Over the last couple of months two of the largest countries of the world (in terms of the population) India & China have been engaged in a bitter standoff over what is a five decade old dispute. The bone of contention is a small stretch of area called Doklam which borders the two aforementioned countries along with Bhutan. And the reason for the recent flare up is said to be the attempt by the Chinese to extend an existing road (by razing Bhutanese bunkers stealthily) in the Doklam plateau.
This has been viewed by the Indian side as a blatant attempt at violating the peace treaty that has existed here for long. While the Indians see this is as a move by the Chinese to gain greater influence in the strategically critical Siliguri corridor China is furious at what they see as Indian meddling in Sino-Bhutan affairs. The twist in the tale is of course that Bhutan has a treaty with India that allows the latter to guide them on foreign affairs.
For the record Bhutan & China have had two dozen rounds of talks & negotiation without making much headway. So when matters began to get out of hand Bhutan asked India to intervene and since then we have witnessed a bitter war of words exchanged between the two countries. China promptly decided to suspend the annual Kailash Manasarovar pilgrimage that has to pass through the trading post of Nathu La which they had given consent to (as a good will gesture) in 2015. The provocative statements by the Chinese state-run media directed at India has only worsened matters further. Amidst all this there has been call from the Indian side to boycott all trade & cultural relations with China till things get better. Economists opine that any such developments will hit China. And badly at that. After all Chinese has pumped in billions of dollars worth of FDI into India and in 2016 alone China’s exports to India accounted for over 60 billion dollars. So clearly China has a lot to lose. And they know it.
In the meantime Chinese ecommerce giant Alibaba yet again exceeded market expectations to finish with over 50% rise in revenues over the first quarter of the year. This is in line with the stocks of Alibaba that have soared by over 80% in 2017 alone. Not surprisingly this has been largely due to the fantastic online sales. The Doklam dispute has led to widespread protests in India with many calling for a boycott of Chinese goods. Will this impact Alibaba which accounts for a large chunk of these online sales? Not really. Reason being that Alibaba is essentially a global marketplace for importers looking to source items from China making it a B2B platform. It does not do business with consumers for which the folks behind Alibaba have launched what they call AliExpress. Started in the year 2010 AliExpress is an ecommerce portal that allows Chinese businesses to sell their wares to consumers from all over the world. Is it possible that the Doklam imbroglio can derail the AliExpress juggernaut?
First things first. Alibaba makes upto three fourths of all it’s revenues locally what with over 700 million internet users making it the biggest internet market in the world. There are in fact three retail marketplaces that Alibaba caters to inside of China itself which are the Taobao Marketplace, Tmall Platform & Juhuasuan respectively. The other business segments that cater to international customers like Alibaba.com, 1688.com and AliExpress.com are growing at a scorching pace but contribute significantly lesser moolah to the kitty. So even if customers from the neighbouring country of India do decide to stop buying on AliExpress it will probably not send the people at Alibaba into the tizzy. And then there is the business model of AliExpress which is so attractive to an end user that it is difficult to imagine that they will stop using this portal inadvertently. What business model?
For the average customer who shops online frequently there are a range of factors that can sway loyalty. It could be the variety of choice, speedy delivery (like next day) professional customer service and of course, the price. And on that count the AliExpress is leagues ahead of it’s erstwhile competitors like Amazon, eBay and Flipkart. For example try buying a LED bulb (the basic one, really) on any of the other ecommerce portals and you will not find any priced less than $10. On AliExpress you could buy 10 of them and get them delivered to your place wherever that is. At no additional fee. But there’s a catch. AliExpress deliveries take longer than most, sometimes upto 45 days even. But in the case of the average Indian consumer the top factor that influences all choices is only one, price. So in nine cases out of ten the average Indian online shopper would not mind waiting the extra days.
Coming to the reason for the delay which is that sellers on AliExpress prefer to ship via China Post Registered Air Mail which takes anything between three to six weeks. So if the customer does want the delivery faster they just pay a little more as shipment charges and that should be that. And then there is the terrible reputation that Chinese goods have. They are considered less reliable and quality of the products & services are not always upto the mark. While it is perfectly possible that the ordered product might work swimmingly well for a good number of years the opposite might happen too and that is what one must know comes with the deal. Yet by pricing their wares incredibly low, the Chinese seem to be winning this, for now. Like with the Single’s Day last year on the Alibaba portal.
What started in the 1990s as China’s answer to the very western Valentine’s Day was turned on it’s head by it’s head (and former English teacher) Jack Maa. Since 2009, the date Nov 11th or 11.11 as it is popular now has become a day for all of China to indulge themselves. And shop as much as they want. And how does it compare with other such annual shopping days? Like after Thanksgiving (dubbed Cyber Monday) or even Black Friday both of which are American events. While last year’s combined total from both the annual sales in the US came up to just over $6 billion the Single’s Day sale at Alibaba saw revenues reach three times this number at nearly $18 billion. What must worry the competition is that Alibaba now hopes to take this one day extravaganza to a global stage. Where everyone from everywhere can get a share of the pie.
So it does seem like China has got all the bases covered and the way it has been able to penetrate deep into the Indian ecommerce space is proof of this.Which is why even an incident like the Doklam flare up has not affected trade between the two countries. Nor is it likely to in the near, foreseeable future either. If nothing else for the rest of the online business community, this gives some food for thought. And perhaps some practical lessons too.
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