The e-commerce giant offered a host of strategies for American small businesses looking to tap the immense potential of the China market.

Share this article:

Alibaba Group (NYSE: BABA) hosted its recent Gateway ’17 Conference in Detroit to spread the word among U.S. small businesses and entrepreneurs about opportunities in the China consumer market—and to share strategies for reaching that market.

Alibaba Gateway '17 | E-commerce market growth

The largest e-commerce platform on the planet, with half a billion shoppers, Alibaba connects businesses to consumers, primarily in China. But its influence extends much farther, with its two most prominent platforms—Taobao and Tmall—among the top 15 most visited websites in the world. The event, at the Cobo Center in downtown Detroit, was its largest ever outside of China; and it quickly sold out as small and mid-size business owners flocked to learn more about the growing China market for American goods.

Gateway ’17 was designed to help small U.S. businesses connect with Chinese consumers. Alibaba founder and executive chairman Jack Ma set the stage with a keynote address about the tremendous growth of the China consumer market. CNN’s Lisa Ling followed by hosting a series of Q&As with high-profile Alibaba speakers, among them the mayor of Detroit, Marcus Lemonis of CNBC, and even Martha Stewart. Throughout the event, a few consistent themes emerged, including the immense potential of the China market and the best ways to meet those consumers’ growing interest in American products.

To open his keynote address, Ma stood in front of a huge time-lapse animation of Shanghai’s skyline over the past 30 years. As the skyscraper-studded modern cityscape arose from an initially unremarkable landscape, Ma’s point was simple: China’s recent growth represents massive potential for American businesses.

Throughout the day, Ma and other speakers repeated a striking statistic: China’s middle class already outnumbers the entire population of the United States and is expected to reach 600 million by 2020. As incomes rise, these consumers are looking for quality imported products, and they are buying them online. This means that now is the perfect time for even small companies to start selling to China.

“If you’re serious about growing and competing globally, you cannot ignore China,” said UPS chairman and CEO David Abney.

That applies to businesses of all sizes, noted Ric Kostick, co-founder and CEO of California-based natural skincare company 100% Pure. Kostic told the audience how he partnered with Alibaba almost as soon as he started his company, in 2005. With a dozen U.S. retail locations, Kostick said, he nonetheless expects his Chinese business to exceed the company’s American business within five years. And he noted that he expects a lot of that growth to come through Tmall, the Alibaba site on which 100% Pure launched an online store live during Gateway ’17.


No end in sight to China’s potential

To open his keynote address, Ma stood in front of a huge time-lapse animation of Shanghai’s skyline over the past 30 years. As the skyscraper-studded modern cityscape arose from an initially unremarkable landscape, Ma’s point was simple: China’s recent growth represents massive potential for American businesses.

Throughout the day, Ma and other speakers repeated a striking statistic: China’s middle class already outnumbers the entire population of the United States and is expected to reach 600 million by 2020. As incomes rise, these consumers are looking for quality imported products, and they are buying them online. This means that now is the perfect time for even small companies to start selling to China.

“If you’re serious about growing and competing globally, you cannot ignore China,” said UPS chairman and CEO David Abney.

That applies to businesses of all sizes, noted Ric Kostick, co-founder and CEO of California-based natural skincare company 100% Pure. Kostic told the audience how he partnered with Alibaba almost as soon as he started his company, in 2005. With a dozen U.S. retail locations, Kostick said, he nonetheless expects his Chinese business to exceed the company’s American business within five years. And he noted that he expects a lot of that growth to come through Tmall, the Alibaba site on which 100% Pure launched an online store live during Gateway ’17.

Alibaba Gateway '17 | Jack Ma on E-Commerce

America’s brand is big 

Another recurring theme is that there is pent-up demand for American products among Chinese consumers.

“They want the product that a consumer here in Detroit would be able to buy if they walked around the corner and into a shop,” said Terry von Bibra, general manager of Alibaba Group Europe.

He cited a 2016 study by consulting firm Oliver Wyman, which showed that 65 percent of Chinese consumers buy imported products for better quality. That search for quality often leads to American companies across all sectors, but especially when it comes to products for babies and children.

