Chinese rivals snap at Alibaba's heels in cross-border e-commerce race (updated)

Sinotrans

26/02/2015 03:55

(Adds details on JD.com) 
    By Brenda Goh 
    SHANGHAI, Feb 26 (Reuters) - A Chinese government push to 
promote e-commerce has created a host of online retail rivals 
for Alibaba Group Holding Ltd  BABA.N  and Amazon.com Inc 
 AMZN.O  catering to shoppers' fears about the quality and 
safety of local everyday goods. 
    Logistics firms have been encouraged by tax-relief 
programmes and other policies that gained traction last year. 
Several, including SF Express and state-owned Sinotrans 
 0598.HK , have jumped into a field dominated by JD.com Inc 
 JD.O , Alibaba's biggest rival, which boasts 118 warehouses and 
thousands of delivery stations.  
    They're all vying to grab a piece of the cross-border 
e-commerce market which the government estimates to be worth $1 
trillion by 2016. 
    Smaller local internet firms like Netease Inc  NTES.O , 
which partnered last month with Sinotrans to set up an online 
bazaar, are also keen to gain from the sector known as "haitao", 
which roughly translates as "seeking treasures abroad". 
    "Local e-commerce businesses aren't able to meet the needs 
of China's consumers who are increasingly buying from abroad," 
said Masa Ren, vice president of international e-commerce 
services at SF Express, one of China's biggest logistics firms. 
    The company launched a portal in January selling lobster, 
milk powder and other items it sources from retailers in 
countries such as Canada and Japan. 
    JD.com Inc  JD.O  has carved out a chunk of China's 
e-commerce sector by marketing the authenticity of its products 
to Chinese consumers wary of low quality and fake goods. 
    It announced a food import programme in January including 
California wines, Massachusetts lobsters and U.S.-grown fruit. 
 ID:nWNAB05RNY  
    Since 2012, more than 2,000 firms have registered as 
cross-border e-commerce businesses, the customs bureau said. 
    While Beijing's policies, aimed at reducing smuggling, have 
helped, the sector is booming thanks to the growing number of 
affluent Chinese who prefer global brands and whose faith in 
local goods has been frayed by a slew of safety scandals, mainly 
involving food. 
    Advertising executive Fiona Chen says she buys most of her 
daily necessities from overseas, spending about $200 on items 
such as shoes and cosmetics online at least once a month. 
    "There are a lot of items that aren't available in China, 
and overseas products, particularly food, are safer," she said. 
    Data from consultants iResearch estimates the gross 
merchandise value of cross-border e-commerce grew to 14.8 
percent of China's total foreign trade last year from 11.9 
percent in 2013. By 2017, the sector is expected to contribute 
about a fifth of total foreign trade, the consultancy said. 
    Analysts say the smaller haitao players will find it 
difficult to grab business from giant Alibaba, which controls 
over 80 percent of all e-commerce in China and which is on a 
campaign to win U.S. business this year after launching Tmall 
Global in 2014. 
    U.S. online retailer Amazon.com is also pushing ahead with 
expansion in China after it set up shop in Shanghai's free trade 
zone in August ID:nL1N0UV04H  ID:nL4N0QQ4NR  
    But as these big firms go head to head with the minnows, the 
biggest winner of all may be foreign brands that are being 
offered a new route into China, said Scott Williams, vice 
president of programmes and services at the American Chamber of 
Commerce in Shanghai.  
    "The doors are open in China for U.S. businesses, this 
includes big brands as well as small-and-medium enterprises, as 
the demand for high quality goods and services has never been 
higher than now." 
 
 (Editing by Emily Kaiser and Miral Fahmy) 
 ((brenda.goh@thomsonreuters.com; +86)(0)(21 6104 1763; Reuters 
Messaging: brenda.goh.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA RETAIL/INTERNET