Magic Johnson Selling Gels Shows Why Alibaba Escaped Trump

Bloomberg | Bloomberg News | Nov 2, 2020

magic 300x230 - Magic Johnson Selling Gels Shows Why Alibaba Escaped TrumpFor American brands struggling to survive the resurgent coronavirus, China is proving to be one of the few bright spots. As Alibaba Group Holding Ltd. prepares to host its biggest and most global shopping marathon ever, its position as a gateway to the world’s fastest-recovering economy is winning points with an increasingly hostile U.S. administration.

Alibaba’s Singles’ Day event culminates annually Nov. 11, an online shopping phenomenon that with $38 billion of sales in 2019 easily dwarfed Black Friday and Cyber Monday.

The festivities, which provide a snapshot of Chinese consumption, will feature the largest international presence since the company pioneered the format 11 years ago, including a number of U.S. merchants making their first forays into the Asian market.

See: Global Survey on Impact of Covid-19 and Recession Risk: Fintech and Financial Institutions

One such company, Uncle Bud’s, is targeting at least 1 million yuan ($150,000) of sales, all through its online store on Alibaba’s Tmall Global platform.

The Los Angeles-based personal care goods maker has roped in former NBA superstar Magic Johnson to hawk its hemp and cannabis-based products like body gels and lotions to Chinese shoppers in a livestream ahead of Single’s Day.

“Tmall really embraces finding brands that are emerging and bringing them to Chinese consumers,” Uncle Bud’s co-founder Bruno Schiavi said in an interview. “We wanted to have a big powerful company behind us. As an emerging brand from the U.S. to the China market, there are always many steps. But having Tmall behind you, to us that’s fantastic.”

China’s largest annual online shopping fiesta is only the flashiest example of how American consumer brands have increasingly come to rely on the world’s No. 2 economy for growth. For them, Alibaba affords one of the biggest windows into China’s rising middle class -- American merchants commanded the second-highest sales after Japanese among importers in 2019’s edition.

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That’s especially true this year, with companies like Estée Lauder Cos. and Nike Inc. banking on the Chinese consumer to help recoup some of the sales lost in the pandemic-induced global economic slowdown.

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That fact is likely not lost on Washington. The online retail giant’s domestic focus -- international commerce accounts for just 7% of total sales -- means the company has limited access to potentially sensitive personal data, unlike fellow Chinese internet giants ByteDance Ltd. and Tencent Holdings Ltd.

Donald Trump has attempted to ban ByteDance’s TikTok and the WeChat super-app, owned by Tencent, in the runup to the presidential elections and he may be emboldened by a second term to continue decoupling Washington from Beijing.

See: What to expect from Biden-Harris on tech policy, platform regulation, and China

Even if Trump loses in Tuesday’s election, a Biden presidency will likely not lead to a strategy overhaul, with the Democratic candidate shifting toward a more confrontational tone toward China over the past few years.

 

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