TORONTO – Canadian businesses – small, medium, and enterprise alike – looking for new markets should consider the 300 million middle class Chinese eager to purchase high-quality products from the Great White North.
That was the central message delivered by Jack Ma, founder and executive chair of Chinese tech giant Alibaba Group, Alibaba president Michael Evans, and Canadian Prime Minister Justin Trudeau at Gateway ’17, a Toronto-based Sept. 25 event that welcomed more than 3000 attendees from across Canada interested in learning how they could use Alibaba and its network of partners to reach consumers in China.
“There are more than half a billion consumers shopping on Alibaba’s platform in China,” Evans told the audience. “They are looking for high-quality, safe, authentic… innovative, and new products, many of which come from Canada’s entrepreneurs.”
Evans and Ma both emphasized that while China’s economy for much of the 20th century had been export-driven, today’s Chinese economy is increasingly led by consumer appetites from a growing middle class, which is expected to exceed 600 million within five years.
By 2020, they said, China’s retail market is expected to exceed $7.7 trillion, roughly the size of the Canadian and U.S. markets combined – and 37 per cent of sales are expected to be through ecommerce, compared to 10 per cent in Canada.
That should be a tantalizing opportunity for Canadian businesses, which already enjoy a reputation for quality among the country’s residents, Ma said, noting that Canadian brands such as Lululemon, Viva Naturals, and Canada Goose (a personal favourite he buys for himself) have already found success across the Pacific, alongside agricultural exports such as seafood.
“You have 1.5 million Chinese here,” Ma said. “These are your ambassadors… They are telling every Chinese, ‘Oh, the environment!’ ‘Oh, the beauty!’ ‘Oh the products!’”
“If you can’t do business with Chinese, it will be difficult for you to do business with other nations,” he added, to laughter.
Ma said that while China has a reputation for being difficult to conduct business with, it’s a reputation that could apply to anyone, though he praised the Canadian government’s recent efforts to establish free trade with China and cited Trudeau’s attendance at the event as proof of the Liberals’ commitment to seeing it through.
For his part, Trudeau emphasized that in today’s globalized, and globally connected economy, China should be considered a trading partner as accessible to Canadian businesses as the U.S., one with a much larger market and, in Alibaba, a partner ready to help bring their products there.
At present, it was mentioned at the conference, only five per cent Canadian small businesses export internationally.
“So many Canadian companies we’ve talked to and have said ‘have you thought about trading internationally?’ They say ‘no no no, we don’t trade internationally – we just trade to the United States,’” Trudeau said, to laughter.
“We take tremendous pride in our diversity, in having communities from every corner of the world… in businesses,” he said. “We need to look at being bolder, being less modest, less quiet, and get out and realize that what we do well in Canada we can and should share with the world.”
“Let’s make one thing clear, folks,” Trudeau said. “This isn’t the future. This is the here and now. Technology brings with it endless opportunities for growth, and as entrepreneurs and owners of small and medium-sized businesses, we want you to take advantage of these tools to help your businesses thrive, grow, and prosper.”
How Alibaba helps Canadian SMBs reach customers overseas
Though its North American reputation is that of China’s Amazon, Alibaba’s core services are more akin to eBay – that is, it operates a variety of online marketplaces that connect consumers and merchants, rather than buying products wholesale and selling them online.
Functionally, staff describe the company as a mix of Facebook, Google, Netflix, YouTube, PayPal, Twitter, and Amazon, since in addition to searching for products from small businesses users frequently use Alibaba’s primary app, Taobao, to watch streaming video or communicate with friends.
For example, Alibaba’s Sharon Chan told ITBusiness.ca, Canadian small- and medium-sized businesses (SMBs) can use the company’s popular China in Action channel to pitch their products to Chinese wholesalers who then buy Canadian merchandise in bulk and sell it to consumers in China.
The Chinese market for Taobao is young – 75 per cent of the company’s business is conducted through mobile devices, Alibaba staff said, and 75 per cent of China’s mobile users are between the ages of 24 and 32.
