By Chuck Chiang | July 18, 2017, 6:00am
It might surprise many that a bottled-water company led by a former banker would be among the B.C. firms on the verge of entering the burgeoning Canada-China e-commerce market as a major player.
But that’s the case with Vancouver-based Sachiel Connect. Company general manager Dake Zhao said the unconventional switch in business direction came after company officials noticed that many B.C. health-food producers selling into Asia using internet sites, such as the China-based Alibaba Group (NYSE:BABA), were complaining of long delays before receiving payment for a completed transaction.
“The current turnaround time for a producer-supplier to be paid on an e-commerce transaction to China is about three months,” Zhao said. “We’ve heard [of] waits of up to six months. Now, if you are a multinational like Boeing [NYSE:BA], you can probably wait it out. But what if you are a small business? If today I say to my employees, ‘I’m paying you every four months,’ my employees would be very unhappy.”
That’s where Sachiel, which began life as Sachiel Water Inc., saw an opportunity. The company still runs its B.C.-based bottled-water business, exporting a portion of its production into the Chinese market. But Zhao said the initial decision to bypass traditional suppliers in China and instead reach consumers directly through the company’s website, then ship through less costly transport partners, created a channel that could be filled with products other than Sachiel’s own water.
Essentially, Sachiel is sharing its bottled-water customer base – what Zhao describes as “subscribers,” numbering about a million – with other producers of products like honey, wine and other agri-foods with a health focus. And because Sachiel placed its own distribution networks, noted as “preferred” channels on Sachiel Connect, on the platform, any Canadian suppliers using those channels to sell into China would be paid within two weeks of a transaction, before the product changes hands in China.
“For small and medium-sized businesses, even if you have the resources to do exports – getting past Chinese customs inspection quarantine, getting labels printed – you would still be wary to sell into China because of the worry of not being paid,” Zhao said. “But if we are essentially buying your account receivable, then you don’t have to wait. And I don’t think small businesses should be penalized on the opportunity to participate in an emerging market just because they are worrying about getting paid in a timely fashion.”
Official estimates put China’s e-commerce market at $899 billion, surpassing the United States’ last year as the world’s largest. The overall Chinese consumer market is valued at $6.5 trillion, and some analysts say there is room for growth.
(Former Canadian senator Jack Austin speaks at the launch event for Sachiel Connect. PHOTO COURTESY SACHIEL CONNECT)
But the right partnership is key to success, Zhao said, and entering China with products under a recognized Sachiel platform with a consumer base that has already shown interest in Canadian products (and has made purchases within the last six months) means that Sachiel Connect, which officially launched on July 7, can provide suppliers with a higher conversion rate from views to sales.
“A lot of people tend to idealize the Chinese market, but we had a client with blueberry wine who went through the trouble themselves of doing exports, and to their surprise, their stuff wasn’t selling after it made its way to China,” Zhao said. “It’s not because it’s not a good product; it’s because nobody knew about it. So we agreed to take it onto our platform to see how it goes, and we moved 100 boxes of it after a week. No matter how good the product is, if no one knows, it’s useless.”
Company representatives said their customer base in China has already begun clamouring for items such as honey and icewines, and Sachiel expects to rapidly expand operations within the year and to increase staffing from the current tally of six.
“The families that have the money to buy foreign bottled water directly also have demands for other products beyond bottled water,” Zhao noted. “They often say, ‘We’ve got our water, now we’d like some honey.’ But I can’t just open a honey business just for that, and that’s where the other suppliers would come in and go beyond B.C. If we don’t help those companies cross the Pacific, soon it would be us who will be facing pressure from foreign products coming ashore in B.C. So we have to reach out.”