Alibaba Gateway 17 Detroit Conference Takeaways

The Alibaba Gateway 17 2-day conference is in the history books now and here is a summary of the most interesting highlights from the event.

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Several invited U.S. companies shared with attendees their experiences in China through main stage talks, group sessions, or just being available for a discussion on the conference floor.

At Gateway 17, Alibaba introduced their various Chinese platforms to U.S. businesses. Walking the floor of the conference, attendees found two sections, one selling to China, and one sourcing from China.

Alibaba brought Chinese trading partners and distributors to Detroit. So attendees could interact with Chinese companies directly to build relationships and learn more about how their products can fit into the Chinese consumer market.

CHINA DOMESTIC CONSUMPTION WILL DRIVE THE GLOBAL ECONOMY

While touring the conference, Jack Ma, CEO of Alibaba, stated he believes domestic consumers in China will drive the global economy for the next 30 years.

The country has a middle class of about 300 million consumers and is set to rise to 500 million in just a few years. This growth provides a tremendous opportunity for global companies to cater high-quality products to this rising consumer market.

OPENING REMARKS PROVIDE POSITIVE REINFORCEMENT TO SMALL BUSINESSES

David Gilbert, CEO of Quicken Loans and Rock Ventures and owner of NBA’s Cleveland Cavaliers franchise stated in his comments that small businesses are vital to the future. He encouraged the assembled crowd of 3,000 small businesses people that innovation comes from small businesses and it is a perfect time to be an entrepreneur.

“Don’t be afraid to take on big guys because you are small,” he said. Also, the best advice he received was to “bring forth an idea, whether or not you think someone else will like it…and don’t be afraid to fail.”

State of Michigan Lieutenant Governor Brian Calley also reinforced it is a good time for entrepreneurship.

“The one thing that we have learned over the course of the last decade is that to make an economy work, there has to be an ecosystem from large to small,” he said.

While attendees were from all around the U.S., about 100 small business from Detroit and 600 from Michigan were among the participants at the conference.

MONDAVI WINERY USING ALIBABA’S TMALL TO SELL WINES IN CHINA

The Robert Mondavi Winery, an original pioneer in California wines, is using Alibaba’s TMall to sell wines in China. The company is no longer owned by the Mondavi family and is now part of a Fortune 500 company, but that doesn’t negate the fact they are finding success with their wines among Chinese consumers.

Mondavi is crediting TMall data to allow it for segmenting its wines to different age groups and demographics. The winery is also utilizing the TMall concierge service to answer wine pairing questions. In turn, this provides an enhanced consumer experience and value-add to their finer wines.

JACK MA TELLS HIS STORY AND VISION

Jack Ma participated in an open discussion with Charlie Rose about the past, present, and future of Alibaba and the global economy. You can watch the entire interview here.

Ma tells his story about starting China Pages in 1995 and how it flopped. His first attempt at building an internet company.

However, he learned valuable lessons and four years later got 18 friends involved to start up Alibaba. Nearly two decades later the company is worth more than $300 billion and growing rapidly.

He also told the audience that he believes a successful company must be mission and vision driven. Never stop and continue to think ahead and plan as few ever see disruption coming.

“The Internet is a 10,000 meters running race. We just finished the first 100 meters. Do not think the people next to you are competitors,” that early in the race Ma said, noting few could have predicted the demise of Netscape or Yahoo.

“Don’t believe you are good all the time. Be paranoid”, he counseled.

Jack Ma further stated that too many companies that entered China worry about making their management or boss happy. They need to make the customer happy and work on long-term strategy, not on short term success.

“If you miss the opportunity to sell your products to China, you will miss the opportunity. You will miss the future,” he said.

He feels he still has a long way to go with Alibaba. In GDP, currently, the company would classify as the 22nd largest economy in the World, just behind Argentina.

Ma hopes to make it to number 5 in GDP by 2036, which would put it on even footing with the UK and ahead of California’s total GDP output.

