Just about the only thing that Brexiters and Bremainers can agree on at the moment is the need for the UK’s businesses to find new markets for their goods and services – particularly in the lucrative Asian emerging economies.
It’s not hard to see why: China’s GDP is rising at an official 6.6% year on year, and even if it that’s somewhat inflated as many stats-watchers suspect, it’s still an order of magnitude more than the poor old EU can manage, at under 0.5% and falling.
Whenever and however we get round to triggering Article 50, the message about where the economic action is coming from is clear. ‘There are 2bn consumers in China, India and Southeast Asia’ says Amee Chande (pictured below), the managing director UK of Alibaba Group, the Chinese ecommerce giant that has 350m customers on its myriad platforms – some 30m or so more even than Amazon, whose title as the world’s most valuable retail brand it has now usurped. ‘But how as a brand or a retailer in the UK do I access all those customers on the other side of the world?’
The demand for British goods in China is there and growing - 270,000 Chinese tourists came to the UK last year, spending an average of £2,000 per visit, and when they go home they want to buy the stuff they got a taste for while they were here. That doesn’t just mean Range Rovers and designer gear either, says Chande. The minutiae of Western lifestyles is the latest big thing in China. ‘It’s not just the things you would imagine like Burberry handbags. It’s food from Sainsbury’s, Tea from Whittards, quality bedlinen.’
It’s not quite that easy of course – plenty of British firms would love to sell to China, but from a UK standpoint it can look like a uniquely difficult market to break in to. Notwithstanding the substantial language and cultural barriers – not enough Brits speak French or German fluently, never mind Mandarin - there are the small matters of negotiating the infamous commercial bureaucracy, the need to sign up local partners, and the much-publicised risk of valuable intellectual property disappearing out of the back door.
This says Chande is where Alibaba comes in. The vision of its founder, the eccentric and hugely successful Jack Ma (ex-teacher and now China's richest man, he performs karaoke at company conferences, owns French vineyards and has even conducted mass weddings for employees) is to make Alibaba a kind of one-stop shop for the rest of the world to trade with China – and vice-versa. ‘Jack’s vision is very much "Why does this have to be limited to China?" There isn’t another platform that allows you to do that crossborder piece easily.’
So Chande – who worked for traditional retailers like Tesco, Wal-Mart and Staples across four continents before joining Alibaba last year – is busy getting the message out that it doesn’t have to be as hard as it looks. ‘I see my mission as demystifying the opportunities in China. The tools do exist but they can seem inaccessible, especially if you don’t have teams of experts and resources in house’ she says.
Based in London’s Covent Garden, her team will guide Brit firms through the challenges, and help them identify the scale of the opportunity. ‘We do that based on experience but also on data – the default behaviour is for consumers to search straight onto TaoBao [Alibaba’s mobile shopping site, the largest in China] so we can use that data - often they are searching for UK brands, so we can take that to the brands and tell them that there is already a demand for their products.
Alibaba's corporate HQ in Hangzhou
‘It's not only good for the customers - Alibaba is still growing fast (Q2 revenues were up 59% year on year to 32.2bn RMB or $4.8bn) but it is keen to earn more of that revenue internationally. Hence the push to globalise and open up new markets itself just as it encourages others to do. 'The whole ecosystem was created for SMEs but it can seem foreign especially because of the language, so we are translating the existing tools - for merchant sellers for example – so you can read them in English.’
They have already signed up a wide range of British firms, from big guns like Sainsbury’s and Unilever to smaller brands like Julie Dean’s Cambridge Satchel Company and Gandys flip flops.
The advantage she says is that Alibaba has the size, systems and processes in place to attract even larger businesses to its trading platforms. ‘Scale matters. We can say to these brands that they are coming to a place where 350m Chinese customers already shop, where we can manage payments [through subsidiary Alipay] and where we can deliver 30m parcels a day at 98% accuracy. That is the robustness of the ecosystems and its components.’
