SAN FRANCISCO — When Jack Ma, executive chairman of Chinese mega-company Alibaba, met with President Trump in January, he made a promise – the online sales platform would give 1 million U.S. small businesses entrée to the Chinese market.
On Tuesday, Ma will announce he’s launching a program to make good on that promise. Alibaba plans a conference in Detroit on June 20 and 21 to teach U.S. businesses how to sell to the company’s 443 million customers in China.
The two largest small business markets in the world are the United States and China, and “connecting them seems like a good idea – good for the United States and good for China,” Alibaba President Michael Evans told USA TODAY.
While Americans are familiar with the idea that most of their consumer goods come from China, China does import some consumer goods from the United States. Alibaba sees an opportunity to greatly increase those.
Currently, the site has 7,000 U.S. businesses, mostly large companies and big-name brands. Over the next five years, Alibaba hopes to increase that to more than 1 million, with the vast majority made up of small businesses. When Ma met with then president-elect Trump, he said the plan would create 1 million U.S. jobs.
As a first step towards that, the company hopes to invite as many as 2,000 U.S. small business owners, entrepreneurs, and farmers to Detroit, focusing on products it believes Chinese consumers want.
The aim is three-fold. First, Alibaba needs to educate attendees about the business opportunity that China represents.
Next, it plans to tell them how the nuts and bolts work of selling to China is done, everything from finding a partner company in China to the logistics of shipping, to dealing with foreign exchange.
Finally, it will play matchmaker, introducing Americans to small Chinese businesses that maintain digital storefronts on Alibaba’s Tmall site.
“We’re going to be very involved in the end-to-end process, establishing the connection and the facilitating it,” said Evans.
Know your audience
Alibaba says it can do this because it has tremendous insight into the needs and desires of its 443 million customers in China.
Unlike the Amazon model Americans are familiar with, Alibaba does not sell directly to consumers. Instead, it operates marketplaces that connect buyers and sellers.
In Ma’s words, “think of us as a virtual mall with nearly half a billion shoppers buying from sellers that operate their own online storefronts.”
Its reach into the lives of its customers is enormous. It is a payment system, a chatting platform, a place to play games and a place to buy things. Given its outsized footprint and the time Chinese consumers spend on it, Alibaba has deep insight into the things consumers there want.
Chinese consumers don’t trust the safety and wholesomeness of Chinese-grown foods and Chinese-made beauty products and they’re especially worried about anything that touches their or their children’s skin. American food and products have a very high reputation.
China is a willing market. A middle class that’s expected to reach 550 million by 2022 can afford to buy some luxury goods from overseas. Already U.S. businesses exported $15 billion in goods to Alibaba customers in China.
The issue of the trade imbalance between the United States and China has long been a sore point between the countries. During his campaign, President Trump made a point of calling out China as a currency manipulator because of its past efforts to drive down the value of the renminbi to gain a trade advantage. He has since backed off that accusation.
Whether a million or even two million small businesses could tip the scales of the current trade imbalance is unclear. The United States imported $32.7 billion dollars in goods from China in February, according to the U.S. Census Bureau. It exported $9.7 billion in goods.
Alibaba and China have also struggled on the world stage. The company has been a haven for counterfeiters, including of many American-made brands.
The difficulties of selling halfway around the world in a foreign language and different currency are manifold and the plan certainly daunting. But Chairman Ma’s efforts in this direction didn’t just begin with the election of Donald Trump and his America First rhetoric.
Ma penned an editorial that ran in the Wall Street Journal on the topic in 2015.
Now in 2017, Alibaba sees itself as a gateway for merchants to reach customers, dubbing the Detroit conference Gateway ’17.
The company’s goal, Ma said in an open letter to U.S. businesses, farmers and entrepreneurs published on its website Tuesday, is to make it easy for American small business owners to “take advantage of the China opportunity.”