China and the largest retail platform in the world.

Huge numbers of customers are being reached through cross-border e-commerce (such as Alibaba) and the numbers will keep growing, Smulders says. Mother and Baby is one of the largest categories and that’s where infant formula products sit. Fortified milk powders fall into the closely related category of food.

Alibaba is strong in the categories that Chinese consumers want to buy through cross-border e-commerce.

There is a sophisticated border clearance payment and logistics system that is all integrated.

It is called ‘trade single window’, and products are moved from a bonded warehouse where they are picked and packed and cleared to enter China as a personal parcel delivered to an individual consumer.

Infant formula falls into a more sensitive category and is regulated more stringently than other categories.

Smulders says until cross-border e-commerce was formalised it was a very difficult situation for the Chinese Government to handle. Everything was coming in through the post, grey channels and personal carry. As Chinese consumers were demanding more imported foreign products, there was an unstoppable flow coming in and no regulation, no tax and no control.

“China has undergone a supply chain revolution if you look at cross-border e-commerce,” he says. “It has gone from personal carrier or postal to a sophisticated system now through cross-border e-commerce which goes through a bonded warehouse channel.”

Daigou and postal channels still exist. But with the bonded warehouse channel, traceability, quality control and the logistic and supply chains are much improved.