Pairing the word ‘mysterious’ with anything Chinese is... problematic. There’s a long and lazy history in the West of mistaking ignorance on our part for enigma on theirs.
Take the country’s vast and ascendant tech companies: Baidu, Tencent and above all Alibaba. We used to think they were simply state-protected copycats of established US tech giants, which was only ever half true. Now it’s increasingly clear they are genuine rivals to the likes of Google and Amazon in both innovation and in scale.
But though we can all see the extraordinary numbers – NYSE-listed Alibaba just revealed a 58% increase in annual revenue to $39.9bn, helped no doubt by adding 110 million monthly active users – most of us don’t really understand what’s behind them. We just aren’t personally familiar with the services they offer or the way that these fit into China’s enormous and varied economy.
In Alibaba’s case, it doesn’t help that the vast digital conglomerate does so many different things. Here’s a quick run-down for the uninitiated.
Alibaba.com itself is a wholesale platform for retailers domestic and global, while 1688.com covers b2b within China, mostly for industry. Taobao is a marketplace predominantly for small businesses to sell to Chinese consumers; Tmall is the b2c equivalent for premium brands, many of them international; AliExpress is for foreign consumers to buy direct from China.
Then there’s Alipay (payments), Alibaba Cloud (take a wild guess), AliTelecom (""), Alimama (affiliate marketing), Cainiao (a logistics and data platform for online sales), Ant Financial (financial services, mostly for SMEs), Fliggy (an online travel agency), AliOS (an Android-derived operating system), Dingtalk (enterprise software), AutoNavi (maps and navigation services), Umeng (analytics), Lazada (ecommerce in southeast Asia), Xiami (music streaming) and UCWeb (a mobile browser).
So while the company is often seen as a kind of Chinese version of Amazon, a more apt analogy would be a cross between Amazon, eBay and Google minus the search. All in a country with 700 million internet users and rising, where ecommerce already comprises a far higher percentage of retail spend than in the west.
Our lack of understanding of China and its ecommerce landscape in particular is more than just a sign of our enduring cultural Euro-centricity. It could be holding British businesses back from immense trade opportunities in a country with 1.4 billion people and a rapidly growing middle class.
‘There are very few people who can stat attack the way I can about the size of this opportunity,’ says David Lloyd, Alibaba Group’s UK MD. ‘That’s great because it gets people focused, but sometimes it means people focus only on the size of the opportunity. There can be the fairly classic mistake of "build it and they’ll come" – there are so many people there, all I have to do is find a route to market, right?’
How to sell to China
Needless to say, that won’t cut it. The most common mistakes Lloyd sees British brands making on Tmall is to treat it as simply a sales channel, instead of a branding channel, and to fail to adapt their approach to what is a very different consumer.
For example, mobile ecommerce penetration is far greater in China than it is in the UK, because the country has leapfrogged the bricks-and-mortar superstore and desktop shopping eras and gone straight to mobile sales. This trend has grown up around and become intertwined with the rise of social media, which means online shopping is much more of an entertainment-led experience in China, and one to be shared.
The result is that the fast and functional, get-them-to-the-checkout offerings found in the UK would seem unbearably bland in Beijing.
‘You need to see it as an ongoing test. There’s an enormous amount of information you can get from consumers – our average user spends 27 minutes a day on our platform, and it’s obviously not just shopping. Chinese consumers are highly engaged, they’ll give feedback, either data driven or typed, so listen and learn,’ advises Lloyd.
'Brand GB': A Chinese perspective
Lloyd cautions that if you asked ten Chinese consumers about ‘brand Britain’ you could get ten different answers. But broadly, he suggests, we’re associated with three things:
1. Heritage. Yes China has a lot of history too, but we wear our traditions on our tweed sleeves. An interesting example is Whittard of Chelsea, which has had some success selling tea to China, in part due to the rising popularity of British-style afternoon tea.
2. Quality. The advantage of having a lot of luxury brands is that the reputation sticks. Think Bentleys and Barbour.
3. Innovation. Our reputation for creativity has crossed the continent, it seems. Lloyd points especially to fashion. ‘It’s not necessarily the power brands of Italy and France, but there’s lots of fast fashion and up-and-coming designers here, so that’s a nice space for us to occupy.’
Lloyd himself is very... English. He ticks all the boxes – drole and self-deprecating (what keeps him up at night? ‘Jetlag is the very honest answer’), polite, a book-loving, Oxford-educated arts graduate. One wonders how he got into tech in the first place.
‘When I was 16, IT lessons were about touch-typing – and I was really bad at it. But I had a really inspiring English teacher who told us that the internet was the most powerful invention since the printing press, that it was going to revolutionise people’s access to information. I remember as he was talking, thinking God I couldn’t give a monkeys. He’s talking about tech and I wanted to talk about literature.
‘Then I thought about it some more and realised how it was becoming massively enabling. So I went from being this book nerd – I’m being very affectionate about myself here – to seeing the internet not in terms of technology but as accessible information. That was very motivating for me.’
A stint in an advertising consultancy was duly followed by nine years at Google, where Lloyd really got hooked on the pace, ambition and relentless learning that defines the tech sector, and which he says is an ‘order of magnitude’ more pronounced at Alibaba. Even two months away from the mothership in Huangzhou and he feels out of the loop (hence the jetlag).
The task ahead
Lloyd’s main role in the company is best described as integration. On one level this is cultural. ‘When I joined I was the only British born and bred person in this entire office, which was a unique experience, to be in a minority as a white British guy,’ he recalls.
Now, as the team has grown from 20 to 50, the proportion with a non-Chinese background has risen to around a third. The camaraderie-building events that pepper the company’s calendar, from ‘AliDay’ (May 10 - celebrating the company’s foundation) and Singles Day (11/11) to Christmas and Chinese New Year, reflect this. Christmas at Alibaba, for example, is as much dim sum as secret Santa.
Integration is also a theme in purely business terms. Lloyd sees his role as building ‘symbiotic relationships’ between the various, largely autonomous divisions operating in the UK, especially where there are common customers - or potential customers.
‘I think about that a lot, how you amplify your impact, in any job you have,’ Lloyd says. ‘It sounds obvious, but anywhere you can make one plus one equal more than two is a good place to be. If you’re not doing that [as a leader] you’re not really bringing value,’ Lloyd says. ‘Then it’s making sure your teams are delivering. You’ll lose credibility very quickly wherever you are if you don’t deliver results.’
Image credit: Alibaba Group