Alibaba comes to Detroit in bid to woo U.S. businesses
Chinese online sales giant Alibaba is in Detroit this week working to convince American small businesses that China is a market for them — and that Alibaba can create 1 million jobs in the U.S. over the next five years.
The company’s Gateway ’17 conference is something between a rally, a training session and an old-fashioned variety show.
One highlight was a keynote by Alibaba Chairman Jack Ma, a man with rock star status in his home country but someone who isn’t a household name here. The company says it expects 3,000 entrepreneurs and business owners from across the U.S. to attend.
The event has political overtones, as President Trump has made much of the trade imbalance between the United States and China. During his campaign, Trump called out China as a currency manipulator because of its past efforts to drive down the value of the renminbi to gain a trade advantage. He has since backed off that accusation.
Despite a recent turning away from the idea of globalization on the international stage, U.S. small businesses are still eager to get their products out to the world. Cross-border shopping is a promising area of growth for online retailers, and Alibaba aims to provide the knowledge and tools necessary to make it simple.
“For U.S. merchants, a lot of that cross-border traffic is being driven by online shoppers in China. And Alibaba, having both a marketplace and a cross-border offering for non-Chinese merchants, is hoping to be those merchants’ gateway to e-commerce in China,” said Lily Varon, a business strategy analyst with Forrester.
Alibaba has been struggling to get a foothold in the U.S. market. In 2014 it opened 11 Main, a boutique online site, but quietly closed it a year later.
While Alibaba is omnipresent in China and across Asia, it’s little known here. It acts as an online sales platform, but unlike the Amazon model Americans are familiar with, it doesn’t sell directly to consumers. Instead, it operates marketplaces that connect buyers and sellers. It’s hugely popular with Chinese consumers and has 443 million customers there.
But Alibaba is more than simply a place to buy things. It’s also a payment system, a chatting platform and a place to play games. Given its outsized footprint and the time Chinese consumers spend on it, Alibaba has deep insight into the things con- sumers there want — and a lot of them come from America.
China represents a potentially enormous market for U.S.-produced food, cosmetics, vitamins and other items. Chinese consumers don’t trust the safety and wholesomeness of Chinese-grown foods and Chinese-made beauty products, and they’re especially worried about anything that touches their or their children’s skin. In China, American food and products have a very high reputation.
The devil will be in the details, according to Christopher Balding, an economics professor at Peking University’s HSBC Business School in Shenzhen, China.
“China simply does not have a professionalized regulatory agency like the FDA with clear standards. The FDA operates overseas offices for companies in major markets that wish to get certified to export to the US. China does not have a remotely comparable degree of professionalization that would allow a predictable process to get products approved,” he said.
The numbers Alibaba is quoting, creating 1 million jobs in the U.S. in five years, seem impossibly large to Balding because the Chinese government would be unlikely to allow it. China still has enormous protectionist tendencies across the entire range of economic and financial ministries, he said.
“Any large increase in imports to China, even via Alibaba, would be met with a swift crackdown.”