China's challengers eye US

27 April 2011

BEIJING: Alibaba, the Chinese ecommerce giant, is rolling out a new platform to assist domestic challenger brands expand their US presence.

The company, part-owned by Yahoo, already has strong credentials as a business-to-business hub linking Chinese suppliers with foreign clients.

It has now extended this wholesale model to, which offers goods in the accessories, apparel, jewellery, electronics, homewares and mobile categories to consumers.

The 30 launch partners incorporate fashion specialist VANCL, audio and wireless group JXD, and GG&MM, a manufacturer of stands and covers for gadgets like Apple's iPad and iPhone.

The main target audience for these efforts will be the second tier of US retailers keen to stock ranges not widely available throughout America.

"We think that smaller retailers are especially in need of a differentiator and need unique products that they can make a margin on," Annie Xu, US general manager of and AliExpress, told AllThingsD.

"Margins erode so quickly when tonnes of sellers sell the same thing."

For the participating Chinese firms, Alibaba constitutes a central portal that overcomes difficulties of independently achieving awareness.

"We can help with smaller emerging brands and designers, who don't have the research and knowledge base to acquire customers," said Xu.

More broadly, this scheme could contribute to changing perceptions of Chinese companies as sources of low-cost, derivative products, by emphasising quality and creativity.

"There are lot of innovative designers and innovators in China," Xu said.

"We want to help the people, who have capability to design authentic original products, move up in the value chain. That's the thinking behind it."

To build confidence among potential customers, Alibaba has established a variety of rules governing organisations utilising AliExpress.

These include providing round-the-clock service, shipping orders within a day of their being placed, giving free returns, and handing a deposit to Alibaba in case of disagreement.

AliExpress already enables consumers outside of China to buy products, an area where it is facing increasing competition from eBay.

This has proved a means for eBay to progress in China after the failure of its EachNet platform to rival Alibaba's Taobao, which does not take commission.

"It's very hard to compete with free," says Jay Lee, eBay's senior vice president and managing director for Asia Pacific.

In 2010, eBay secured $4bn in sales from China and Hong Kong, only lagging the US, Germany, the UK and South Korea in revenue terms.

"We learned a lot," Lee argued. "China is very important, but we needed a different way to approach the market."

As such, eBay now boasts 150 staff working directly with Chinese vendors, and has allied with the China Post and US Postal Service on a system allowing overseas buyers to track their orders.

However, John Spelich, vp, international corporate affairs at Alibaba, suggested a desire to protect American clients from the pressure of cheaper Chinese goods would limit eBay.

He said: "eBay will never be fully committed to the cross-border business."

Data sourced from AllThingsD/Business Week; additional content by Warc staff