Alibaba looks to U.S. small businesses to trade online
If you’re a typical ‘mom and pop’ shop in the U.S. – that is, a small, family-run, business – you’re probably not the best person to get into the Chinese Ecommerce market. Forget mastering the basics of things like digital marketing and social media – the cultural barriers alone make it a daunting proposition. Still, these are the people that Alibaba’s CEO, Jack Ma, plans to speak to at the companies Gateway Conference in Detroit this week.
As random as it may seem, Ma is beholden to a promise he made to U.S. President Donald Trump: to create one million jobs in the U.S. At the time, people praised Ma’s diplomatic intervention (Trump had, after all, accused the Chinese of ‘inventing’ climate change to hamper American businesses, during the campaign trail). But there’s more to this offer than diplomacy.
Ma has big ambitions for Alibaba, seeing it become a powerful global community that serves 2 billion people and helps 10 million small businesses trade online. According to Ma, China will only be able to supply 40% of the market he wants. The rest will have to be found elsewhere, and where better to start looking than the world’s biggest economy?
There are huge hurdles to selling in China. CEO of Baozun (a company which helps foreign brands sell in China), Vincent Qiu, said that the process of selling to China through Alibaba was hard for foreigners: “The obstacle here is complexity; it’s very hard to understand. It’s very challenging for a small-, medium-sized enterprise to do it themselves. There’s a lot of knowledge and experience that’s lacking.”
Still, the benefits are obvious. China’s Ecommerce market is far and away the largest in the world. Not only is it the planet’s most populous country, but the biggest proportion of its internet users are devoted online shoppers (75%). China has adopted Ecommerce incredibly quickly because it fills a need – huge portions of the country are not yet urbanized, meaning not all shoppers can get to brick-and-mortar outlets. And the country’s hordes of young middle class consumers continue to flock to it in droves, propelled by smartphone use and constant innovation.
Can Ma convince ‘mom and pop’ to sell in China? If he can, there are benefits on both sides of the equation.
Dominion gains exposure to Alibaba through Yahoo, which is held in its Global Trends Ecommerce Fund.
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