They also provide Canadian businesses with an attentive audience: Between livestreams, shopping, and communication, Chan said the average user opens the Taobao app approximately 7.8 times per day, for 30 minutes total.
And for enterprises?
Two of the more prominent guests at the Gateway ’17 keynote were executives from Lululemon and Viva Naturals – Canadian businesses which have used Alibaba’s enterprise platform, TMall, to increase their Chinese footprints.
Lululemon CEO Laurent Pontdevont told the audience that his company wanted to enter the Chinese market because it saw many parallels with its native Canada: consumers who place physical activity and mindfulness high on their daily goals.
Viva Naturals president and CEO Husayn Remtulla, meanwhile, said the company learned there was an appetite for natural products in China driven by Canada’s more health standards, noting that his company didn’t even need to change its packaging for the Chinese market because it was looking for the same features as North Americans.
Unlike Taobao, TMall provides retailers with the means to establish virtual Chinese storefronts and interact directly with consumers overseas – though as with Taobao, Alibaba provides the marketing platform, expertise, and tools, rather than services.
During a discussion with keynote host Michele Romanow, Lululemon’s Pontdevont praised Alibaba for placing “millions of eyeballs” on its brand who wouldn’t have seen it otherwise, and noting that, rather than assuming they’ll become experts in the Chinese market – “It’s too complicated,” he said – they should focus on seeking out lessons from local talent, which they’ll often be able to apply to operations both at home and abroad.
How Canadian businesses can overcome challenges
The opportunities presented by Alibaba cannot be overstated, Ma said – last year alone the company sold merchandise worth $550 billion USD dollars, with $1.8 billion USD in sales on its top day – but it can be oversimplified.
Acknowledging that trade in China could be difficult, Ma said he nevertheless believed it was a larger challenge for enterprises than SMBs – and a greater opportunity for small- and medium-sized business-owners driven to succeed as well.
“The difference between big companies and small companies is not about revenue,” Ma said. “It’s about the dream. The small companies have dreams. Most of the big companies, once they get a certain size, only have KPI. If you’re fighting only for the next quarter, how can you survive in such turbulent times?”
Successful businesses – and people – Ma said, frequently convince themselves they have established a way to earn continuous revenue, and are slow to consider alternatives, giving smaller businesses an opportunity to move in – much as Alibaba itself did after its seeds were established in 1995, after Ma’s Internet search for “China” and “beer” retrieved no results.
Yet Alibaba was not an overnight success, Ma said – officially started in 1999, with Ma running the company alongside 17 friends from his apartment, it lost money during its first two years of business and nearly went bankrupt.
Today, it employs more than 15,000 people – more than 40 per cent of them women, making Alibaba a leader on tech’s gender equality front as well – and has more than 500 million users, and shares on a daily basis the opportunity Ma seized with thousands of other entrepreneurs.
Those entrepreneurs will face challenges of their own, he said, like the growing impact of artificial intelligence (AI), expected to either create millions of new jobs or wipe them out, depending on who you ask.
Ma said he falls firmly into the former camp, though he acknowledged machine learning is going to create “trouble” over the next 10 years.
“Doing business in any other city or any different country is difficult,” he said. “As an entrepreneur, don’t expect a lot of hanging fruit.”
However, business owners should consider that in the future, the majority of SMBs will need to globalize their business practices if they want to survive, he said.
“And if you do not use the internet to globalize – not necessarily Alibaba… you will not have a chance,” he said.
Ma repeated his message of perseverance when asked later by reporters about the challenges of conducting business in China, emphasizing that while he believes Canada can do a much better job of helping businesses – especially SMBs – conduct businesses overseas, he sees the groundwork being laid in Trudeau’s recent efforts.
“If we start now, the next three, five years could be very fundamental,” he said. “I don’t think exporting into China today for small businesses is easy, and I don’t think we can accomplish a huge success in the next two to four months. But absolutely if we start now, in five years it will be much easier.”
Editor’s note: Some quotes have been edited for grammar and clarity.