Webinar Transcription

Josh Halpern: Welcome, everybody to another version of “Conversations from the Field – China.” We’re here with Tony Shan from Alibaba, talking about all things China market entry through ecommerce. Tony Shan is the Head of Tmall Global & Kaola, the Americas and Alibaba Group. Tony, thanks for joining us.

Tony Shan: Hi, Josh. Thank you for having me. Hello, everyone.

Josh Halpern: So, let’s talk future. What do you see down the pipe?

Tony Shan: Yeah. So, in terms of consumer spending, we definitely have seen a fluctuation throughout this global pandemic situation, but we are seeing that the demand has now recovered. There’s a term that we use called revenge spending. We see a lot of consumers kind of cooped up for the last few months, not being able to shop both online and offline, you know, we had limited logistics and supply chain. But now, things are beginning to recover in terms of future growth. We’re definitely seeing consumers picking up spend as well. We do have some risks to consider as well because in terms of imports, in terms of global brands selling into China, that is also subject to each country’s export controls as well, so that might have some effects for future. But, in general, I think the sentiment from a consumer, and also from a business perspective within China, it is very positive. They surveyed internet users in China, and close to 60% of these respondents wanted to maintain or increase their spending. So, as you can see on this bar chart, 42% of people are maintaining their overall spending and confidant in the future. And then 17% are even looking to increase overall spending. And I think this number, as we continue the recovery within China, that it’s going to increase as well.

And we can see this in terms of sales trends on our B2C ecommerce platform. In March, we had a 3.8 Women’s Day Campaign and we’re seeing strong sales during this time and this is part of the revenge spending that I mentioned. 23% year-over-year increase in terms of daily sales. And we’re seeing live streaming being a strong driver of traffic and sales. Because now people cannot go offline or interact with products personally, live streaming is a way for them to engage with influencers or what we call key opinion leaders, KOLs, to be able to learn more about the products and see the products. So, we’re also seeing conversion increasing 11% year over year as well because of that.

Josh Halpern: Real quick note, in China, they don’t call them influencers, they’re called KOLs, or key opinion leaders, it’s taken actually from English, but yet we don’t use it, they use it, KOLs. I mean, China’s always been a little bit ahead of us in terms of using mobile and using streaming. I know there’s actually people in the U.S. traditionally who are streaming from department stores, sending notes back, and then people would buy those products and send cross-border to China. People, traditionally, there were Chinese who would travel back and forth between China and U.S. and bring products. Obviously, they can’t do that. So, if you want to get international products, you’ve got to go cross-border online. Is that accurate?

Tony Shan: So, yeah. So, now they can’t, as I mentioned, they cannot go offline to shop for these things. So, online sales, especially if they want global brands, it has to come through cross-border. So, we’re seeing strong growth in terms of cross-border ecommerce sales.

Josh Halpern: New opportunities emerge, the positive opportunity here.

Tony Shan: Yeah. So, we’re looking at this both from a short-term and a long-term perspective, and we’re seeing this mostly from a consumer and also a category trends perspective and we’re seeing new trends emerge. A lot of this is due to the environmental changes. We all are currently experiencing as well here in the U.S. too. So, in terms of the short-term, as we know, there was initial fight against the pandemic. We have been staying at home quarantining. And then in terms of consumer category perspective, there has been a huge demand for medical supplies, for surgical masks, ventilators, and things like that from a more healthcare perspective. But from a consumer family-oriented perspective, they also need to buy masks to go outside, hand sanitizers, cleaning supplies, disinfectants. Those are our kind of the short-term consumer trends that we’re seeing. And then in terms of daily necessities, pantry loading not so much, we haven’t seen a lot of toilet paper hoarding in China. But we are seeing kind of shelf-stable foods like grains, like rice, and also frozen foods like dumplings and wontons, this is more Chinese culture-based. And then online fresh food as well. Grocery delivery services, food deliveries for things like pork, fruits, and things like that. And more and more people are now cooking at home because they couldn’t eat out in restaurants. So, we’re also seeing like kitchen tools and gadgets as an emerging category as well, like things like sandwich makers, electric mixers, and things like that.

And then from a long-term perspective, I think people are still going to be spending more time at home. There isn’t a lot of traveling going on, at least in the near short-term and near long-term as well. And then also rising health consciousness, which creates more habits at home. You’re less likely to go to spas and things like that. So, home care, like having your own face masks, facial masks for skincare regimen, and then hula hoops and things like exercises you can do at home, like yoga mats. We’re seeing athleisure wear increasing as well. And then from a both healthy diet and supplement perspective, people are looking to increase their immune systems, so vitamins and things like that. Also, again, more Chinese culture-oriented as an emerging category as well. And then lastly, like infant care, as a whole, to be able to sanitize the bottles at home and also having vitamins and various health supplements for babies and kids as well.

And then on our platform, we launched over 200,000 new products in the past three months related to these new opportunities and new categories. And we’re seeing a spike in terms of these products performing during the 3.8 campaign that I mentioned earlier, we’re seeing 24 times growth for these best-performing products. And then in terms of the growth opportunities to 135% growth for these health protection products, that includes personal care and also health supplements and nutritional products.

Josh Halpern: That’s great. This is such a fabulous overview of where the opportunity is, especially in California companies that really do fit into a lot of these categories as part of their DNA.