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Small business has been a big focus for President Trump and his administration. Recently, he met with Alibaba Group CEO Jack Ma, where they declared their joint intention to help create a million new U.S. jobs by helping U.S. small businesses sell in China via Alibaba Group’s various platforms.
However, what escaped many of those stories is the fact that Alibaba Group is already enabling U.S. entrepreneurs like Stadium Goods, a retailer and reseller of a wide variety of cool sneakers, to sell in China via its business-to-consumer platform, the TMall marketplace.
What’s the opportunity for U.S. small business in China?
There’s no doubt that, with a population more than three times that of the United States, China presents a tremendous opportunity for small business. Alibaba Group said that today it had approximately 493 million unique active users — not registered users — on Taobao and TMall.
Moreover, as the market there is just developing, Chinese consumers are open to creating new relationships with worldwide brands. It’s a tremendous opportunity for a small business to get in early on the Chinese consumer’s brand affinity cycle and create strong relationships.
What kind of small business is well-suited for China?
This is the most important point to consider if you are a small business. To have success like Stadium Goods, you have to be willing to make an investment. While you need a business registration and partner in China for the TMall platform, TMall Global allows you to open a storefront without having to have that partner, removing a big barrier for small businesses to be able to sell in China.
The basic business of TMall Global is having you as a seller open your own fully controlled storefront from which you sell directly to the consumer. While it may sound similar to other platforms and business marketplaces, there are a number of differences.
One difference is that you will likely need to make at least a five-figure commitment to be successful. As opposed to other platforms that US businesses may be familiar with in the U.S., like Amazon, eBay and Etsy, TMall’s cross-border channel Tmall Global operates through bonded warehouses located within China’s free-trade zones, which eliminate import taxes. You send your inventory and store it there ahead of time, and products reach Chinese consumers more efficiently and economically. While that makes it more of an even playing field, price-wise, it does mean that you, as a small business owner, must be thoughtful about what you’re marketing, because you aren’t just mailing off packages one-by-one.
So, in a nut shell, as of today, more established small businesses with sales and investment capabilities are going to be a better fit than start-ups or cash-strapped businesses.
What industries and products are hot with the Chinese consumer?
Per the Alibaba Group team that reviews the company’s substantial customer data on an ongoing basis, there are a few in-demand industries overseas. Agricultural products, food and beverage, baby and maternity goods and health and wellness products. Basically, the types of products you put into and on your body — industries where Chinese goods have come under fire in the past for the quality of ingredients and materials used.
Also, there’s an increasing focus on sports, athleisure and lifestyle goods. These areas aren’t as developed from a brand standpoint in China as they are here in the U.S. and elsewhere throughout the world, so there’s a great opportunity for other brands and resellers to take the lead of Stadium Goods in tapping the market in China.
How do you facilitate marketing?
Obviously, when you don’t speak the language of the Chinese consumer, let alone understand their customs and buying habits, marketing to them seems incredibly daunting. This is the arena where Alibaba Group differentiates itself. Their business model is built around marketing facilitation, and they have tremendous amounts of data on their customers to help a small business decide which products to sell, how to segment to demographics and ultimately, how to best target consumers on their platform.
They also heavily use influencers, including YouTube and other internet celebrities that do livestreaming for brands in China. Think of it as a digital version of home shopping programs that can help introduce brands and their products to the Chinese consumer while giving those products a stamp of credibility and approval.
What about payment and logistic?
There are other hurdles for a small business selling in China beyond its e-commerce marketplaces, but Alibaba Group provides the infrastructure necessary to facilitate doing business. Alipay, owned by Alibaba’s sister company Ant Financial, allows you as a small business owner to easily transact business and get payment from consumers. They also have an affiliated logistics company, Cainiao, that oversees a partner network of distribution companies that facilitates both domestic and cross border movement of goods, to make getting your product to the Chinese consumer something that you won’t have to worry about.
While the international trade landscape is likely to continue to change over the next several years, this is a good starting point for assessing whether selling in China is a good fit for your business now. If you want to learn more about how your small business can leverage a platform like TMall and market your products in China, visit the website here.