B to B: New Players…But is the Game Rigged?

by Julian Righetti on September 11,2012 in China Trade , Trade Websites ,

B to B: Importing from China, it pays to pay (for information and market intelligence).

To that end, I have done a lot of research about the different international trade websites and how this market is changing.

At the top, of course, you have Jack Ma and Alibaba.com. They dominate other B to B trade portals.

Alibaba controls about 60% of the global trade link b2b internet business. They primarily charge factories subscription fees. By delivering customers to factories, they help factories market to consumers.

Alibaba’s Estimated Membership Base: 85 million users

Market Share: 60%-65%

Gold Membership Package: $2000USD-$4500USD/year

Revenue: 5.56b RMB/year +/- 2011

Fraud Links: http://www.pcworld.com/businesscenter/article/234793/arrests_made_in_china_over_alibaba_fraud_case.html

http://online.wsj.com/article/SB10001424052702303763404576417252547931000.html

Next, you have Global Sources who account for approximately 20% of this market. In terms of prominence, I think they are also a step above other b to b

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sites. They have a good product and nice website layout.

Registered Users: 13 million

Market Share: 20%

Membership Package: $3000-$4500USD/year

Revenue: $225m USD/year

In addition, Global Sources provides trade show events, research reports, and related trade assistance to buyers.

Finally, there are some stragglers:

Trade-key.com

Made-in-China.com

Not sure how much revenue these companies make, what they charge, or what their subscription/user base is, but they are hanging around…..These b to b sites seem really dodgy in my opinion.

But because of major fraud issues at Alibaba, a number of new companies have entered the market place to “bridge the gap” between China and the rest of the world.

Is this necessary?

Corruption

“China is grappling with mind boggling corruption to such an extent that the country’s Premier Wen Jiabao said it is the biggest threat facing the ruling communist party, which has been in power since 1949.

A Chinese study released last year estimated corrupt officials have siphoned off more than $120 billion from the country in less than two decades.” –http://pmnewsnigeria.com/2012/08/29/like-nigeria-corruption-chinas-biggest-threat/

Counterfeits

“China is still our number-one source country for counterfeit and pirated goods. About 62 percent of our seizures are from China,” said Heacock.

The losses from counterfeit goods are enormous. Last year, customs officers seized more than a billion dollars in phony sneakers, electronics and handbags. Yet no one knows how much is still getting through.”

http://www.cbsnews.com/8301-18563_162-57433030/counterfeit-goods-from-china-a-continuing-problem-that-costs-billions-a-year/

Trade Fraud

On February 21st, in a filing with the Hong Kong Stock Exchange, Alibaba announced two of its most senior representatives, David Wei, the chief executive, and Elvis Lee, the chief operating officer, would resign to accept responsibility for the company having granted “golden status” a mark of supposed integrity, to 2,236 dealers who it says had subsequently defrauded buyers.” –http://www.economist.com/blogs/newsbook/2011/02/online-fraud_scandal_china

Clearly, something is not working. As China exports more than a trillion USD worth of goods each year, some fraudsters will get through, but how can purchasing managers in other countries verify sellers’ credibility?

Enter the “new guys”:

trademango.com

Trademango uses US customs data to verify suppliers. If they have shipped in the past, then they will show up. The idea is that with real shipments, the seller must be real. However, in my experience, their coverage is limited. I think this is a great idea for b to b websites and I hope alibaba embraces this (although I doubt they will).

goodfactories.com

Goodfactories is focused on the home furnishing market exclusively. They provide reviews, contact information, data, and products about suppliers in this field. I haven’t used them, but I like the idea.

panjiva.com

Panjiva is a service provider that incorporates data similar to trademango (us customs data, global certification data, credit reports) and centralizes that data for buyers. They charge a lot of money for this data and they also state that “this is only a short-list” not a replacement for “boots on the ground….”

On the bottom, you have actual physical sourcing companies or “trade assistance websites”

There are a lot of them….

http://alibabascam.com/

http://alibabauser.wordpress.com/2008/10/24/alibabacoms-blacklist/

A lot of people denounce blacklisting….I don’t know if its very useful…certainly there are way too many companies on Alibaba to make heads or tails of any “blacklist”……

How do you think this industry will continue to develop?

What do you think of these new players?

–UPDATE–

I wanted to add a few other websites that I really like:

mfg.com-a great way to quickly quote out to numerous suppliers-I think this is the best website and the most competitive over the long-run.

hktdc.com-a Hong Kong centered sourcing website-looks clean and most things out of Hong Kong are usually better than mainland (except prices! haha).

 

 

  1. John Jay says:

    Excellent post, very informative. I think the industry will develop to the point where all small and medium businesses conduct their trades online, over platforms such as the ones you mention.

    However, today’s platforms cannot account for tomorrow’s trades because of their lack of accountability, terrible UI, and misguided economics. The key will be to develop a platform like paypal and ebay for international trades. In that case, the money is earned by taking percentages of the trades themselves, as opposed to advertising for factories – which ends up hurting the ecosystem in the end.

    John Jay

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