RooLife (ASX:RLG): Interview with CEO Bryan Carr

Roolife Group Ltd

Roolife (ASX:RLG): We spoke with CEO Bryan Carr about RLG’s specialist expertise in helping companies market their products digitally in China, the rapid growth of RooLife over the last twelve months and some misconceptions people have about China and companies doing business in China.

See full transcription below.

 

Read our most recent article on RLG here

 

 

Transcription

 

Stuart: Hello, and welcome to Stocks Down Under. My name is Stuart Roberts and I’m one of the co-editors of our publication. And joining me from Perth, on the 30th of September 2021 is Mr. Bryan Carr, who’s the CEO of RooLife, ASX:RLG. Bryan, good morning.

Bryan: Good morning, Stuart. Pleasure to speak with you today.

Stuart: So, RooLife is probably not a story that many people will know, in part because you’ve got a ridiculously tiny market cap compared to your potential. But you are potentially one of the leading beneficiaries on ASX of the massive size of the current and future e-commerce market in China. Talk to us about how you became an old China hand, as it were.

Bryan: Yeah. Well, I feel like we were in the right spot at the right time, you know, as you alluded to there. E-commerce, or shopping online, everywhere in the world is booming. The place where is the biggest and most developed is China. And we’ve seen such a…there’s 925 million online shoppers in China looking for products all day, every day. And, you know, I said that my experience of being in China is just seeing people shopping on their phones, always looking, buying. And, you know, we’ve just been able to say…whenever we meet a business, they go, “I want to sell into China.” And, you know, the other side of it, we’ve got all these Chinese shoppers we know [inaudible 00:01:32]. So, yeah, right place right time, we feel.

Stuart: Right. Now, I first became aware of your company talking to Dr. Hartley Ackinson over in Auckland. Now, Hartley runs AFT Pharmaceuticals. They’re, as far as I can tell, a satisfied customer of RooLife. You’ve helped them to sell some of their over-the-counter pharmaceutical products into the Chinese market quite successfully.

Bryan: Yeah, exactly. They’re a bright company to work with and they’re a classic example of, you know, the types of products which are in demand in Chinese shoppers. So the health and well-being, and supplements, they’re the things that people are looking for. People are even, you know…it’s being exasperated by the COVID situation. People are more attuned now to being healthy, looking after themselves. And in New Zealand, it was very highly regarded, seen as clean and green. So that’s a perfect match for the product selling into the Chinese market.

Stuart: Right. And your bread and butter, and it fits that you guys are pretty good at this, is setting up the [inaudible 00:02:35] and all the other digital infrastructure which helps companies, brand owners, like AFT and other companies we’ll talk about in a moment, to be able to get product into China, and sell just like you’d sell in any other country. That’s not an easy skill set to replicate, I would think.

Bryan: That’s exactly right. And that’s where we see what our sort of offering is, is that we take away all of the requirements from the business that wants to set up and sell into China, to access that market. We provide the advantage of having our experience on the ground, people on the ground understanding the market. How you position, how you actually get your product into the market, and the translation and position. Very, very different to a Western context, and some of the…a common mistake that international companies have made over many years going into the Chinese market.

So, we really understand, you know, our product and our marketing pitch. And what we’ll do now is translate that and we’ll launch into China. Very different, very sophisticated market. A lot of this stuff that we do is actually online live streaming, promoting products in real-time, and generating sales. So, very, very, very mature. And that’s really our position, you know, understanding and our capabilities on the ground in China.

Stuart: Right. And as you alluded to, there’s been a number of tailwinds that you’ve enjoyed in the last little while. COVID, obviously, by promoting more awareness of health and beauty-type products from countries like Australia and New Zealand. More importantly, companies such as [inaudible 00:04:11] used to sell into that market via [inaudible 00:04:14]. [inaudible 00:04:15] is a very different beast now. For one thing, the borders of their countries are closed. You’re the alternative, which works when the [inaudible 00:04:23] traffic dries up.

Bryan: Yeah, correct. You know, everyone’s seen the products that were being put in suitcases and sent back to China. That was a sort informal [inaudible 00:04:35] whereby people were buying, selling to their friends, and that was tourists, it was students that were here. Right from the beginning, RLG’s taken the approach of having a very formalized way of taking products into China, and with that [inaudible 00:04:50] network and the traveling drying up, once again, that’s played to our strengths, with our ability to directly take product into market and directly to consumers.

Stuart: Right. Now, it’s fair to say business is brisk at RLG at the moment. Four million in revenue for the most recently reported quarter was about three or four times the size it was a year ago. You just had your first cash positive quarter. And judging by the rate at which you’re signing up new clients to work with, there’ll be more profitable quarters where that one came from.

