With the cost-of-living crisis changing behaviour, maybe this is the right time for competitor brands to look elsewhere.
Australia’s cost-of-living crisis is dramatically shifting consumer spending habits. A May 2024 survey by MYOB found 62% of Aussies are opting for cheaper options at the supermarket, 62% reducing spend on entertainment, and 51% cutting back on clothes and cosmetics because of rising costs. At the same time, small and medium businesses are having to adjust their market strategies to cope. Sales dropped by 3.5% between 2023 and 2024, with nearly half of all small businesses in Australia currently operating at a loss.
Meanwhile, the quasi-monopolisation of big retail brands in Australia makes it even more difficult for smaller competitor brands to gain a foothold in the market. Two players dominate grocery and liquor. Likewise, two aviation firms rule the skies. In fact, Australia ranks as one of the world’s most concentrated markets, with industry concentrating more than ever. This drives up prices, reduces innovation, and stymies competition. The cost-of-living crisis isn’t helping matters.
Even worse for smaller brands is that these big players aren’t going anywhere. Research by the OECD and Macquarie University found top companies rarely get dislodged from their positions, especially in uncertain economic times, like a cost-of-living crisis, where consumers just go with what they know. These companies also prevent new entrants from claiming a stake. Estimates show that between 2007 and 2021, monopolisation led to as many as 6,300 fewer employing firms than Australia would have had otherwise.
Rather than trying to win a rigged game in a tough environment, are there other options for competitor brands to make a name for themselves? While the cost-of-living crisis is making things difficult domestically, do other geographies across the region offer more of an opportunity for success? With a growing middle class, favourable trade relationship, and innovative sales channels, China may be a potential option.
Why China might be right for your brand
Beijing is implementing a series of measures aimed at revitalising consumer confidence and boosting spending. Much of this is to stave off a cost-of-living crisis on the mainland. These include a nearly $300 billion investment into sovereign bonds in 2024, while slashing mortgage rates. The National Development Reform Commission has also revealed more initiatives to help small and medium businesses, boost private sector financing, and focus on increasing domestic demand. Their stated goal is to benefit livelihoods and promote consumption.
That’s great news for Aussie brands looking to expand. China, obviously, isn’t going to be a holy grail for every brand though. Getting the market right takes a tremendous amount of research, having the right partners, and deeply understanding consumer sentiment. It also takes time and money, which may not be available to some smaller businesses. But for competitor brands that are able, China’s business landscape may not be as daunting as you might expect.
First, the Chinese market is massive and growing. Most people know it is one of the world’s largest consumer markets, with an estimated 800 million people entering the middle class by 2030. With this comes higher levels of disposable income. At the same time, desire for Aussie products is at an all-time high. Where we’re really seeing this play out is with more premium products in the health, wellness, and F&B spaces. That’s the exact opposite of what’s happening at home, where Aussies are shying away from top-shelf items.
Second, China and Australia have an increasingly good trade relationship. While fraught during the Covid years, Prime Minister Albanese’s July trip to China, loosening restrictions on key industries, and forward outlook all underscore how this is improving. AustCham’s 2025 Doing Business in China Report found 86% of companies view the improved Australia–China relationship positively, with 53% saying doing business in China has become easier. Compare this to the difficulties of breaking through in a place like Melbourne or Sydney.
Finally, innovative sales channels allow savvy marketers new avenues to reach consumers. China has the world’s largest e-commerce market, representing about half of all global transactions. It’s also much more mature compared to Australia’s growing online landscape. Although it is a crowded space, brands with the right proposition and marketing skills can absolutely break through the noise. Some have also used the massive amounts of data these platforms collect to conduct market research and testing.
The key, however, is to balance these potential benefits with the ever-present complications a dynamic market like China presents. This is even more important for small brands that may not have the same access to resources as their large competitors do. How this is done will depend on factors like size, sector, and region. In our experience, though, the three biggest determinants of success lie with market knowledge, distributor networks, and realising plug-and-play never works.
Knowing the market runs the gamut from identifying the right geography and consumer profile, to nailing sales and marketing strategies. While Shanghai, Beijing, or Guangzhou might seem attractive, you may have better chances in a second- or third-tier city. What functional and emotional drivers make up your target consumer’s behaviour? With Chinese companies churning out new SKUs by the second, do you have a solid understanding of your competitive set, where they play, and how you’ll differentiate? None of these are minor considerations, and each plays a major part in any go-to-market strategy.
A distributor can help or hinder this strategy. To determine who’s who, consider the finer details of a potential relationship. Do they understand your space, ideal consumer, and target market? Can you see them not only as a distributor but also a trusted advisor?
Investigate pricing terms, marketing prowess, and the strength of the distributor’s sales team. Ask detailed questions to understand how they perform in each of these areas. You might even be so bold as to run a trial with the right distributors. While this may seem like it signifies a lack of trust, it’s really doing everyone a favour. You want to make sure they can deliver on their promises, have the right cultural fit, and are responsive to your needs.
Lastly, avoid plug-and-play. Simply replicating what you’re doing in Australia, with no adjustment to China’s unique market variables, is a recipe for disaster. Yet, we see this happen all the time. It’s fine to lean into your brand’s Australian-ness, especially with emotional sentiments of quality, trust, and sustainability. That’s just the starting point. Beyond simply being Aussie, which a lot of other brands can already claim, what else sets you apart? Build in your understanding of China’s landscape, consumers, and existing competitor brands to truly set yourself up for success.
A five-point game plan for Aussie companies looking to China
With all that out of the way, where to from here?
- First things first, pay China a visit. You can’t expect to understand the market if you’ve never been there.
- Next, consider your options. Does China realistically offer more opportunity and ease of doing business than Australia? Is the cost-of-living crisis hurting you back home? If so, is your business in a position to consider a move?
- Identify the right partners. That includes potential distributors as well as advisory firms, government stakeholders, and trade agencies. The Australian expat community is strong, so consider reaching out to people who’ve done it before.
- Measure twice, cut once. Research the market, consumers, and sales channels before you begin any type of production or distribution. China’s billion-plus consumers are not a monolith, and neither is the vast country. Making assumptions about either will likely get you in trouble.
- Constantly innovate. China is a market on the move. Stay still for too long and you’ll get passed by. Whether you’re looking to China for the first time, or are an established player, it’s important to always stay one step ahead of what’s next.
Even if you’ve been uncertain or hesitant to look towards China as a potential market, the cost-of-living crisis could be that push to consider shaking things up. Given the right amount of research, understanding, and strategy, it may open up opportunities Australia could never offer for your businesses.