Jessica Rudd meets her online retail match in Shanghai

It was two months ago in Shanghai when entrepreneur Jessica Rudd first met the man she saw as her great rival.

Jessica Rudd and Will Zhao at Drops Cafe in Shanghai.

It was at Drops Cafe in the French quarter in Shanghai two months ago where Brisbane entrepreneur Jessica Rudd first met the man she saw as her great rival, Will Zhao, the head of Metcash’s operations in China.

Ms Rudd had set up Jessica’s Suitcase, an online business selling Australian food and consumer goods into China, in 2015 after returning from a five-year stint living in Beijing with her investment banker husband, Albert Tse.

But she soon found that Australian supermarket and wholesale distribution company Metcash had set up its own online business selling similar goods into China and it was being run by the equally entrepreneurial Mr Zhao, who is Australia-educated but now based in Shanghai.

With Ms Rudd living for a few months in Shanghai with Tse and their two children, she decided to meet Mr Zhao, who had worked for Deloitte in Australia before joining the Goodman Group and then Metcash in China.

Over coffee on a hot Shanghai summer’s day they began talks that would become the basis of a deal, announced late last week, in which the ASX-listed eCargo Holdings would buy 85 per cent of Metcash Export Services, including its China-based Asian business.

“It was like a Montagu and Capulet meeting,” Ms Rudd recalled in an interview from Shanghai, referring to the feuding families in Shakespeare’s Romeo and Juliet. “Will and I have always seen each other as competitors,” she said. “We came into the same online platform business (selling Australian goods into China) around the same time.

“I remember setting up Jessica’s Suitcase in 2015 and thinking how I was such a pioneer in this space, and then, lo and behold, there was Metcash doing the same thing.

“I am thinking ‘I am just a start-up retailer. How can I compete with the sourcing power of Metcash?’

“I had admired Will and his work for a long time and respected him as a sparring partner.”

Having agreed to meet for a chat, the two were wary of how the conversation would go.

Ms Rudd had sold 45 per cent of her Jessica’s Suitcase business to ASX-listed eCargo, which specialises in selling Australian goods into China via online platforms such as Alibaba’s TMall Global, in January this year.

She became a director and the second largest shareholder of the company, which had agreed to buy out the rest of her holding in Jessica’s Suitcase across the next 18 months.

As representatives of two ASX-listed companies (eCargo’s board includes Melbourne-based philanthropist Rupert Myer) with rival businesses, their casual meeting for a chat still had its complications.

“We were having coffee and thinking ‘How much can we say? How much can’t we say? Are we even supposed to be here?’ ” Ms Rudd said.

The two realised they had a lot in common. Both 30-somethings with young children of a similar age, they were both experienced in selling goods from Australia into China and could see the vast potential of the China market.

Soon, the meeting of rivals turned into a possible discussion about merging the two businesses.

“We struck up an instant friendship,” Mr Zhao recalled.

“It was a real meeting of minds.

“I respected Jessica a lot and she and her business offered something different to what my online business was offering.

“We were competing, but we had complementary skills and offerings that would go really well together. In the end, we realised that the market is so big, that if we got together and created a bit of an ecosystem, we could create a thriving business.”

Unlike Jessica’s Suitcase, which was all online selling Australian goods such as Penfolds wine, coconut oil, Buderim ginger, goods from Freedom Foods as well as mother and baby products, Metcash’s China business also had distribution arrangements for selling Australian goods into China with supermarkets and retailers across 11 provinces to many of the third and fourth-tier cities.

The discussions led to last week’s deal that will effectively mean a merger between eCargo and Metcash Export Services, including its China-based Asian business.

ECargo is paying Metcash about $11.5 million across time for 85 per cent of the business, while it will eventually buy out the rest of Jessica’s Suitcase. The combined business will have an initial turnover of about $36m — eCargo with its turnover of about $24m and Metcash’s Asian business, which turns over about $12m.

Mr Zhao, who will also take over as interim chief executive of eCargo, says major deals struck by Metcash Asia at last week’s Shanghai import expo have the potential to generate new revenues of more than $100m across three years for the company.

Ms Rudd said the combined business would have both online and bricks and mortar distribution capacity into the China market, which would provide a powerful marketing tool for Australian companies wanting to sell into China.

“Will’s team and his expertise will mean we have a business that is not just online but will have an offline distribution business which is highly sophisticated, with a network that reaches 50 cities in China,” Ms Rudd said.

“So if you are trying to come into the China market from anywhere outside of China we can help a company launch a small brand through Jessica’s Suitcase, or launch a bigger brand that is ready to stand on its own two feet on one of the online platforms.

“Will’s amazing reach will now allow us to take those brands out into the third and fourth and fifth-tier cities in China, which is a much harder reach for anyone sitting in Sydney or Melbourne.”