When Chinese President Xi Jinping stepped on to the airport tarmac in Australia's smallest state Tasmania he was presented with a purple-coloured fluffy toy called Bobbie.

The welcome gift he received, stuffed with lavender and wheat, was not in the shape of the southern island's iconic Tasmanian devil, but instead a teddy bear that has captured the hearts and wallets of Chinese consumers.

'Bobbie' has been an overwhelming success in China with a remarkable following -- the bear's success has helped creator Robert Ravens, the owner of the lavender farm in north-east Tasmania, secure an inaugural Australia-China business award for entrepreneurship.

Tasmania has long had the nation's weakest economy, but it is hoping to boost its fortunes by using its natural resources to attract an affluent Asian market looking for quality products.

When Ravens bought the Bridestowe Lavender Estate in 2007, his first goal was to return it to the peak farming condition it was in several decades ago.

- New products -

He was also keen to boost the tourism potential of the almost 100-year-old farm, which uses lavender descendent from a crop specially harvested from the French Alps in 1919 and brought to Tasmania in 1921 by an English family.

"We looked to create new products which would attract young visitors, and that came through food," Ravens said.

An early product, lavender ice cream, started to attract Chinese tourists to the 260-acre (105-hectare) farm, an hour's drive from Tasmania's second-largest city Launceston.

But it was through the bear that Ravens, a former chief executive of a leading chemicals firm, struck a winning formula.

"We were experimenting with various shapes and colours. One day, five years ago or more, we showed a bear to a young Chinese girl in a shop," Ravens told AFP as his staff filled the plush toys with dried lavender before hand-stitching them shut.

"She said 'so cute' and she was carrying it like a baby, and you could see the bond form between the buyer and the bear. As soon as we saw that, the light went on and we knew that was the right configuration."

Even the name was designed to attract Chinese consumers, Ravens said. "You can say Bobbie phonetically in Cantonese and Mandarin."

Ravens courted the celebrity market and when a Chinese model posted a picture of herself with the bear online last year, demand for the furry creature -- which doubles as a heat pack -- reached stratospheric levels.

The farm had to limit sales to one per customer, temporarily halt online shopping and even contend with fake toys piggy-backing on Bobbie's fame.

Kathy Lam, a Hong Konger who was visiting the farm, said she liked the bear as it also had a medical function, with the heat used to relieve pain.

"I wanted to see the farm as it makes me feel that the lavender is very natural," she said. "The feeling is very different from a supermarket."

Visitor numbers to the farm have soared from 23,000 in 2007 to more than 65,000 last year, and it now produces 40,000 bears annually.

"In Australia, you become successful and you have 26 million potential customers. In China, you have a billion. The scale is so phenomenal," said Ravens.

"I think the answer is to be authentic and to target the market as acutely as you can. We are aiming always to be a boutique market, not a mass market."

- 'China ready' -

Catering to the demands of the rising Asian middle class is key for a state economy left behind during the unprecedented mining investment boom on the mainland that helped Australia avoid recession for more than two decades.

Tasmania was hurt by the boom's side effects such as the strong local currency, which squeezed the agriculture, tourism and manufacturing industries.

But what it does have is an abundance of natural resources such as fresh water, fertile soil and stunning landscapes.

And the fact Tasmania is counter-seasonal to the northern hemisphere allows it to cater to demand for crops such as tulips and onions.

As such, Bank of America Merrill Lynch economist Saul Eslake said niche industries -- including gourmet wine, wool, wagyu beef and aquaculture -- were where the growth opportunities lay, and where high costs are covered by higher premium prices.

Tasmania has already been working to boost the hospitality industry as China becomes its number one source of tourists, with 20,400 visiting in the year to June.

The state government has sponsored a "China Ready" guide for tourism operators that suggests offering slippers, cup noodles and fancy condoms to guests, with the lure of Bobbie the bear an added bonus.