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Business-to-business sites are reshaping shopping in China
Posted Date 2013/08/21 23:29

Surprisingly, they hadn't done any shopping for a year or so. This, in a culture that I had believed lived to shop, the great Saturday and Sunday ritual, even more than Australians.
No, they have joined the great army of ants, as entrepreneur Jack Ma -- who recently stepped aside as chief executive of Alibaba but retained his chairmanship -- fondly describes them.
His business-to-business Alibaba site is the world's largest for sourcing manufacturers. But it is with Taobao (both syllables pronounced with an "ow"), a consumer-to-consumer and business-to-consumer site, that he has really hit the jackpot.


Founded a decade ago, its turnover last year was $180 billion. It has 500 million registered users. It is the world's 10th most visited site, and China's third most visited.
People using the site can pay by Visa or Mastercard, but most use escrow -- sending money into their Taobao account and keeping it topped up.
However the Taobao users pay, the big state-owned banks miss out, and are starting to be exposed as slow-moving monoliths, despite their selling shares on the Shanghai and/or Hong Kong markets and putting an occasional foreigner on their boards.


People are simply finding ways round them, such as Taobao.
Ma hosted a big event for the fifth anniversary of Taobao, which means "searching for treasure". He had 2000 of his staff sing a song affirming that "ants that organise together can beat an elephant".
The Taobao payments system is also proving a boon for NGOs and charities, especially when combined with Weibo, the Chinese version of Twitter. Ma's Alibaba recently bought 18 per cent of its parent company, Sina Weibo, for about $525 million.
The resulting fused microblog is ideal for handling "social commerce". Thus a newish NGO run by an acquaintance that campaigns for better treatment of workers who have contracted bronchial illnesses from their employment can campaign online and at the same time direct people to a Taobao account for payments.
The use of escrow accounts for payments is entirely free, so all the money goes directly to the NGO.
Alibaba recently set up a five-storey furniture showroom in Beijing, as an example of the complex ways in which the visual and real worlds keep combining in today's China.
Overwhelmingly, the goods bought on Taobao are new, and have a fixed price. Used items are sold, and there are auctions, but these are at the margins.


The site has provided a platform for huge numbers of individual entrepreneurs to open stores for consumers across the Chinese-speaking world -- it is claimed about 300,000 people so far. Its key advantages include its instant messaging service between buyer and seller, and its easy payment system.
China's state-owned enterprises have held their money close to their chests. They have made masses of it in recent years from their monopoly or oligopoly franchises, yet haven't been expected to pay taxes, or dividends back to the taxpayers who own them.
Instead, China's workers and consumers have not enjoyed the full fruit of the remarkable growth, which they have largely driven. The resulting imbalances continue to fester. It's natural that people are rushing to businesses like Taobao instead.


It is responsible for more than 60 per cent of the parcels delivered in China. An opportunity for China Post? Indeed -- but again, this SOE hasn't seized it.
Instead, enter Shunfeng -- "sail with the wind" -- Express. Founded by Wang Wei in entrepreneurial Shenzhen when he was in his 20s -- he's now 42 -- he has only just taken on board three Chinese corporate investors, buying 25 per cent between them, after he spurned offers from big foreign rivals.
Last year its revenue was $3.6bn. It owns 30 cargo planes and more than 10,000 vehicles, with 150,000 staff operating out of 6000 service centres, many of them delivering Taobao parcels from electric scooters. All its livery is jet black.
On a recent morning in Beijing, half the highway seemed occupied by Shunfeng vehicles.
New tech, new thinking, boldness and luck, and building strong staff relationships, are all part of a wave of the Chinese revolution -- which Australians would be wise to monitor, and if possible find ways to get on board.

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