China watcher Paul Gordon from the ToCN team takes a look at the impact the recent IPOD of Alibaba might have on smaller ‘e’tailers in the future.
The multinationals are well established and the mid size corporates are beginning to gain a foothold, but accessing the world’s fastest growing consumer economy is still a problem for many SMEs. A combination of IP protection issues, red tape, compliance as well as the capital required have deterred many. I have recently spoken to three successful international entrepreneurs with Chinese objectives who have thus far failed to go beyond Hong Kong or Singapore for a combination of these reasons. In truth, some of these are perceived and out of date but the fact remains that the China market is still just an aspiration for most.
Something is beginning to change though and that is Alibaba. Like Amazon, Alibaba offers merchant e commerce capabilities. Such a service enables an international online retailer to enter the Chinese marketplace in the same way they could trade at home. The issues around supply management have been addressed and the trust that Chinese consumers have in Alibaba, its most recent commercial success story, will overcome many of the barriers to entry.
Business history tells us that when a breakthrough happens in one sector the domino effect occurs.
This might well be the breakthrough many have been waiting for.