‘And we know that many SMEs are worried about their intellectual property, so we run workshops now in partnership with the government. We bring in experts and law firms to explain what you need to think about.’
Alibaba is not only about selling to consumers however, it can also help Brits looking to access the vast wholesale manufacturing sector too. ‘Take a small business like Gandys flip flops – great design, everyone instinctively says "If only I could manufacture in China I could do it at reduced cost.".
‘Well, we have an RFQ [Request For quotation] service which acts a bit like gocompare – bid them out and they come back with 10 suppliers who can meet your specs. And there’s trade assurance on top – here’s who you are dealing with, the factory inspections, insurance in case the product doesn’t meet your requirements.’
Effectively the pitch is that, whether you're buying or selling, Alibaba is China without tears. ‘I’ve been a retailer, I know what a struggle it is to drive top line growth. Being presented with the opportunity to do that at relatively low risk and investment is very attractive.’
There’s also a business called AliExpress, connecting consumers direct to Chinese merchants, which Chande describes as ‘A cross border Poundland or 99p store’
‘Take Wal Mart’ she says. ‘80% of what it sells is made in China. So if I can take away all that retail infrastructure and buy direct – in one’s if that all you want - that’s an amazing proposition for the consumer’. If not so amazing for Wal Mart, but it is probably big enough to look after itself.
Access to the basic trading platform is also pretty cheap, she says (unlike rivals such as eBay and Amazon, Alibaba is not in the actual retail business: it holds no stock itself but rather facilitates the matching of buyers and sellers via its technology).
‘The cost is minimal – low single digits. We don’t make the majority of our revenues from transaction costs, we’re really a utility.
‘Our financial services are less than you would pay in merchant fees for a credit card on the high street. You’d pay 2%-3% plus a bad debt charge whereas we’re charging less than 2%, and there’s no bad debt charge because there’s no bad debt.’
Getting money out of China – usually a complex affair requiring a local subsidiary - is also simplified. ‘We do spot exchange rates with no spread on them whatsoever, and you get pounds straight into your own bank account. Conventionally just getting the renminbi out would be difficult without your own Chinese entity.’
Where the firm does start to earn real money is from its data – the ROI on data-driven marketing insight is ‘incredibly high’ she says and s something that larger clients will pay handsomely for. ‘Say you already have 150,000 customers [with Alibaba]. We can take that data and use it in an anonymised way to identify other customers who are most like them and how to target them.’
At the moment her team numbers around 30 although the fact that there is room for plenty more in their office hints at future plans. ‘The idea is continued expansion here. The UK is a very attractive place to do business – the government is very receptive and because the domestic market is not the biggest, the country has been a trading nation right back into history.’
She travels to China at least once a month to meet the senior team, including Ma himself (left) who despite his celebrity status (he’s currently headlining at the G20 meeting in Hangzhou) remains, she says, a pretty regular guy. ‘He’s a very humble person but when I hear him speak I genuinely feel that he can see over the horizon, to the profound shifts in the way that global trade will happen.
‘But at the same time he can relate at a very personal level and he is honest about how difficult building a business is. It can be hard here and drain your enthusiasm a little bit, but when you go back to China Jack paints a vision and that’s so inspiring.’
She also has a message for anyone who’d like to build a career in the tech sector, but isn’t a coding geek. ‘There are a handful of really great companies in the world right now, and most of them happen to be tech companies. My message to young people starting their careers is that it’s not just engineers who succeed in these companies – we need people who are entrepreneurial to identify where the business opportunities are, we need people who can partner with our customers and understand their needs, and we need people with really good influencing skills to take that understanding back to the core business and influence what the developers will be working on’.
How about a similar message for post-Brexit Britain? ‘The fact that the world is a small place and it’s getting smaller is maybe resonating a bit more than it did a couple of months ago' she says. 'The UK market isn’t big enough on its own, even the European market isn’t really big enough.
‘The UK has some phenomenal companies showing vibrant innovation and great quality of design. You should have the confidence to go out to the world and show them why British products are great.’