Tmall Opens Up China’s Market For U.S. Brands
Accessing China’s growing market often can seem daunting for many US brands.
On the one hand, American consumer brands are increasingly aware that China is the largest retail market in the world. Research firm eMarketer states that China overtook the US in this category in 2020. On the other hand, these same American brands have limited familiarity with China — or no familiarity at all. And they know there are significant gaps in culture, lifestyle, and language.
So how realistic is it for a US brand to allocate management time to exploring and building out the China market? The enormous potential of the market is offset by its (perceived) enormous complexity.
Fortunately, Alibaba — through its Tmall platform — bridges the gap between market size and potential and that complexity. Tmall is the largest B2C platform in the world and it currently boasts over 250,000 brands, with U.S. businesses selling more than $54 billion worth of goods to Chinese consumers in 2020.
Because not only is China the largest retail market in the world, it is also the largest ecommerce market in the world. Over 50% of all retail sales in China are online. For goods in the mass-premium and premium spaces – where many US brands tend to fall – that percentage is bound to be higher.
So with a stand-alone ecommerce strategy, a US brand can cover a solid majority of the China market. Tmall allows a brand to enter the China market without ever (1) visiting China; (2) setting up a China legal entity, or (3) hiring anyone in China.
As the costs of market entry drop, China has become accessible to a range of mid-tier and junior brands which historically might not have been able to enter. Tmall does not eliminate commercial challenges facing American brands, but it does dramatically reduce market entry costs so that your break-even point is reduced dramatically.
Americans tend to view ecommerce in the US as an augmentation tool, whereas in China it leads the marketing effort. In the US, ecommerce is icing on the cake. In China, ecommerce is the cake.
Frank Lavin is the founder & CEO of Export Now, a US-based Tmall Partner assisting US brands. He formerly served as U.S. Undersecretary of Commerce for International Trade