Helping you grow your business into ChinaCharles ThompsonGeneral Manager of International

Page 2

“The Changing Landscape”Big themes in the parcels and supply chain industry

1. Digital – Marketplaces, asset-light models and social media Converging physical + information supply chains Market places (e.g. eBay, Alibaba, Tmall, JD.com,

Amazon) The sharing economy (e.g. Skynet (Aliabab), Uber,

Tujia.com)2. Australia and the world reorienting to Asia

Traditionally a net import nation Rapidly growing Asian middle class, demand for quality Declining A$ and FTAs creating niche export

opportunities3. Customer expectations “end-to-end” and who is “The

customer” End-to-end solutions (“channel NOT cost to market”) Final mile convenience and choice judged by social

media4. Global opportunities, global and regional competition

Globalisation means global competition and rapidly changing

The increasing importance of partnering for success

5. Safety and engagement as a differentiator

Page 3

StarTrack and Australia Post

Largest logistics force in Australia

Service business and consumer markets

Unrivalled parcel, freight, express, courier and international logistics solutions

Deliver end-to-end eCommerce solutions

Page 4

Demographics & technology will effect cross-border trade

Dynamic demographics and increasing technology uptake will continue to have a pronounced effect on cross-border trade in the region

IndonesiaInternet penetration71m Users(20% of population)eCommerce – size 4.5bneCommerce - growth 51% p.a.

Source: ITU, e-marketer, AP team analysis

ChinaInternet penetration642m Users(47% of population)eCommerce – size 440bneCommerce - growth 51% p.a.

PhilippinesInternet penetration44m Users(41% of population)eCommerce – size 1.7bneCommerce - growth 17% p.a.

AustraliaInternet penetration21m Users(94% of population)eCommerce – size 56.1bneCommerce - growth 10% p.a.

IndiaInternet penetration243m Users(20% of population)eCommerce – size 30.3bneCommerce - growth 28% p.a.

LegendInternet penetration - Internet users, 2014 Market size, 2016 forecast (USD) 2011-2016 CAGR

Directional

Page 5

Worldwide B2C eCommerce

$57.7bnLatin America

$482.6bn

North America

$347.4bn

Western Europe

$58.0bnCentral & Eastern

Europe

$33.8bnMiddle East & Africa

$525.2bn

Asia Pacific

Last year, worldwide B2C eCommerce sales were predicted to total $1.5 trillion USD

… this year B2C eCommerce sales are predicted to total $2 trillion USD

Page 6© 2015 Australia Post

Connecting Australian SMBs to consumers around the world through key partnerships

B2B B2C B2B2C

Largest network in Australia with 4400 lodgement points

With aggregation points all around Australia, StarTrack can assist with all your end-to-end outbound solutions

International Products & Solutions Group

Helping Australian businesses expand around the world…

Page 7

Source: Australia’s International Business Survey 2014

An optimistic outlookDespite a sluggish world

economy a above average AUD currency, 74% of the 1700 Australian businesses

surveyed have indicated plans to expand into two or

more markets over the next two years.

Australia’s current overseas marketsThe top five export

markets for Australian businesses are US, China,

NZ, UK and Japan, indicating the continuing importance of advanced

economies

Market & Competitive Environment - OutboundAustralian businesses plan to expand to China and USA despite a range of barriers

Page 8

Supporting cross border trade

Flagship store for Australian branded products

Third party logistics joint venture with China Post

Reloadable prepaid dual- currency card with CUP

Flagship store and logistics partnership

Market Places International logistics Payment

Hong Kong & International supply chain solutions

Alipay vouchers sold exclusively by Australia Post

International - Powered by Australia Post

Page 9

Australia Post eParcel International ReturnsProcess Flow

The merchant can ask their consumer to contact them to arrange a return. The customer sends the consumer an eParcel Returns – International label for the consumer to attach to their article and lodge at their local Post Office

International Returns Process

Page 10

Australia Post eParcel International ReturnsKey Features and Pricing

Express Courier International • Up to 2kg = $14.00• Over 2kg = $10.50 per item & $2.70 per

kg Airmail• Up to 2kg = $12.00• Over 2kg = $9.10 per item & $2.40 per

kg

Express Courier International

• Up to 2kg = $38.00• Over 2kg = $22.10 per item & $8.90 per

kg

Airmail• Return rates not available

NEW ZEALAND - PRICING

UNITED KINGDOM - PRICING

* You pay – The merchant pays Australia Post for the return and decides whether or not to charge their consumer

*

Page 11

Zhenzhou

Shanghai

Ningbo

Shenzhen

1 bonded warehouse3,000m2 warehouse

5 warehouses (1 bonded)20,000m2 warehouse space

1 bonded warehouse3,500m2 warehouse

2 bonded warehouses, 1 non-bonded12,000m2 warehouse space

Perth

Tasmania

Sydney

Brisbane

AdelaideMelbourn

eStarTrack Warehouses in every major city with aggregation offered

nationally

Connecting Australian SMBs to Chinese

consumers

China

Linehaul

Wine acceptance point via import licence provided by

China Merchant International

International Products & Solutions Group

Through our 4400 lodgement points, we have the largest

network in Australia

Helping businesses expand into Asia…

Joint venture

More than 3 million sqm of warehouse that is located in 31 provinces across China owned by China Post that are available to Sai Cheng

