Why Alibaba Launched Taobao’s US Network


Jul. 31 2017, Updated 9:12 a.m. ET

Detroit conference leads to dedicated business network

Alibaba (BABA) recently announced the launch of a US business network called Taobao Global US Merchants Network. The launch of the network followed a Detroit conference in June 2017. During this conference, Alibaba executives met with representatives of several US (SPY) small businesses to discuss e-commerce and selling in China (MCHI) (FXI).

Taobao Global US Merchants Network is a platform that Alibaba is dedicating to helping US SMEs (small and medium enterprises) sell to Chinese consumers. Unlike other e-commerce platforms, it is designed to connect these small businesses with merchants that already have experience selling in China.

Alibaba’s US business network has an element of introduction and mentorship for US SME manufacturers entering the Chinese market for the first time.

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Profiting from China’s interest in Western goods

For Alibaba, launching the dedicated US business network can be viewed as part of its goal to profit from the growing demand for Western goods among Chinese consumers. As China’s middle class (QQQ) expands, the appetite for Western goods has also ticked up and Alibaba is trying to seize the opportunity. By being the gateway of Western vendors selling to China, Alibaba hopes to widen its lead over rival JD.com in China’s e-commerce industry.

The chart above depicts the quarterly growth trends of Alibaba’s core commerce revenues.

Fulfilling a pledge to President Trump

According to an Alibaba statement, the US business network would connect US SMEs to more than 500 million consumers in China.

The launch of the US business network can also be viewed as fulfilling the promise Alibaba’s CEO, Jack Ma, made to President Donald Trump earlier this year about creating about a million US jobs through e-commerce.


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