Alibaba Group Holding Ltd Reveals Secret Recipe To Succeed In China

Alibabaalibaba by sam_churchill on 2014-05-07 09:46:21

Alibaba has finally revealed what it takes for foreign firms to succeed in China. According to Maggie Zhou, the China-based company’s Australian boss, celebrity endorsements and clever product placement on China-based TV shows will help increase sales for Australian brands in the country.

Celebrity endorsements a big hit

On Thursday, the managing director of Alibaba Australasia told AFR that social media and celebrity culture are playing essential roles in brand-building in China. Australian firms that use Chinese celebrities in their marketing are developing their brand among the 434 million active users of the Alibaba platforms (including Taobao, Tmall, and Tmall Global) in the country.

Zhou told the Australian Financial Review, “That will be very useful. The celebrities, what they are doing, what they are eating, what they are using, people are very interested. That’s the trend of the future.”

More than 1,300 Australian brands are on Alibaba’s platforms, in which some of the best categories are cosmetics, vitamins, mother and baby products and health supplements. Swisse vitamins uses actress Nicole Kidman in its marketing, whereas Blackmores, a vitamin brand, uses retired Chinese tennis star Li Na as a brand ambassador. Sanitarium’s breakfast cereal Weetbix experienced a big ramp in sales after it was featured in a domestic scene in Ode To Joy, a Chinese television drama, noted AFR.

Zhou explained that the Chinese middle-class had embraced online retailing happily. Many sports stars and celebrities have a large number of followers on social media sites, so with just a small mention of products, videos or photos featuring a particular product in the background have a major impact.

Alibaba’s core commerce to continue deliver robust growth

In other Alibaba news, JPMorgan’s Alex Yao said that the online retail giant’s core commerce business should keep on delivering healthy GMV growth, but the non-commerce initiatives are expected to become earnings contributors in the medium to long-term. Yao raised his price target to $135 from $129 and maintained his Overweight rating on the e-commerce giant.

Yao thinks growth will probably be driven by increasing the value proposition to merchants and boosting user engagement.  Yao noted that the growth in Alibaba’s core commerce would help the company with funds to invest in the non-commerce initiatives.

“We expect Cloud and UCWeb, among others, to become meaningful earnings contributors over the medium to long term,” Yao said.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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