In Tier 1 and 2 cities, Sai Cheng owns more than 30 thousand sqm warehouse

B2B B2C

B2B2C

Page 12

A one-stop shop for supply chain solutions, helping businesses establish reliable and efficient channels to market

Sai Cheng Logistics InternationalAustralia Post and China Post joint venture since 2005

AP InternationalChina Post Logistics

Sai Cheng Logistics International

Page 13

Warehouse services• Bonded and non-bonded

warehousing • Global distribution • Import and export trade and

re-exports• Pick/pack processing• Supply chain design

Value add services • Linehaul booking • Customs declaration • Sorting and labeling• Palletizing• De-vanning• Pick-up• Trucking

Sai Cheng – our services

Page 14

Sai Cheng warehouse at work

Page 15

How does TMALL work?

ChineseConsume

r

Merchant A

Market Management System

Australia Post Store

Customer Service

TABA

O A

PI

Merchant B Merchant C

Page 16

auspost.tmall.hk

Page 17

Helping businesses expand into Asia…

Product Market Overview

FashionWe have an iconic Australian fashion brand sending to China who sell through their own sales channels and use our Express Courier International product to fulfil direct to customer within 4 days.

Vitamins and Supplements

We support one of Australia's largest vitamins and supplements companies to export $3.5m worth of product to China. They have their own Tmall platform and consumer network

Milk Powder The growth in Milk Powder into China has seen our international product revenue grow as Chinese customers trust the EMS brand which is the largest delivery network worldwide.

Australia Post/StarTrack currently provide solutions into China for over 100 Australian businesses

Page 18

How Australia Post helped Olive Oil Skin Care Co create a successful international presence in China

Benefits to the Customer Boost in sales volumes, while reducing the effects of seasonal sales Increased brand exposure Low cost of entry with minimal setup costs Access to the largest eCommerce market in the world

Benefits to Australia Post Increase in customer international outbound volumes Increased postage revenue Sales commission from merchant sales

Success Story: Olive Oil Skin CareOlive Oil Skin Care is a premium organic skin care brand designed and made in Australia. The company began selling through Australia Post’s Tmall store in May this year and have fulfilled 567 orders to date.Tmall Global invited Australia Post to participate in Australia Week (from 8th - 14th Sep) and Singles Day (11th Nov). Olive Oil Skin Care received 118 orders in Australia Week and a staggering 341 on Singles Day.

How can you help create more success stories like this?Contact our Australia Post Tmall team at:tmall@auspost.com.au

Merchants complete a qualification

questionnaire

Tmall team assess merchant’s suitability

to sell on Tmall

Merchant onboarding and products listed

on Tmall

Merchants use Tmall system to fulfil orders

Merchants receive payment via Australia

Post

1 2 3 4 5

567 orders to date $15.9k sales revenue $20 avg. order value Goat’s Milk Soap Tri Pack is the most popular product in the range

Tmall Sales Snapshot: 341 out of 567 orders were on Singles Day only $8.27K sales revenue to the customer in the 1 day

Singles Day Snapshot:

Case study: Success story

Page 19

Parcel lockersTZ

(Parcel Point)

Through the recent Couriers Please acquisition, SingPost can now use their network to compete

with AP in metro areas

Australia’s competitive landscapeSingapore Post and Alibaba

With offices in Sydney, Austin and San Francisco, provides SMBs with digital

support to launch, promote, manage and scale an online store

Sinotrans is a Chinese International freight carrier that provides logistical and delivery

services worldwide. In Asia, Sinotrans and DHL are in

partnership

Alibaba has a 10.35% stake in

SingPostPartnership allows Alibaba to integrate

its buyer and supplier network with Bigcommerce’s ecommerce platform

Wholly-owned subsidiary of SingPost

that specialises in logistics and fulfilment

services within Asia Pacific

Alibaba has formed a strategic alliance with Sinotrans in Australia, agreeing to give then all

outbound volume from Australia to China

ECOMMERCE FRONT-END

(Alibaba) INBOUND(SingPost – Couriers Please)

VOLUME & SCALE

OUTBOUND(Bigcommerce & Sinotrans)

Alibaba’s complete Inbound/Outbound model in Australia

An Australian regional delivery network remains Alibaba’s main gap in their offering

Page 20

Considerations when exporting to China

Visit Austrade.com.au for further information to help you get export ready

“Doing business in China has its

own risks, success is

not guaranteed”

“Get your product and brand ready for the Chinese

market”

“Protect your intellectual

property with a Trademark”

“Understand key regulations and

customs procedures”

“Ensure that you have the

necessary export documents”

“Be prepared to register your

company as a legal entity”

Page 21

Appendix

Connecting Australia to China and the worldRecent Publications

Page 22

Connecting Australia to China and the worldSouth China Morning Post

Page 23

Connecting Australia to China and the worldAsia Today – The Postman Rings Twice

Link: http://www.asiatoday.com.au/content/ati-magazine-april-may-2015

The Postman rings Twice -  Australia Post is positioned to win further e-commerce market share through its logistics joint venture with China Post. New alliances with Alibaba and China UnionPay also allow Australia Post to open the door for Australian exporters to millions of active online consumers.

Page 24