Beyond those more practical concerns, America is considered cool in China. American TV shows, movies and pop culture in general are hugely popular. American products benefit from that popularity, especially if they can be associated with a celebrity through advertising.


Tell a story and they will read it

Chinese consumers are also unique in that they will go to great lengths to get to know all about the products they’re buying—and to verify that those products are authentically American.

While brand websites in the U.S. keep their backstories short, successful brands in China often offer 10 to 15 times as much content. Chinese consumers eagerly read brand-story materials, to be certain that the product they’re buying is genuine and to learn the story of how it got to China. Von Bibra noted that QR codes, widely ignored in the U.S., are heavily used in China to discover the stories behind a wide variety of products.

Chinese consumers enthusiastically engage with the American brands they purchase in a variety of other ways. For example, the average consumer visits Taobao seven times a day—spending more than 25 minutes on the site reading his or her favorite brands’ newsfeeds or watching hugely popular livestream videos that feature product demonstrations, von Bibra said.

“People open the app not necessarily because they want to buy something right now,” von Bibra explains. “They want to see what their brand’s doing today.”

While this may seem like a great deal of marketing, brands don’t need to invent a new identity to reach Chinese consumers. In fact, American brands that have tried to sell their products to the China market by creating commercials with Chinese actors or dialogue dubbed in Chinese have learned that such an approach rarely works, said Pier Smulders, director of business development for Alibaba Group New Zealand.

“Keep the authentic brand story about who you are,” he said. “They’re buying the story of who you are.”


The biggest China market is online

One theme that came up repeatedly was how thoroughly technology has opened China’s markets to American companies. Ma said that just as America was once considered a country of automobiles and drivers, China is now a country of mobile devices and users.

The average Chinese consumer is under 35 and likely to shop mostly via mobile device, said Amee Chande, managing director of global strategy for Alibaba Group. “They’re open and faster adopters than in the West,” Chande added.

But retailers don’t necessarily need to invent new tech to reach these consumers, as much as they need to use that technology to tell their stories. Ma told the audience about Alibaba’s early days, when he was the company’s product tester because, he said, if he could figure out how to use it, then so could most of his potential customers.

“If Jack Ma can do e-commerce, you definitely can do it,” Ma said.


America’s brand is big 

Another recurring theme is that there is pent-up demand for American products among Chinese consumers.

“They want the product that a consumer here in Detroit would be able to buy if they walked around the corner and into a shop,” said Terry von Bibra, general manager of Alibaba Group Europe.

He cited a 2016 study by consulting firm Oliver Wyman, which showed that 65 percent of Chinese consumers buy imported products for better quality. That search for quality often leads to American companies across all sectors, but especially when it comes to products for babies and children.

Beyond those more practical concerns, America is considered cool in China. American TV shows, movies and pop culture in general are hugely popular. American products benefit from that popularity, especially if they can be associated with a celebrity through advertising.


Tell a story and they will read it

Chinese consumers are also unique in that they will go to great lengths to get to know all about the products they’re buying—and to verify that those products are authentically American.

While brand websites in the U.S. keep their backstories short, successful brands in China often offer 10 to 15 times as much content. Chinese consumers eagerly read brand-story materials, to be certain that the product they’re buying is genuine and to learn the story of how it got to China. Von Bibra noted that QR codes, widely ignored in the U.S., are heavily used in China to discover the stories behind a wide variety of products.

Chinese consumers enthusiastically engage with the American brands they purchase in a variety of other ways. For example, the average consumer visits Taobao seven times a day—spending more than 25 minutes on the site reading his or her favorite brands’ newsfeeds or watching hugely popular livestream videos that feature product demonstrations, von Bibra said.

“People open the app not necessarily because they want to buy something right now,” von Bibra explains. “They want to see what their brand’s doing today.”

While this may seem like a great deal of marketing, brands don’t need to invent a new identity to reach Chinese consumers. In fact, American brands that have tried to sell their products to the China market by creating commercials with Chinese actors or dialogue dubbed in Chinese have learned that such an approach rarely works, said Pier Smulders, director of business development for Alibaba Group New Zealand.

“Keep the authentic brand story about who you are,” he said. “They’re buying the story of who you are.”