These ASX stocks are set to ride China's market wave as trade relations warm

China’s lifted bans on Aussie beef and reduced tariffs on Aussie wines, indicating improving trade relations
Aumake is capitalising on e-commerce and tourism strategies to expand sales in China
EZZ Life Science expects growth opportunities in China too

Australia-China relations have been on an upswing recently, evidenced by China lifting bans on imports from several Australian beef processing facilities in May, and removing punishing tariffs on Aussie wines in April.

Those bans, emblematic of a tumultuous period that began in 2020 amid geopolitical tensions during the pandemic, had cast a big shadow over the Australian agricultural sector.

Now, with these restrictions lifted, the path is cleared for Australian beef to once again grace Chinese tables.

Simultaneously, China’s decision to scrap punitive tariffs on Australian wines, in place since the fallout in 2021, is a big welcome change.

These tariffs, which were set as high as 218%, had stymied Australian winemakers, forcing them to seek new markets. With these barriers now removed, the Aussie wine industry anticipates a revival. $10bn capped market leader Treasury Wine Estates (ASX:TWE) is up almost 19% in the past six months.

In general, Australian-made products enjoy a strong reputation in China and are often perceived as ‘premium offerings’.

This positive perception stems from Australia’s stringent quality control measures, pristine natural environment, and commitment to high standards across various industries.

This trust has been cultivated over years of trade relations, positioning Australian exports favourably in the competitive Chinese market.

Aumake in prime position to benefit

The latest development is set to boost China-focused companies like Aumake International (ASX:AUK), which connects Australian and New Zealand products with Chinese consumers.

Aumake focuses on selling a range of consumer products such as health supplements, skincare items, baby formula, agricultural products, and wines.

“I think both Australia and China need each other,” says Joshua Zhou, Aumake’s co-founder and CEO.

“Regardless of political issues, I believe trade relations between the two countries will only become better and stronger. I’m confident about that.”

Zhou acknowledged that the Chinese market is currently experiencing challenges, and there has been a decrease in inbound Chinese tourists to Australia compared to previous levels.

“We have therefore shifted our model to a more online and e-commerce model, instead of a retailer model,” Zhou explained.

Apart from e-commerce, the company is evolving its strategy to focus on more engaging sales approaches.

Late last year, Aumake entered into a deal with Petersons Wines to offer tourism experiences in New South Wales’ Hunter Valley specifically tailored for Chinese and other tourists from Asia.

The collaboration includes plans to establish local shops, co-brand Petersons wines, and introduce comprehensive dining, travel, as well as accommodation options.

“We are using wine tourism, wine culture and lifestyle to generate more content and to attract more audience to help small Aussie wineries promote their brand,” said Zhou.

Aumake’s stock price surges sharply

Aumake’s stock price more than doubled this week after the company announced that it has entered into a distribution agreement with a Chinese state-owned enterprise, Yangtze River New Silk Road International Logistics.

Under the 3-year deal, Yangtze plans to buy at least $100 million worth of Australian goods annually from Aumake, valuing the agreement at a minimum of $300m.

Zhou said that securing agreements with State-Owned Enterprises (SOEs) in China is crucial for companies aiming to achieve broad market penetration in the country.

“SOEs play a very crucial role in China and they have a lot of power in the marketplace. They are thought of as a kind of a KOL (key opinion leader),” said Zhou.

“So by working with them, they will certainly help us to use their huge network to grow our sales.”

Aumake is also turning to Streamii, an AI-powered digital marketing platform aimed at enhancing sales capabilities.

Streamii integrates seamlessly with popular Chinese social media platforms like Douyin, WeChat, and Xiaohongshu, with plans to expand to Facebook, Instagram, and YouTube by the end of 2024.

The platform offers AI-driven content creation, allowing businesses and individuals to reach new international markets efficiently and at reduced costs.

EZZ Life Science also set to benefit

Another ASX-listed company that could get a boost from the rapidly thawing Australia-China trade relations is EZZ Life Science (ASX:EZZ).

EZZ specialises in healthcare and personal care products, and in its Chinese market, the company is capitalising on the popularity and trust in Aussie made products.

EZZ’s chairman Glenn Cross told Stockhead that over the past 12 months they’ve seen the trade relationship between Australia and China strengthen, with EZZ a beneficiary.

“We already had a strong presence in the Chinese consumer market where EZZ has been able to capitalise on the popularity of Australian-produced skin and personal care products, and this has increased with the lifting of trade tariffs.

“We’re confident this positive shift will continue to open up more opportunities for companies like EZZ that have a deep understanding of Chinese consumers.”

Cross said that China remains EZZ’s largest and most important market.

“While we have expanded our focus to Southeast Asia, we view this expansion as complementary to our efforts in China building on our success and learnings.”

China remains a huge market despite slowdown

Cross said that although some of the data from China is mixed, the market is immense and the demand for healthcare products remains strong.

“Chinese consumers continue to prioritise their health and wellbeing and we continue to see strong demand for EZZ’s range of healthcare products.”

Cross added that over the past few years, the company has been very focused on building its presence across multiple distribution channels in China, both online and offline, to support its omnichannel distribution model.

“This approach has enabled us to gain a deeper understanding of our consumers and leverage these insights to develop new and targeted products.

“Moving forward, we see opportunities to continue strengthening our partnerships with key online influencers to drive sales and enhance our brand presence in China,” Cross said.

Apart from Asia, EZZ is also eyeing the huge US market with a keen interest after the US FDA approved nine of its products in the food category.

The company has more than 50 EZZ-branded products. It also has exclusive distribution rights for the EAORON brand of skin care products to pharmacies, supermarkets and specialist retailers in Australia and New Zealand.

Other ASX consumer focused stocks with presence in China

RooLife Group (ASX:RLG)

RLG is an e-commerce and digital marketing provider delivering integrated marketing services and e-commerce operations leveraging RLG’s cross-cultural expertise in Australia, China, Hong Kong and more broadly across South-east Asia.

RLG specialises in market entry and cross-border e-commerce, providing a comprehensive sales platform, RLG Marketplace, for brands to enter and sell into new markets.

The company markets and sells food, beverage and health and wellness products exclusively in the markets it operates in and also sells its own health and food brand VORA through its online RLG Marketplace.

Uscom (ASX: UCM)

Uscom is a medical technology company that focuses on the development and commercialisation of non-invasive cardiovascular and hemodynamic monitoring devices.

The company’s flagship product is the Uscom 1A, a non-invasive cardiac monitor that provides accurate measurements of cardiac output, stroke volume, and other hemodynamic parameters.

These devices are used in various clinical settings, including hospitals, clinics, and emergency departments, to aid in the diagnosis and management of cardiovascular conditions.

Uscom has a significant presence in China, where it has established partnerships and distribution channels to market its medical devices.

The Uscom 1A has been well-received in the Chinese market.

At Stockhead we tell it like it is. While EZZ Life Science is a Stockhead advertiser, it did not sponsor this article.