Bryan: Well, yeah. What we’re seeing now is we’re benefiting from…we’re two years into our business journey. Over the last 12 to 18 months, we’ve signed up a number of brands. We’ve launched them into the Chinese market through online stores. They are reaching a level of maturity now where those sales are growing and they are [inaudible 00:05:42] every month. So, we’ve come off our third consecutive quarter of growth. We expect to deliver our fourth consecutive quarter of growth now. And, as we said, with more brands signing on, brands that are maturing with us right now, so they’re going into their second years, we believe we can continue this growth trajectory for a while yet.

Stuart: Right. Now, what’s instructive to me is that business has never been better, but your share price has not been doing so well. Now, I have a couple of suggestions as to why that would be. People watch the evening news and there’s a certain amount of tension between Australia and China at the moment. And, secondly, I think there’s probably concerns that China is headed for trouble, as we’ve seen with this Evergrande crisis that they’re facing up in…So, we’ve seen the evening news and think that RooLife’s business is about to dry up. And, yet, you look at the numbers from day-to-day, and that’s not happening. What do you think’s going on underneath all that stuff we’re seeing on the TV news, which is good for you?

Bryan: I think that [inaudible 00:06:47] those headlines are certainly noticeable and, you know, it’s reasonable that there’s a sentiment to associate with that, but the reality behind it is that Chinese consumers, shoppers, the middle class are still growing. They’re shopping and buying products online. They are still aspirationally buying products from outside of China. And, as a business, [inaudible 00:07:09.818]here in Australia, 80% of our sales and revenue and client-base is from elsewhere around the world. We represent and sell brands and products from Europe, North America, South America, New Zealand, in addition to Australia.

So, from our perspective, we’re servicing known, identified demand. We have a diverse range of products, and we sell to the [inaudible 00:07:32] around the world. In terms of China and its incredibly strong growth, yes, there’s particular instances like Evergrande. But we truly expect that that situation will be managed. The Chinese, as a central government, is very much in control and I don’t see them letting a situation arise whereby people are not prospering on an ongoing basis.

Stuart: Right, right. Now, a book I read a little while ago to familiarize us with your situation, this is the Alibaba story that Duncan Clark published several years ago. Now, it was encouraging to see that Jack Ma’s net worth is still $50 billion. And Alibaba, the company he created, is worth $400 billion. So, the business is obviously not slowing down for Alibaba. And, obviously, you’re a part of that given that, you know, [inaudible 00:08:31] and so forth are a part of what you’re doing. If we were to fast forward 12 months from now, I imagine Jack Ma will be a bit richer and so will Alibaba. Where’s RooLife gonna be, if we’re having this conversation 12 months from now?

Bryan: Yeah, well, I think that we’ll be seeing the…we’ll be going along for that ride. The online shopping market is already, you know, very mature in China. And one of the interesting aspects we’ve seen over the last 12 months is there’s a new group of silver shoppers, the elderly people who were probably the only people in China that weren’t shopping online on their mobile phones forced to do so during COVID. They’ve worked out just how easy it is and it’s become now the very much predominant way of shopping. RLG’s a marketing partner with Alibaba and Alipay so, you know, we work very closely with them. We work very closely with their team in terms of identifying demand for products and setting up that team of global stores. So, we expect to go along for the ride with Alibaba over the next 12 months and onwards.

Stuart: Yeah. Now, previously offline, I was intrigued by a comment you made. Your sense was that China had become one of the most sophisticated e-commerce markets in the world. And, obviously, most viewers in Australia will know about how we do e-commerce down here. How is China further advanced than us in terms of the sophistication of their market?

Bryan: It’s very much an acceptance and a high expectation service. So, a Chinese shopper is very discerning, they’re very detailed in terms of their research. They’ll look at a product, who’s recommending it. They will wanna see, you know, live demonstrations of the product, and that’s one of the key ways we’re seeing products being sold now, and people buying in real-time. High demand in terms of the…or high expectation in terms of when are they gonna get that product. “I want it by this morning. I want it delivered this afternoon.” And the systems and process has been put in place end-to-end to service that expectation. So, you will get high-quality products delivered direct to your door very quickly. And one of the things people associate with high quality is foreign products and they’re the types of products that we’re presenting a position into that market.

Stuart: Well, Bryan Carr, well done on what you’ve achieved. Just two years into the RLG journey. Business couldn’t be better and there’s a heck of a lot more growth where that came from. So, you can buy into a bit of stock on market yourself to take advantage of all the idiots who are selling too cheaply.

Bryan: We see long-term value in this business [crosstalk 00:11:13] so, yeah.

Stuart; So, yeah, I hope you get considerably more wealthier than you already are from those judicious purchases when people can’t see the value you’ve created. Well done.

Bryan: Thank you and great to speak with you today.