China is set to unleash its retailers upon the world

If you were wondering what enormous strategic threat the Chinese administration is cooking up to unleash on the world, wonder no longer. It’s retail.

Having mused previously in this space about the fertility of China’s virgin field of retail brands, we now have some interesting evidence. Guess who is China’s biggest retailer? Alibaba.

In fact there are nine ecommerce players among the top 20 in China’s retail sector. China’s retail ecommerce is already twice that of Japan and accounts for 60 per cent of Asia’s total — and growing fast.

Of course, Alibaba is not lacking for competition on its own terms, but in taking the top spot it passed Suning — which has 700 retail stores across the country. The trend, as they say, is established.

Keep in mind that Alibaba’s global presence is B2B. That is, it matches manufacturers with retailers — for all manner of goods, a huge proportion of which are made in China. At the same time it has developed a huge domestic retail presence, is evidently looking at diversifying into entertainment, would like to get into financial services — and just lately has bought a football team.

Alibaba’s next step is a US stock exchange listing, which will no doubt capitalise the apparently extensive scope of founder Jack Ma’s vision. With the cash flow growth pumping from the retail base, and an ability to capitalise that stream internationally, Alibaba shapes up as a remarkably powerful force.

Given the fact that Alibaba’s retail strategies are derived from China’s largely immature brand environment, it will be fascinating to see how the growth offshore develops. It certainly offers the possibility that China’s manufacturers might soon be able to go direct to the clients of companies like Walmart.

About the author

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Michael Gill is Principal Advisor with ChangePond Technologies and Counsellor with global business advisory firm Dragoman.

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