Alibaba Group Holding Ltd and JD.com are in a race to sign up more and more Western brands. Earlier this month, Alibaba announced that French skincare brand L’Occitane has opened an online store on Tmall. Now JD.com has signed a deal with the U.S. clothing retailer Gap Inc to sell its apparel online in China. Alibaba, with its Taobao and Tmall platforms, dominates 84% of the Chinese e-commerce market. JD.com is the No.2 e-commerce company with about 8% market share.
Gap already has a store on Tmall
They are vying to sign deals with the famous Western brands. It offers a big boost tot their sales as well as image. Notably, Gap already has a store on Alibaba’s Tmall. It is the latest Western company to open stores with Chinese online retailers. JD.com is backed by Tencent Holdings Ltd, which owns 15% stake in Jingdong Mall.
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JD.com CEO Shen Haoyu told Reuters that the demand for Western brands in China is “tremendous.” But the traditional retail network is problematic for them. An international clothing company can spend billions to open stores in 200 cities. Or it can simply open an online store on sites like JD.com and get instant access to millions of consumers.
Alibaba, JD.com trying to shed their past image
However, they are not only joining hands with fashion brands. Tesla, General Motors, Volkswagen have all opened stores on Alibaba’s Tmall. Costco Wholesale Corp also has a store with Alibaba. Meanwhile, film, TV and music brands have also teamed up with various Chinese Internet firms and music streaming companies. Tencent has become Chinese distributor for Sony Music Entertainment and Warner Music Group. It will stream HBO’s TV shows in China.
For a long time, major international brands avoided opening stores on Chinese e-commerce sites because customers there have become accustomed to discounts and cheap prices. Chinese online retailers also have an image as hotbeds of intellectual property infringements and piracy. Now they are trying hard to shed that image. Alibaba has promised major brands to prevent unauthorized and gray market sales of their brands once they open stores on its platforms. What’s more, the size of the Chinese e-commerce market makes it difficult for international brands to ignore.