On the pig's back - businesses making the most of Chinese New Year

Thursday, 24 January 2019

Last year almost 69,000 Chinese tourists came to New Zealand over Chinese New Year, and businesses are encouraging them to spend up large by offering mobile payments systems they are familiar with back home.

According to Chinese astrology, 2019 is the Year of the Pig and that makes it a good time for investing and making money.

Kiwi businesses certainly hope so as they gear up for the annual influx of Asian visitors over Chinese New Year on February 5, and anticipate an extra boost from the official China New Zealand Year of Tourism.

From a tiny Nelson hat maker to Wanaka's Puzzling World and The Warehouse, Chinese visitors are increasingly able to use payment systems they are familiar with back home.

'Make it easy and they will spend' is the mantra as WeChat pay, UnionPay, and Alipay spread throughout the country.

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The incentive to adopt this cashless approach to payment used by billions of Chinese is obvious – more than 500,000 Chinese visitors are expected this year, and it's estimated they will spend close to $2 billion.

Have electronic wallet, will travel

Petra Fidler's Nelson market stall accepts Alipay mobile payments and she says Chinese customers appreciate that. They often don't speak English, and are very atrracgted to things in Chinese, so having the service makes them feel welcomed.'

Alipay country manager for Australia and New Zealand, George Lawson, claims the mobile payment service is used by 80 per cent of Chinese visitors coming here.

He won't reveal annual transaction figures but says tourism experiences, food and beverage, and gifts are the top three things they splash out on over Chinese New Year.

'They're cashed up and ready to spend, and merchants know that.'

So far Alipay has 4500 Kiwi businesses on board, about two thirds of them signed up through a partnership between parent company and e-commerce giant Alibaba and Christchurch International Airport which provides assistance with translations.

Wanaka's Puzzling World attraction has made just over 2600 sales through Alipay since in began using the system last year.

The airport's Alibaba project director Ken Freer says the fact that all four major eftpos terminal providers can now process Alipay transactions has made a big difference.

But businesses without eftpos can still accept payments by running a QR code through a smart phone app, which is what Petra Fidler does for Chinese customers patronising her KnitwitNZ stall at the weekly Nelson market.

They especially love her felted aviator hats and payments are converted from yuan into New Zealand dollars by the time they hit her bank account.

Fidler says Alipay removes the language barrier which can sometimes hinder sales, 'and I don't have to pay for a credit card reader because of the QR code'.

Wanaka's Puzzling World has put through more than 2600 Alipay transactions since taking it on last year and operations manager Duncan Spear says offering mobile payments is worthwhile.

NZ Post's Year of the Pig stamps feature a quirky take on the Pig Route in Otago. Some of its limited edition gold-foiled miniature sheets have sold out despite the $1888 price tag, a figure strategically chosen to reflect the Chinese belief that 8 is a lucky number.

'Because it's easy to spend with us, the hope is that the yield is more, they can just go into the cafe and the gift shop and present their Alipay information.'

The merchant fee is slightly less than Visa or Mastercard and the only down side is that transactions are slower than eftpos tap and go, says Spear.

Resident Chinese customers

Chinese students coming here to study are another core market and Warehouse Stationery in Auckland's Newmarket was looking at 'back to school promotions' targeting them, Freer says.

'[A student's] Alipay account is linked to their parents' bank account so they can finance their studies in New Zealand, and keep an eye on what they are spending.'

Although catering for visitors is the driver for many retailers installing Alipay, Freer says it also appeals to members of the large resident first generation Chinese population who still have bank accounts back in China.

'It's a very convenient way for them to move money out of China by paying for good and services in New Zealand.'

The Warehouse is finding regional stores, as well as city sites, are attracting Chinese customers keen to use UnionPay and Alipay.

Foodstuffs South Island has introduced Alipay as a trial at four supermarkets in Tekapo, Wanaka, and Queenstown, and will decide whether to roll it out further on a store-by-store basis.

The Warehouse Group introduced Alipay and UnionPay to 250 The Warehouse, Warehouse Stationery, Noel Leeming and Torpedo 7 stores in November.

Chief financial officer Jonathan Oram says it's a nod to our growing Chinese population, and a recognition that Chinese visitors are increasingly shopping across all retailers, rather than simply at specialty tourist stores.

While the level of mobile payments is not yet significant, it is growing.