JEWELRY.COM FOUND SUCCESS IN CHINA WITHOUT SELLING TO CHINA

Jewerly.com started in 2001 and now is a destination for online jewelry purchase. It never had any vision selling to China but found through research that it had many Chinese customers that purchased on its online store and had products shipped to friends in the U.S.

The natural step was to open up the Chinese market directly, and Jewelry.com started to accept payments through Alipay. It then added a storefront on TMall.

The company found that shopping in China is very different from the U.S. Customers love to spend time on product pages, learn more about the product through images and videos, interact with the page. So Jewelry.com used the TMall platform to bring that kind of shopping experience to Chinese consumers.

By opening up to the Chinese market the company also learned valuable lessons for the domestic market. It is now using better packaging and added additional certificates of authenticity.

It wants to be part of the original emerging middle class in China. Most of whom have not made their first purchase from an overseas vendor. The are even looking at creating a jewelry brand with designs specifically for the Chinese market.

UPS DISCUSSES CHINESE MARKET GROWTH

UPS CEO David Abney took to the stage to talk about the growing export business to China. U.S. exports to China surged 115% between 2006 and 2015, and today over $4 trillion in goods and services are exported to China.

He suggested that for small businesses to succeed in China, they need to “go native” and tailor their products and services to the market. Understanding local customs is essential for success in China.

David Abney also shared that a company of UPS’ size had its share of mistakes in the Chinese market. One anecdote included facing a painted dragon on one of its planes backwards that was flying to China. Chinese consider dragons depicted incorrectly as bad luck or disrespectful.

Like others, he encouraged that learning from mistakes only makes one stronger. He also stated that UPS with over 200 flights a week and two processing hubs in China could offer small businesses valuable logistics information before entering the Chinese market.

GERBER BABY FOODS A BIG HIT IN CHINA

Gerber had been exporting its products through Chinese distributors but decided to go directly to the consumer via TMall. While some products were available online in China, they knew there was a much larger audience.

Alibaba provided them with the resources and market data to go directly to the Chinese consumer. Gerber believes the Alibaba shopping platforms in China are at the center of the “New Retail” trend.

Most importantly, the platforms provide trust among Chinese consumers and allow companies like Gerber to provide Chinese middle-class consumers with high-quality products they want quickly.

With 20 million babies born every year, Gerber sees an enormous potential in the Chinese market. Moreover, Chinese middle-class consumers want high-quality food products for their kids from global providers. It is a match that works.

MARTHA STEWART PROVIDED INSIGHTS FOR ADAPTING TO THE CHINESE MARKET

The lifestyle guru and entrepreneur offered up some valuable tips to the local businesses in attendance. You must adapt your products and services!

She used an example of luxury towels to bring home the important point of knowing your customer and market.

If you are selling towels in the U.S., standard washing machines can handle big loads. A 10-foot terrycloth towel is not a problem for the average U.S. washing machine.

Now take a look at the typical size of a Chinese washing machine. The same luxury towel needs to be smaller. She stated more thought needs to go into the product to be successful in China.

Stewart also emphasized the importance of content. Social media is a valuable tool to interact with Chinese consumers and build your brand.

In China, shopping is different; it is an educational, entertaining, and a social experience.

Jack Ma underscored that point in noting that 60 million customers log onto Alibaba platforms without ever buying anything. Their platforms are rich with content and opportunities to socialize.

CONNECT WITH CHINESE CONSUMERS VIA LIVE VIDEO

In a sample session to highlight the importance of live-streaming, Alibaba demonstrated a live streaming session about the virtues of U.S. agricultural products.

In this video session, they gave away coupons and interacted with Chinese consumers who had questions and comments. Again, reemphasizing the nature of the direct approach and how Chinese consumers view shopping as entertainment and fun.

The live streaming ability is built into the mobile shopping app so that U.S. small businesses can take advantage of this type of interaction. Of course, you will need to have a Chinese speaking presenter to make this work.

