Small businesses pleasantly stunned by size of China's consumer markets

No foreign small- and medium-sized enterprises (SMEs) can really understand how humongous the Chinese market is until they set foot in the world's second-largest economy, which boasts a 300 million-strong middle class.

The deep-pocketed, lifestyle-savvy Chinese shoppers, usually in their 30s and 40s, intend to consume high-quality goods and services and are willing to pay hefty prices for wild-caught Alaska seafood, New Zealand-made diary products and sun-dried cranberries, tomatoes or apricots from America's West Coast.

Here is one example: On June 18, e-commerce giant Alibaba did a promotion through its marketplace, and Chinese consumers swept up 2 million Western-branded lipsticks within 15 minutes.

"We also sold 200 tons of baby formula and diary products within the same time frame," Alibaba Executive Chairman Jack Ma said at the Gateway '17 summit, a two-day event in Detroit, Michigan to educate American SMEs on how to sell to China.

"Thirty years on from now, the domestic demanding power of China is going to drive millions and millions of small businesses globally," Ma said.

JD.com, another major Chinese e-commerce player, has entered the battlefield. It has maneuvered since last year into several alliances with international and domestic heavyweights, including the world's largest retailer Wal-Mart and British fashion retailer Farfetch UK, in order to cash in on the sophisticated and multilayered consumer demands in China by improving its logistics and supply chain functions.

Last October, Wal-Mart launched its exclusive Sam's Club flagship store on JD.com, a move to let Chinese clients access millions of high-quality American commodities.

Meanwhile, Wal-Mart opened its Global Imports Store on JD.com's cross-border platform JD Worldwide, to allow Chinese consumers to scrutinize and purchase from Wal-Mart's global commodity pool.

Wal-Mart and JD pledged to continue to expand collaboration to provide superior products at fair prices to hundreds of millions of Chinese consumers, with same- and next-day delivery speeds thanks to the previous merger of Dada and JD Daojia last year. That not only led to the birth of China's largest logistics platform but also enabled speedy delivery of grocery and fresh goods to urban households.

Last week, JD Daojia announced its half-year revenue which has increased nearly eight times compared to that of last year. The monthly gross merchandise volume (GMV) grew 30 percent this year, and the number of online orders also rose 20 percent, said the company, adding that swift delivery and consumers' online-offline shopping experience integration have contributed to the business boom.

By leveraging JD Daojia's 70,000 offline retail outlets in 22 major Chinese domestic cities, Wal-Mart has realized a four-time increase in monthly transactions since January, JD Daojia said.

Of its $397 million investment in Farfetch UK, JD said the major move into the luxury fashion segment signified its resolve of working toward a comprehensive shopping platform to bring Chinese consumers the "best of its kind" Western apparel, accessories, shoes, bags and small leather goods.

However, the foreign SMEs' usage of the Chinese e-commerce platform and marketplace has demonstrated great discrepancies - the economically advanced areas incline to adopt such tools while their counterparts in less-developed places lag behind.

In California only, Jack Ma said "there are more than 20,000 small businesses using Alibaba platforms to sell their products across the board, to buy products from outside, and assemble them and package them and sell them".

Ma might be disappointed in the state of Oregon, where farmers and small-business owners barely know the name of Alibaba and JD.

Pete Kent, executive director of the Oregon Diary and Nutrition Council, said China remains a remote and unfamiliar market for his member farms. "We visited China in 2015, and now we are still in the process of researching the market there," Kent said.

On Monday, Alibaba announced the launch of the "Taobao Global US Merchants Network," which will offer innovative ways for American SMEs to reach the more than half billion consumers on Alibaba's platforms.

Features of the network include "efficient channels for the US SMEs to access a centralized platform; (and) ongoing training to help participating Taobao Global merchants better identify industry trends and improve the experience for both US businesses and Chinese consumers".

"Alibaba created the Taobao Global US Merchants Network to strengthen the connections between US small businesses and Chinese consumers," said Michael Evans, president of Alibaba.

"Being a part of this network will enable these merchants to more efficiently identify and work with US small businesses to bring their products to Chinese consumers."

Contact the writer at junechang@chinadailyusa.com