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What Alibaba’s Australian focus means for local e-commerce

E-commerce giant, Alibaba, is set to open an Australian office in late 2016 and establish a team to support Australian merchants access the Chinese market via its platforms.

China business and marketing consultant, Marcus Reubenstein of Red Door Asia, believes the move to open a local office is a big vote of confidence in Australia.

“Chinese consumers are very brand conscious and the opportunity to align Australian brands with a giant of brand in Alibaba is good news for existing Australian producers and producers who want to get in to the Chinese market,” Reubenstein told Internet Retailing.

Australia ranked as the fifth top-selling country into China during last year’s Alibaba Group Singles’ Day shopping event, which in total generated US$14.3 billion in gross merchandise volume (GMV) in 24 hours. In comparison, the NAB online sales index estimates Australians spent $19.2 billion on online retail in the 12 months to February 2016.

“Australia is well-known as the origin of high-quality organic goods, such as baby and maternity products, health and nutrition, and fresh foods,” said Maggie Zhou, MD for Australia and New Zealand at Alibaba Group. “These categories are among our top-selling international product categories, and are sought-after by many consumers in China.”

However, Reubenstein warns Aussies should not to solely rely on the strength of ‘brand Australia’ to succeed in China.

“Alibaba’s arrival is not substitute for doing the hard yards of building a business,” he said. “Japanese, European and American companies have been extremely successful in breaking into the Chinese market because they have paid attention to what is going on in China, they’ve worked hard to understand the Chinese consumer and they build relationships with Chinese business partners.”

Alibaba announced its plans for a local Australian office while hosting a Australian trade delegation at Alibaba’s Xixi Campus in Hangzhou during Australia Week (April 11 to 15).

“The impression I get from Chinese business is that Australia is overwhelmingly viewed as a positive economy and trading partner but that Australia doesn’t work as hard on the China relationship as others,” Reubenstein said.

“Straight after Australia Week in China, New Zealand’s Prime Minister, John Key, was in Beijing negotiating a better terms on its long standing China Free Trade Agreement. It was John Key’s sixth visit to China and, to be honest, I think our Kiwi cousins have been far more proactive in engaging China at a number of levels.”

Globalisation is a key strategy for the New York-listed Alibaba Group, establishing a foothold in the US and announcing plans to expand to France, Italy and Germany.

“Globalisation is a core strategy for Alibaba Group and it will be for the decades to come,” said Joe Tsai, vice chairman of Alibaba Group. “As one of our key markets, Australia clearly plays a key part in this strategy. With the services and the hundreds of millions of user base that Alibaba has to offer, we are well positioned to further expand our collaborations with global businesses from around the world in bringing premium quality goods from different countries to our Chinese consumers.”

Among the various services Alibaba’s ecosystem has to offer is Tmall’s B2C platforms and Alibaba’s B2B platform, for both Australian retail and wholesale to enter the vast China market.

In March 2016, Alibaba’s China retail marketplace platforms surpassed RMB 3 trillion in GMV, which is about US $476 billion and, if the platforms Alibaba operate were a province, it would rank as the 6th largest provincial economy in China.

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