Jessica Rudd joins forces with Metcash in new China venture

November 13, 2018
AFR
Michael Smith
Shanghai | Jessica Rudd returned to a very different China four months ago than the one she left four years earlier.
The author, entrepreneur and daughter of former prime minister Kevin Rudd understands the Chinese consumer better than most. She lived in Beijing with her husband Albert Tse for five years before moving back to Australia to raise her family in 2014, speaks Mandarin, and has her own profile in China as a brand ambassador and online celebrity.
Ms Rudd moved to Shanghai with Mr Tse and their two children in August for a four-month stint where she has been busy reconnecting with a country she is close to personally and professionally.  Ms Rudd started he online sales company Jessica”s Suitcase in 2015 after being hounded by friends in Beijing to bring back suitcases full of products from Australia whenever she went back home.
This week, Ms Rudd started a new chapter in her China story when she sold the remaining 45 per cent stake in that business to ASX-listed technology group eCargo and teamed up with Australian wholesaler Metcash to help it sell fresh food into the world’s second-largest economy.
“I have seen this market boom in the most exciting ways. Jessica’s Suitcase was conceived when I was a young mum in China looking at the lifts in my building which was full of couriers and trying to work out what people were buying and where they were buying it from,” Ms Rudd told The Australian Financial Review in Shanghai.
“This was an economy that has gone from cash entirely, from guys walking around with Gucci man purses from full of 100 kuai ($20) notes. I have been in Shanghai for four months and I haven’t withdrawn currency once. They have leapt over the credit card trend and leapt straight into payments like Alipay and WeChat.”
​”But there is one constant and that is this massive demand from this consumer body for Australian and other goods from overseas.”
The spending power of the Chinese consumer will be on display this Sunday.
Singles Day, November 11, was invented by Alibaba and is the biggest online shopping day in China and the world when millions of people are encouraged to splurge online in a sales frenzy that makes the Boxing Day sales in Australia look like chicken feed.
Ms Rudd last week sold the remaining 55 per cent of Jessica’s Suitcase to eCargo, where she retains a board seat and an active role in the company.
She is now focused helping eCargo’s big push into fresh food into China. ECargo last week acquired an 85 per cent stake in Metcash’s export arm, which includes its China business.
Unlike Coles and Woolworths, which have only dipped their toes into the China market, Metcash has been selling food, household, baby, wine and healthcare products to Chinese consumers online and offline for some time. Its focus is on China’s so-called 3, 4, and 5-tier cities, which are smaller the more established mega-cities well-known to Australians such as Shanghai and Beijing, but still have enormous populations and a rising middle class.
“Most of China’s 1.4 billion people live in the third to fifth tier cities,” says Will Zhao, who heads Metcash’s China operations. “What we are seeing is an absolute consumer upgrade in those cities. They want better lives and socio-economic outcomes. While there is talk of potential economic downturns, those cities are thriving and growing in double digits.”
“We have spent a good part of two years building a strategy to build a platform into those cities to sell Australian products.”
Both Mr Zhao, who was born in Shanghai but raised in Australia, and Ms Rudd say they were “terrified” of each others businesses before agreeing to join forces.
“I watched Metcash come online shortly after Jessica’s Suitcase came online in 2015 and I was completely terrified. There I was, a start-up retailer googling what a SKU meant and there was this behemoth  in the form of Australia’s largest wholesale distributor, and it was suddenly entering the market,” Ms Rudd said.
“The other big grocers have dabbled at the sidelines but haven’t thrown themselves fully into Chinese cross-border ecommerce. They don’t have the expertise on the ground.
Ms Rudd will keep her role as a Lifestyle Ambassador” for Chinese e-commerce giant Alibaba. In China, companies hire Key Opinion Leaders (KOL) are use their social media profiles to generate sales.
“She is an iconic Australian strong-willed lady who is leading the charge bringing quality products coming into china,” Mr Zhoa says.
The deal combines Jessica’s Suitcase, eCargo and Metcash in China. Ms Rudd says the business will be able to help brands from Australia and other countries break into the China market.
Both are confident China’s new e-commerce laws will only help companies selling into via established online stores. While her father has strong views on the way Canberra has managed its relationship with China, Ms Rudd says she is focused on the country’s insatiable appetite for Australian products rather than the political “noise”.
ECargo and Metcash sealed the deal while attending China’s import-themed trade fair in Shanghai last week.
“We are completely inundated because there is steak on the BBQ and people are desperate to get their hands on Australian products,” Ms Rudd says.
Ms Rudd and Mr Tse, whose investment fund Wattle Hill is focused on China deals, will move back to Brisbane at the end of the year but she plans to spend a lot more time in Shanghai in the future.