Introduction

AusMask is a leading manufacturer and distributer of anti-pollution environmental masks. The firm is considering its entrance into the Chinese market because China has severe pollution problems and the mass population in China signaled that there is a huge potential. The firm has already established a center for manufacturing in Guangzhou and has built relationships with a logistics Warehouse Company in Shenzhen although the specific rates have not been secured yet. The products will be distributed on Kickstarter, then Indiegogo and on jd.com, one of the largest e-commerce platforms in China. After the product has secured its place in the Chinese market, the firm’s own website will also become a source of distribution. As for the marketing strategies, KOLs on Chinese social platforms will be used.

Challenges outlined

To enter the Chinese industry, there are many challenges ahead. Apart from the fact that the general market condition is different from the Australian market, the AusMask team also knows little about the Chinese market compared with the Australian market. The competitiveness of mask in the Chinese market is very high because of the formidable competitors like 3M, Lvdun, and Pitta Mask. Key potential partners will help introducing AusMask into Chinese market. However, there are also challenges associated with the potential partner because as a new market entrant, the partners might not be willing to cooperate with you if the scale is too insignificant. Obviously, a cooperation should generate a win-win situation for both parties, but the other party can choose not to cooperate if the increase in revenue for them is minimal. This is challenge that will be met at the beginning of the business and will be solved when the business grows to a certain scale.

Design/Methodology

This section will analyze three kinds of partners for AusMask—suppliers and strategic alliances and platform/network. Suppliers include chemical firms that produces materials such as polypropylene, fabric firms, and delivery firms. Strategic alliances exist in their marketing channels because they can cooperate with media firms to better market their products through KOLs. Platform/network, The masks will be sold through three major platform or networks, namely, online ecommerce firms such as jd.com.

Data analysis

Supply

The main suppliers for AusMask include chemical firms, fabric manufacturing firms, and those firms who manufacture the large equipment needed for make masks. For those firms, the general strategy would be to negotiate a discount price once there are economies of scale. However, when the business first started, and the quantity required is relatively small, it will be hard to convince those suppliers to reduce the price.

Another important kind of partner that AusMask needs to have is with the logistics and delivery firms such as Shunfeng. Those delivery firms have a fierce competition between themselves and would prefer institutional clients with large amount of orders. If the amount if large enough, AusMask can negotiate a cheaper price.

Strategic alliances

This paper proposes that AusMask cooperate with KOLs and media firms to market itself better. Media firms such as Hearst Cooperation, Conte Nast and Trends Group, the leading three high fashion firms should be potential partners because they can help AusMask to market the product. While the market is already predominately captured by 3M, nobody has ever associated masks with high fashion before. This could be AusMask’s opportunity. By turning it into a fashion product, prices can be marked up higher and even if it is marked up higher, the price range will still be considered low for the public, let along this is a necessity for every day life. Those leading fashion magazine firms can have celebrities and models wearing their masks and market for them. In addition, those media firms nowadays like to hold offline events such as the Bazaar’s Charity Night and Elle Fit event. Ads on the magazine pages of those top fashion magazines cost less than 10 thousand AUD. Or AusMask can also save money by paying a commission, for example, 5% of their revenue to those firms instead of paying an advertisement fee upfront. Those firms also have venture capital divisions to fund AusMask if the budget is still quite tight. By cooperating with those media firms, AusMask can also sell their products through offline events.

Platform/network

The masks will be sold through three major platform or networks, namely, online ecommerce firms such as jd.com, offline pharmacies and retailers, and KOL links. The most traditional channel would be offline pharmacies and retailers. This network is relatively harder to negotiate because there is no single large pharmacy that dominated the market. Therefore, the firm needs to appoint sales and marketing personnel to negotiate with each separate pharmacy to secure a place for them to sell the masks.

The second and most popular network is through leading ecommerce platforms such as jd.com. The two largest ecommerce platform included Alibaba and jd.com and no matter which one the firm gets, sales can be guaranteed. This paper also suggests that the firm negotiate with jd.com and use their JD self-operated method to sell their products since this sales method is often preferred by the customers. The fast and free delivery is its main comparative advantage over Alibaba’s Taobao or Tmall. In addition, even if AusMask has already negotiated with jd.com, as long as the cooperation contract is not exclusive, this paper suggests that AusMask continue its negotiation with Taobao or Tmall because many products are sold in various platforms online nowadays. One extra platform means more opportunities to sell.

The third method is through KOL and media influence as mentioned before. The KOLs may have their own links and fans can purchase directly from their WeChat Moments function. The sales team from AusMask can talk with different KOLs individually to secure support from each of them.

Recommendation/Discussion

Based on the analysis, this paper proposes that AusMask can should do three tasks for the partners to increase the overall size of the business and these could be done simultaneously. Negotiations should be conducted with suppliers and delivery firms to decrease the cost of the business. Marketing partners such as media firms needs to be paid well since the mask industry is a monopolistically competitive industry, that is, the products are all similar and marketing is vitally important. AusMask must differentiate itself from the others using the most effective marketing techniques. Then, online platforms such as jd.com should be used in addition to traditional offline stores to capture more market share. These three methods together should be able to increase the size and significance of the firm in China. With more publicity, more partners will be willing to cooperate with AusMask and this will solve the challenge addressed in the opening of the paper.