Alibaba on the ‘continued desire’ for European brands in China: ‘Consumers are willing to pay for quality and provenance’

As the world’s second-most populated country with numbers exceeding 1.4bn, China represents an enormous market. Alibaba – the country’s largest online commerce company – hosts millions of merchants and businesses to serve over 1.3 billion consumers globally.

Via Alibaba’s Tmall Global, a business-to-consumer online retail platform, the company offers the opportunity for international brands and products to access Chinese consumers. And a growing number of EU and UK companies are taking notice, according to Zarina Kanji, head of business development and marketing for Tmall Global, Alibaba Group UK & Nordics.

The opportunity in China

On Tmall Global, a marketplace for cross-border ecommerce, each brand has their own branded, self-managed ‘flagship’ webstore. These brands can also access Tmall’s ‘supermarket section’, made up of different brands from around the world.

International brands currently selling into China via Tmall Global include tea brands Twinings and teapigs, coffee and tea chain Whittard of Chelsea, preserves and spreads maker Tiptree, and high-end retailer Fortnum & Mason.

“The element of cross-border ecommerce means that the end consumer is purchasing directly from the brand, meaning that the brand doesn’t have to do a B2B import,” ​Kanji told FoodNavigator.

“That makes it easy for the brand to get into the market. And then later on, should they wish to do so, they can use the data they have learnt from selling on the platform to understand where their customers are and what their favourite products are, before registering their best-selling products in domestic China to sell via our domestic platform and/or locally in Chinese supermarkets.”

GettyImages-1350164916

Most consumers on the Tmall Global platform are female (around 70%). GettyImages/AsiaVision

Tmall Global boasts the greatest market share amongst cross-border ecommerce platforms in China, with close to 40% according to public data. And with more than 100m people shopping at Tmall Global, brands have the opportunity to reach a huge audience.

But even at a modest scale, the opportunity can be attractive, we were told. “Even at a small scale, the amount [international brands] can do – if they do it right – is a nice add-on for their global business.”

The UK brands currently doing well on the market are those that have ‘leant into the customer’ and continue to develop ‘newness’ for the Chinese market. “This is really key. The Chinese consumer always wants something new.”

Current food and beverage trends in China

Tmall Global customers are mostly located in first- and second-tier cities in China, suggesting a certain level of affluence. “They do have money to spend,” ​we were told. “Chinese consumers, like consumers everywhere, love a bargain. But they are particularly willing to spend on products that go inside or on their body.

“They really care about the quality and provenance of the product. That is an area where they are willing to pay.”

Most consumers on the platform are female (around 70%), with two-thirds made up of Gen Zs. More than 90% of Tmall Global users access the platform via the smartphone app, rather than the website.

With the international market having been closed for three years, Alibaba is now observing ‘continued desire’ for European brands and products.

whiskey lucentius

Strangely, as desire low/no alcohol products grow, so too does demand for premium whisky. GettyImages/lucentius

So what foods and beverages are trending in China right now?

The most prevalent trend Kanji observed on a recent trip to the country is coffee, with the coffee shop scene ‘absolutely exploding’. “Chinese consumers are drinking coffee all over the place, which you wouldn’t have previously seen so much since it is traditionally a tea-drinking country.”

Chinese consumers are searching for international coffee brands on the Tmall Global platform, which the business development lead revealed does not currently stock enough to meet demand. Tea continues to be sought after, as does honey from the EU, UK and New Zealand – although sales are shifting to lower-priced honey from Russia takes greater market share.

Premium, collectable whisky is another product on consumers’ radar. Shoppers seeking out these products fit into the ‘high net-worth’ category where is ‘no price barrier’. And on the other side of the spectrum, a growing trend for low and no alcohol drinks has also been observed. Fortnum & Mason’s 0% sparkling wine, for example, is selling well.

The ice cream category is another gaining in popularity – an unlikely trend given that more than 90% of Chinese consumers are lactose intolerant.

Any hesitations about entering the Chinese market?

The vast majority (more than 80%) of the companies Kanji works with are making their China debut. Such brands can be initially hesitant about entering the country, believing the process to be more challenging than it is, the business development lead suggested.

“They think it’s harder than it is and often worry about the language barrier,” ​we were told. Using cross-border ecommerce means the product packaging remains the same, no matter the market. Packaging and labelling for a Twinings tea product, for example, is identical for British and Chinese consumers if sold on Tmall Global.

But this is not a problem, said Kanji. Everything that is on the product label and packaging is translated on the brand’s Tmall Global webstore. “They can just reference that, which they’re used to doing.”

Another potential hesitation brands may have about entering the Chinese market lies in Tmall Global’s cross-border model, which differs to conventional sales models. In other international markets, brands sell their products to distributors. But under the Tmall Global model, most brands work with a trade partner on consignment. It is the brand’s responsibility to invest in marketing – both on the platform and off – and success, according to Kanji, often depends on how much effort brands are willing to put in.

Being a consignment model also means that shelf-life is a big consideration. Tmall Global is looking for products with a shelf-life of minimum nine months, but ideally 12 or over. “Products need to have at least two-thirds shelf-life left when it enters the warehouse,” ​Kanji stressed. But that should not put off companies with shelf-life specifications, she suggested. Ice cream from the UK is currently being shipped to China, sold on the Tmall Global platform, and transported completely cold chain to the end consumer.

China should not be considered a more challenging market to enter than the US, believes Kanji. “I always think China is less complicated than the US, where you have 50 different states and different regulations per state.

“China is just one country, and you can do it all digitally. It’s easier in that respect.”

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