Ernesto Caccavale (Naples, 1963) is the founder and CEO of SChina. This firm offers European companies a comprehensive package of services to enter and position themselves in the huge Chinese e-commerce market. His company provides support with a 360-degree vision, from the creation of the online store itself to invoicing, marketing, logistics and customer service, in order to sell directly to the end consumer in the Asian giant.
Before founding SChina, this strategic brand consultant was director of business development in Spain and Portugal for the Alibaba Group and, previously, he was part of Mediaset. His background includes a stint in EU politics, as he was a member of the European Parliament.
Caccavale will be one of the speakers who will participate this Wednesday in the first day of the Business Opportunities Cycle in Asia, organized by Go Aragón. The event will take place in the Patio de la Infanta, starting at 4.30 pm.
-What can the Asian market offer to the European businessman?
-In my opinion, for a European company with an international vision, it is essential to be in the Asian market at this time. At present, the consumption of products is growing in Asia and falling in Europe, and that means that any company that is thinking about the future has to be in Asia. It is a market that is growing a lot, and not only in China; we are talking about India, Southeast Asia?
-And what can the European businessman offer the Chinese market?
-The opportunity lies in the fact that, at the moment, the European product is considered a quality product. And, therefore, the consumer, in general, buys the European product, because he considers it more reliable, more attractive, safer, more controlled, more fashionable… in short, with more quality.
-Are we in Europe aware of the real weight of China and Asia in the global economy?
-I see many companies that are not aware of how important it is. I say that it is essential at this time to be in the Asian market, it is a must. It takes time, resources, energy, investments… it costs, in the sense of the company’s approach. It is much easier to sell to Spaniards or Italians, but, I repeat, I think it is essential. And the companies that do not understand it is because they have no vision. If today’s entrepreneurs want to leave their company to their children and make it profitable in the future, they have to make the investment today, not tomorrow. And that means positioning themselves in Asian markets.
-What is the feature you would highlight the most in trade with China?
-The sale of products for the middle class is growing. And the sale of European products is growing because Asians are looking for quality, especially the Chinese. They do not lack products, they have plenty of them, but they know perfectly well that, in order to buy quality products, it is better if the product is European.
-What kind of products are most attractive in this market?
-The ones we sell to the middle class. Fashion accessories, because the size issue is complicated, but with accessories there is no such problem. The whole world of children’s products, because Chinese mothers are very interested in buying quality products for their children. All around cosmetics, one of the sectors, especially in Spain, which has grown a lot; Spanish cosmetic companies have positioned themselves very well in China and all these brands now have a competitive advantage because there is a perception of the Chinese consumer that the Spanish cosmetic product is of quality. Also, the area of food supplements, which is growing a lot. And the world of pets is also growing exponentially, both in China and in Europe.
These are some examples and we have to think about the middle class: what we sell to Europeans is what we sell to Chinese people, with the big difference that the Chinese middle class alone is 500 million people and in Europe we are 300 million, counting all the inhabitants. That is the great advantage, if we reach a percentage, even a small one, of the potential consumers in China, it is a great success.
-There are currently tensions between the world’s two geopolitical giants, China and the USA. In any case, can European investors have peace of mind when it comes to setting up in the Chinese market?
-It is a very good question, it is difficult to say what may happen in one or ten years. It can happen in Taiwan as it happened in Ukraine; nobody could have expected what happened in Europe. There are issues that go over your head, which are political decisions, and these cannot be foreseen. Taiwan is a serious issue, but I wouldn’t worry too much about it at this point because I see it as general suicide if they go to war over Taiwan; China also has a lot to lose.
Right now, it is worth it because China is a market that is still growing, the middle class is still growing and European products are selling a lot because there is a lot of Chinese middle class interest in them. This does not mean that everything cannot change, but also in Spain, in Italy or in Europe. If we talk about politics, we are moving on a level that we cannot foresee.
-You are the founder of SChina, what services does this company provide to its clients?
-We are a partner of Alibaba. I was Alibaba’s business development manager in Spain and this company still takes care of renting a space to sell your products on their e-commerce platform, provides the logistics service and the payment system. But the rest, to open an online store and sell directly to the end consumer, is done by us. It includes store design, marketing, customer service, logistics, warehousing, inventory, administration, invoicing… this is the 360-degree service that we offer to European brands that want to open their own store and sell their products directly to the end consumer in China B2C (Business to Consumer) without intermediaries. The whole platform is in Chinese, but you can sell the original product as it is sold in Spain, Italy or France. You don’t have to change anything about the product.
You have already worked with well-known brands in Spain, such as Campofrío or Pikolin Home. How have these experiences with national firms been?
-It is clear that it is a very competitive market, China is the most competitive market in the world and it is not a path of flowers. That is to say, we need companies that have an international vision and a marketing budget, because it is clear that for a European firm that wants to sell in China, the most important issue is brand positioning. The main barrier for European companies is marketing investment. And European companies that have that capability, that have a marketing budget to position the brand and implement Chinese social media initiatives, are likely to succeed. If they don’t, it is impossible to sell in China.
In many cases, European brands, not the ones you named, don’t realize that they are entering the most competitive market in the world, where the competition is huge. And to be competitive, they have to explain to the Chinese consumer why they have to buy their products. That is marketing. And this is what some European companies find it a bit difficult to understand that in order to be successful in China, they need an investment, to invest in their own brand. If you think your product is good and differentiated, because it has particular characteristics, you have to invest in it and communicate to the Chinese who you are.
-As you mentioned, before you founded SChina, you were Alibaba’s business development director in Spain and Portugal, what did that experience teach you?
-When I started working with Alibaba, what I realized is that in China there was a digital revolution that in Europe had not yet arrived. What I saw in China in 2015, when I started working with them, is that they were 5 to 10 years ahead. Alibaba is part of this digital revolution, it is a company that has revolutionized the market system, competition and e-commerce platforms.
And you have to add up the e-commerce turnover of the top ten countries in the world to get to what is done in China; USA, Canada, Italy, Spain, France, UK, India, Australia… all together do not reach the global e-commerce turnover in China. Alibaba represents, more or less, 50% of the Chinese market, so you can see what we are talking about, a giant that has a capacity for growth and innovation that is a point of reference for everyone, not only for China.
-Precisely, you are going to participate in the first Go Aragón conference on business opportunities in Asia, what will your presentation be about?
-The great opportunity that exists in China is what we will talk about at the conference, that you can sell directly to the end consumer in China, that is the great advantage.