Jack Ma is on a mission, a mission to sell the “China Dream.” On September 25 Alibaba Group hosted their Gateway 17 event in Toronto, Canada, with feature speakers Jack Ma, Canada’s prime minister Justin Trudeau, and a fireside chat with Laurent Potdevin, current CEO of Lululemon, a Canadian venture that’s seen some success in China.
But of course, this wasn’t Alibaba’s first Gateway 17 event in the West. Just little over 3 months ago, Alibaba hosted the same event in Detroit and even Martha Stewart came for a fireside chat on the topic of “Exporting the Martha Stewart Lifestyle”.
There was a VR shopping booth, a chance to take a photo with a virtual Jack Ma, and of course the infamous Alibaba AI Robots. All of this in an attempt to court more international SMEs from both the United States and Canada to become merchants on Alibaba’s TMall Global Platform and use Alipay.
Selling the China Dream!
“In the past thirty years, USA domestic consumption was the engine of the global economy. And I told people at that time, if you miss the opportunity of selling your products to the world, to the USA, to Europe, you might miss the chance. Today I want to tell people that if you miss the opportunity of selling your products to China, you will miss the future” —Jack Ma during his fireside chat with Charlie Rose in Detroit.
In Toronto, Jack preached the same thing, but with a slight twist. In Toronto, Jack emphasized that the US ship has already sailed and that Canadian SMEs should begin their plan to sell the 1.3 billion Chinese consumers instead.
While I won’t go as far as to say the US ship has already sailed, as a Chinese-Canadian entrepreneur, I would still consider the America market first due to the similarity of culture, values, and language. However, I think Jack has a point here.
But what exactly is Jack proposing that western SMEs can leverage on to sell to the China?
The internet of course! Jack wasn’t just preaching the China dream, he spoke at length about the global dream, the internet dream, the dream that his own personal success has heavily depended upon.
He tells the American and Canadian entrepreneurs that if you’re not online selling your products, then you’re seriously losing out. E-commerce, and becoming a global entrepreneur is the future and Alibaba will provide the tools to help you succeed.
E-commerce in China has experienced double digital growth in the past 10 years. According to Danielle Long from The Drum, China’s e-commerce market passed the $1.1 trillion mark in 2017, making China the leading country for e-commerce in the world. It is estimated that 40% of all retail sales in China will be on eCommerce channels by 2021! But is it really as beautiful and simple as what Jack said?
The Truth of Selling Your Products to China
However, Jack didn’t mention, or perhaps even neglected to mention, all the hurdles that SMEs in US and Canada will face when they actually try to sell to China.
During the event, Jack made selling to China sound like a walk in your backyard. This is of course somewhat misleading. For one, if you want to sell vitamins, food-related items, skin care, and cosmetic products you will most likely run into regulatory and licensing issues that could take years to resolve or obtain.
Ok, lets say it was all smooth for you and you begin to use TMall Global as your platform to sell into China there are still problems.
For one, applying for a TMall store requires you to be a well-known brand, to have a physical address in China for returns, provide extensive documents and pay TMall an annual fee of $5,000 to $10,000 plus an initial deposit of $2,500. We haven’t even mentioned the massive amount of competition you’ll have to face on TMall just to get noticed.
On top of that, what about your customer service, marketing, advertising, and branding? China’s landscape is completely different than the West. Facebook does not exist, Google does not exist in China, there is no Twitter, and there is no Instagram. You’ll need to partner with someone or work with an agency that knows how to setup, operate, and run marketing campaigns using popular digital channels such as WeChat, and Sina Weibo as well as offline channels and methods.
Advertising in China is expensive! This is partly why we as a full-service China marketing agency rarely work with a client who is selling less than millions in annual revenue. It’s not that we don’t love SMEs, and don’t want to help them, the truth is we do and would love to help them but don’t want to give them the impression that they can succeed in China easily and without a considerable amount of effort on their end.
However, Jack is not totally misleading here after all his telling SMEs to sell their products using Cross Border e-commerce through Alibaba’s TMall platform and certainly, it will make a few things much easier. And if you have the right products and do the right marketing on the TMall platform using the platform’s various marketing tools you may do very well.