'The important thing is more the breadth than the spend; it's not just Queenstown, we're seeing people spending in The Warehouse in Motueka and Greymouth.'

Oram says the other obvious advantage is the ability to market online during international sales events such as Singles Day, Black Friday, Chinese New Year, and the Golden Week holiday around China's national day in October.

Ecostore's dishwashing and laundry products experience a lift in sales over Chinese New Year thanks to the tradition of gift giving.

Manuka honey is a popular gift for Chinese travellers and New Zealand producers are alert to counterfeiters setting out to rip off consumers.

Managing director Pablo Kraus says the company makes 9 per cent of its Chinese sales over this period and growing environmental awareness in China helped feed e-commerce sales on TMall year-round.

'We've gone from no business in China to [it making up] 19 per cent of turnover in four years.'

The lure of special deals

But Alipay's reach begins well before Chinese tourists set foot in the country, through coupons and special offers they can access while researching trips here.

Lawson gives the example of the Chemist Warehouse in Australia which last Chinese New Year found a third of 100,000 coupons were downloaded by mainland Chinese before they left home.

Once Alipay users arrive in New Zealand, they can receive push messages about special deals or attractions in the geographic location they are visiting.

'We know where the merchants are, we know where the customer's phone is, so we can get quite targeted.

'We can serve up coupons to them based on their previous spending habits – if you go for high end fashion, we'd prioritise those, if you spend a lot of money on restaurants, we'd prioritise those,' Lawson says.

Kiwi companies selling online into China are advised to have their intellectual property well protected as Chinese New Year is a prime time for counterfeiters. Over the last year more than 200 products were removed from Chinese sites for unauthorised use of the FernMark country of origin logo.

Alipay has also invested in Paytm, a mobile payment system in India which is a growing tourist market for New Zealand

'Eventually you will see these [electronic] wallets being connected up, and at that point it will mean that merchants that accept Alipay will be able to accept Paytm.'

Silk purses and sow's ears

Although Chinese New Year is a golden opportunity for Kiwi exporters, intellectual property (IP) experts warn it is also a prime time for counterfeiters to target some of our premium products.

In 2017 the FernMark government-backed country of origin logo introduced an optional QR code for branded products which customers can scan to verify they are legitimate,

So far almost 80 per cent of the 6000 scans globally have been by Chinese consumers checking out products such as Manuka honey.

That is no surprise to Comvita IP manager Heidi Darcy. 'It's incredibly important for consumers, especially when they're buying something for a gift, they want to know it's true to label.'

She says they are constantly on the alert for trademark transgressions and for new trademark applications similar to Comvita's.

NZ Story manages FernMark and spokeswoman Sarah Morgan says monitoring of more than 1000 online trading sites in China by the Yellow Brand Protection service led to about 200 products being removed from sale over the past 12 months for unauthorised use of the FernMark.

She urges exporters to protect their brands well before entering the Chinese market.

'Chinese New Year is a silk purse for New Zealand exporters, but rip-offs can make it a sow's ear.'

One of the challenges of IP protection in China is the 'first-to-file' trade mark law.

'This means people have the right to the exclusive use of a trademark if they're first to register it, as opposed to most other countries where if you're first to use the trademark, you have exclusive rights,' Morgan says.

John Hackett is a principal with IP specialists AJ Park and he says New Zealand companies unaware of that distinction risk being essentially held to ransome by 'trademark squatters' who register their brand names in China.

Anyone with even the 'germ of an idea' of exporting to China should immediately register their trademark in the English name, the Chinese transliteration, and in Chinese characters.

'It's not expensive, it's about $1500.'

He cited the example of winemaker Penfolds which was forced to go to court to win back the right to register Ben Fu, the Chinese translation of its name.

Hackett is aware of about a dozen New Zealand companies that have shelled out $100,000 or more to regain use of their trademarks in China.

'To regain them you probably have to grant the Chinese company an exclusive distributorship … or you have to pay.

'We have a lot of stories we can't tell unfortunately because the clients are a bit embarrassed by the fact they've have been caught out.'

Enforcement of Chinese intellectual property law had improved in recent years, and was quite rigidly applied in major eastern seaboard cities, but that was not the case in other parts of China, Hackett says.

'[In], what we call the wild, wild, west; the courts can't be trusted. '