FOOD IS A HOT TOPIC FOR CHINESE MARKET

Food is a significant opportunity in China. A bit ironic in that so many U.S. and European producers are looking at China for food products, yet the Chinese middle class is looking to the U.S. and Europe for higher quality food.

At Gateway 17, Alibaba held a breakout session on fresh food to educate small businesses about selling to China. Fresh food is a growth market in China with over 36 million households in 2016 buying fresh food online. And that number is growing rapidly.

Key points for attendees in the breakout session were:

• “The fresh shopper [in China] is a very, very sticky shopper,” said John O’Loghlen, director of business development for Alibaba in Australia and New Zealand. That means that when Chinese consumers find a brand they trust, they tend to be loyal to that brand.
• Some of the most popular American fresh food products among Chinese consumers are cherries, oranges, apples, grapes, pears, lemons, sea cucumber, king crab, cod, live lobster, shrimp, pork, and chicken.
• Farmers and fisherman looking to position their products in China might want to consider the following growth areas: frozen and chilled foods as well as fresh; and ready to eat/cook..
• A final important tip to know: Make sure you know the import and export rules and regulations for China. China takes this sector quite seriously, so there’s no room for error.

Alibaba also announced during the conference that Driscoll’s and Chicken of the Sea signed a memorandum of understanding their products will become available for sale on TMall.

THE LONG PLAY IS IMPORTANT

For small businesses, the long play in China is critical. While some of the company successes presented at Gateway 17 are from well-known brands, small businesses can and will have an impact in China.

Brand loyalty is essential to Chinese consumers. Using one of Alibaba’s platforms to sell products in China helps build that brand loyalty.

However, small businesses must be patient. Unlike companies such as Gerber, who is a known brand entity, smaller businesses will have to work to get that brand loyalty.

To build trust, U.S. small businesses must engage the Chinese consumer and cater to their unique needs and shopping habits.

Chinese consumers shop around holidays, learn the important holidays in China and use marketing and promotions and unique products to cater to these opportunities.

TMall is a not a quick rich scheme. It is a marketplace that requires dedicated work and constant attention. List it and forget is not going to make you successful in China.

WHOLESALE MAY BE OTHER OPTION FOR NEW BRANDS

Alibaba’s Pier Smulders hosted a breakout sessions discussing using wholesale partners to enter the Chinese market.

This is a very good option for smaller businesses that sell products that have no name brand recognition in China. The Chinese wholesale partner can also offer valuable advice and help in product marketing.

Of course, the downside with any wholesale entry is that your product must have a the profit margins to work in a 2-step distribution system. Again, think long term, if your brand is going to be successful, it must be priced right.

Smulders also offered valuable advice in marketing “tell your story, be authentic”.

He recalled a story about a New Zealand company that was trying to create a video with Chinese actors in Chinese. Smulders waved off this idea and instead suggested they focus on being a New Zealand company.

“I said, ‘look, you’re a New Zealand brand, a New Zealand company. Tell it as it is, put in some subtitles. They’re buying the brand that you guys started or that has a history here or a story here.”

And finally he suggested all brands entering the Chinese market need to some basic homework. Make sure you protect you brand and that Alibaba has resources available to help brands with intellectual property rights.

FINAL TAKEAWAY FROM GATEWAY 17

With 3000 attendees and fully sold out this conference was a success. A lot of information was presented that is valuable for anyone that is looking to expand to China.

Even the contentious subject of intellectual property rights was discussed and Alibaba had partners in attendance to guide U.S. businesses.

Hopefully Alibaba will bring this conference back. Considering this was only announced a few months back, Gateway 17 can be declared a success.

Jack Ma may have some lofty goals about creating 1 million new U.S. jobs. But one cannot argue his success.

If you attended the Gateway 17 conference, we love to hear your take on the experience. Would you go back or suggest other entrepreneurs attend it the next time?