Alibaba -- Is China Really Still the Top Supplier to Global Buyers?
When you see headlines like this coming from sources like Alibaba.com you have to question not just whether they're right, but the motives of the sources behind them. So whether or not it's true that Alibaba's latest "quick poll of top global buyers from Fortune 500 companies affirms that China remains the world's top supplier despite rising production costs" is almost irrelevant. Look at the source. Alibaba has pulled one of the best fast ones in history on any supplier community in existence. I know from talking with various suppliers and procurement staff in China that Alibaba essentially promised suppliers that their site was the go-to resource for anyone looking for suppliers in the region.
To hear Alibaba market themselves to suppliers, you'd think their website had replaced Microsoft Word, Excel and PowerPoint as the most used application in existence. But as we all know, Alibaba is about as useful as the Yellow Pages in researching supplier details -- in China and beyond. Western buyers quickly smartened up to the fact that the listings and much of the review / commentary were pay-to-play. In fact, despite its market cap, Alibaba is a great metaphor for the state of global sourcing today and many of the lies and mistruths that both buyers and suppliers got themselves into when trying it out in the first place.
I personally believe that global (and China) sourcing is here to stay. But the second wave will look very different from what we've seen to date -- as well the applications and supplier information sources. Alibaba must change with the times -- suppliers and buyers are too smart to get sold a false bill of goods (or a fake ISO certification) another time. What should Alibaba 2.0 look like? If it features true community-based ranking and feedback of suppliers, provides detailed information into supply -- and buyer -- risk in place of non-existent credit ratings in China and offers a means to truly vet whether a suppliers credentials, ownership structure, labor practices, etc. are accurate, then, and only then, will the site live up to the true global sourcing hub concept that it promised to paying suppliers in the first place.
- Jason Busch
To hear Alibaba market themselves to suppliers, you'd think their website had replaced Microsoft Word, Excel and PowerPoint as the most used application in existence. But as we all know, Alibaba is about as useful as the Yellow Pages in researching supplier details -- in China and beyond. Western buyers quickly smartened up to the fact that the listings and much of the review / commentary were pay-to-play. In fact, despite its market cap, Alibaba is a great metaphor for the state of global sourcing today and many of the lies and mistruths that both buyers and suppliers got themselves into when trying it out in the first place.
I personally believe that global (and China) sourcing is here to stay. But the second wave will look very different from what we've seen to date -- as well the applications and supplier information sources. Alibaba must change with the times -- suppliers and buyers are too smart to get sold a false bill of goods (or a fake ISO certification) another time. What should Alibaba 2.0 look like? If it features true community-based ranking and feedback of suppliers, provides detailed information into supply -- and buyer -- risk in place of non-existent credit ratings in China and offers a means to truly vet whether a suppliers credentials, ownership structure, labor practices, etc. are accurate, then, and only then, will the site live up to the true global sourcing hub concept that it promised to paying suppliers in the first place.
- Jason Busch
I was involved in the poll of global buyers that you refer to in your article and I can assure you that the findings were very real. China does seem to be the supplier hub of choice for procurement officers around the world and looks like it will remain that way for a long time. But other markets like India, Vietnam, South Korea and Turkey, just to name a few, are rising in importance and we are actively working with local companies and export associations in those markets to help promote their suppliers too.
I am the director or corporate communications at Alibaba.com and would welcome a chance to continue our discussion, my email address is: csplinder@alibaba-inc.com.
I look forward to the conversation on many levels. I still believe that Alibaba misrepresented itself to the supplier community -- and the role that it played for global buyers -- but it is good to hear that things appear to be changing. You'll probably find that we agree more than disagree on the future of China sourcing.
On a recent trip to Hangzhou to give a presentation on MFG.com to about 30 suppliers of Apparel, Home Textiles, and Industrial Textiles, I asked the group how many of them were members of a web-based directory such as Alibaba or Global Sources and almost all of the hands went up. I then asked them "how was it going? Every one of them said "not so good". The reason is that the directory model has suppliers paying a fee and then hoping by some miracle a buyer on the other side of the world will somehow find them in a sea of thousands of suppliers. Bad odds.
The better model for a supplier is to be on a truly transactional platform where the supplier can see RFQs from buyers that need to source custom production of exactly what the supplier is so good at making. Good ROI.
Tony Forcucci
Global Director, MFG.com Textiles & Apparel Marketplace.
tforcucci@mfg.com
Those who automatically get offended by what Jason and Josh are saying should take a deep breath and listen to the key issues found, and hopefully learn that no system is perfect… And, all systems can be improved…
From my side. It has been pretty common complaint from expats living in China, that Alibaba.com has not been a useful tool to find factories. Many companies with Gold Membership are trading companies, so when we go out sourcing a new manufacturer, we need to spend days just gathering information on who the company really.
On the other side, there is nothing wrong with trading companies, and the services they offer are actually often necessary for any people purchasing without actually traveling to the factory they are making the purchase from.
Also, it is important to note that the Chinese version of Alibaba.cn is apparently better for finding factories, according to my office, then the English version. Apparently, the trading companies are less focused on local business, so they do not waste their time with the Chinese version.
What I like about Josh’s company is that they are approaching the problem of finding good suppliers from the back end. They are actually researching and categorizing manufacturers and suppliers via their shipments and customers.
We’ve taken a similar approach at GoodFactories.com for furniture manufacturers and home décor suppliers.
My suggestion to Alibaba.com would be to create a more detailed rating system for Gold Suppliers, similar to what Global Sources has done… Make sure if a company says they manufacturer candles, that they actually do this. Many companies may manufacture in one industry, but advertise products for multiple… A lot of time gets wasted, and peoples’ trust in the verification system gets hurt…
Tony, good points, too, MFG does a really good job in helping align purchases and suppliers. I’ve used it, and while prices can range dramatically, I found the reviews to be VERY helpful in selecting suppliers.
Online forums are also helpful, that is why forums like http://www.thewholesaleforums.co.uk/forum/ get so much traffic. But navigating through them is not simple.
Seth Berman, CEO, GoodFactories.com seth@goodfactories.com