Global brands at war with China’s e-commerce giant Alibaba

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http://maltawinds.com/2018/04/25/global-brands-at-war-with-chinas-e-commerce-giant-alibaba/

It was looking like a banner year for business in China. The US clothing company was expecting a 20 percent jump in online sales on Alibaba’s Tmall, thanks to the e-commerce giant’s massive reach.

But executives soon learned that what Alibaba gives, it can also take away.

The company refused to sign an exclusive contract with Alibaba, and instead participated in a big sale promotion with its archrival, JD.com. Tmall punished them by taking steps to cut traffic to their storefront, two executives told The Associated Press.

They said advertising banners vanished from prominent spots in Tmall sales showrooms, the company was blocked from special sales and products stopped appearing in top search results.

The well-known American brand saw its Tmall sales plummet 10 to 20 percent for the year.

“Based on our sales record, we should have been in a prominent position, but we were at the bottom of the page,” said the brand’s e-commerce director, who spoke only on condition of anonymity for fear of further retaliation. “That’s a clear manipulation of traffic. That’s a clear punishment.”

As the Trump administration pushes China to play by fair trade rules, companies are caught in a quieter but no less crucial struggle for rules-based access to a $610 billion world’s online marketplace, an Associated Press investigation has found.

Executives from five major consumer brands told the Associated Press that after they refused to enter exclusive partnerships with Alibaba, traffic to their Tmall storefronts fell, hurting sales. Three are American companies with billions in annual sales that rely on China for growth.

Alibaba Group Holding denied punishing the companies.

In a statement, Alibaba said pursuing exclusive deals is a common industry practice and called the charges of coercion “completely false.”

“Alibaba and Tmall conduct business in full compliance with Chinese laws,” Alibaba said. “Like many e-commerce platform providers, we have exclusive partnerships with some of the merchants on Tmall. The merchant decides to choose such an arrangement because of the attractive services and value Tmall brings to them.”

In a speech about cyberspace last week, Chinese president Xi Jinping said ensuring free and fair competition online was a regulatory priority, citing the need “to cultivate a fair market environment, strengthen intellectual property protection, and oppose monopoly and unfair competition,” state media reported.