Alibaba site offers channel to foreign products

Alibaba Group Holding Ltd, China's e-commerce giant, officially launched an independent website on Wednesday to allow overseas brands and merchants to sell directly to Chinese online shoppers.

The site, named Tmall Global, which has an independent domain, www.tmall.hk, will be operated independently as a subsidiary company of Alibaba. The move signals the company's strong push into overseas business, said analysts.

According to Alibaba's statement on Wednesday, the newly launched international platform provides genuine products that are 100 percent produced or sold in overseas markets. All the vendors doing business on the platform are outside China.

In addition, the platform offers a direct delivery service. All the purchased goods will be imported into China through international logistics companies utilizing proper customs processes.

Tmall Global, which is a business-to-customer marketplace, has four categories of products on offer currently. The four main categories are: mothers and babies, food, cosmetics, and clothing and shoes. Alibaba said it will expand into other categories to enrich the platform's product portfolio in the future.

Previous media reports said that Tmall Global has been recruiting international business-to-customer businesses in an attempt to set the platform up since July last year. Alibaba said more than 140 companies, which sell thousands of international brands from the United States to Japan, have opened for business on Tmall Global.

The move marks the latest overseas expansion by Alibaba, which announced an e-commerce push into the United States by setting up a US-based boutique e-commerce site about a week ago.

Mo Daiqing, an analyst with the Hangzhou-based China E-commerce Research Center, said surging demand by Chinese online shoppers to buy cheaper and better goods outside China prompted Alibaba's decision to set up the new site.

"More and more increasingly wealthy Chinese enjoy buying overseas products directly online for various reasons. For example, mothers like to buy infant formulas overseas because there are food safety issues in China.

And some young shoppers, who buy foreign-branded clothes or bags, find it is cheaper to make purchases online because imported luxury goods frequently face high taxes," said Mo.

Statistics from the China E-commerce Research Center showed the market for online daigou, which means buying via overseas contacts through Taobao or other professional buyer agencies and websites, amounted to 74.4 billion yuan ($12.25 billion) in 2013. The center forecast the daigou market in China will exceed 100 billion yuan in 2014.

A China luxury goods market study released by Bain & Co in December also found nearly 60 percent of the 1,400 customers they interviewed had made at least some luxury purchases through the daigou market.

Mo said that many e-commerce companies have made moves into the sector. It is key for Alibaba to tap into the market in order to maintain its leadership position in the e-commerce market in China.