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1st LD Writethru-China Focus: Alibaba vows to slash prices of wine imports via e-commerce model

Xinhua, May 6, 2015 Adjust font size:

E-commerce giant Alibaba is slashing prices of wine imports to China by offering direct sales to retailers, according to media reports Wednesday.

Using a business to business (B2B) model, Alibaba subsidiary 1688.com is connecting exporters in Spain to retailers in China, Liu Fei, a department manager at 1688.com was quoted saying on Yicai.com.

The company's cross-border business plan will ease business between countries, improve efficiency and reduce the cost of imports, including wine, said Liu.

A bottle of wine for 10 euros (68.54 yuan) in Spain can cost more than 240 yuan in China after time-consuming, costly import and transport procedures.

The products often move from exporters, general agents, regional agencies and wholesalers before reaching retailers. Each handler will normally raise the price by 15 percent before handing the wine down, plus the costs of duty and logistics.

With the B2B platform of 1688.com, a 10-euro bottle of wine in Spain could be sold in China at the price of 116 yuan, less than a half of the price imported through normal channels, said Liu.

The market value of imports that are suitable for B2B business mode is estimated at 213 billion yuan (34.83 billion U.S. dollars), accounting for about 1.78 percent of the total imports in 2014, according to Yicai.com, a global business news website.

There are more services Alibaba can provide besides B2B in its global expansion drive. Alibaba is also planning to offer more in financial services to cross-border businesses, Liu said.

Back in China, Alibaba's online payment product Alipay allows users to pay for online purchases and credit cards or remit money between bank accounts, which is free of charge under certain amounts.

Similarly, Alibaba has offered an Alipay cross-border e-payment service, a payment solution that allows buyers to pay for goods sold on international merchant websites.

When Alipay is linked to the Yu-E Bao, Alibaba's online fund management platform launched in June 2013, users can not only spend but also earn interest on money saved in Yu-E Bao.

Yu-E Bao's yield was more than 6 percent in its early days. It was at 4.24 percent as of Tuesday.

Yu-E Bao accounts for 80 percent of the e-commerce money market fund (MMF) assets in China, according to an article by Fitch Ratings. Chinese e-commerce MMFs, which are funds linked to e-commerce platforms, have exploded in popularity thanks to its convenience, low investment threshold, higher yields and easy redemption of money.

Unlike traditional wealth management products offered by banks, which normally require a minimum investment amount of around 50,000 yuan, e-commerce MMFs investors can invest as little as one yuan.

Investors of many e-commerce platforms use the service to instant redeem money to bank accounts, in contrast, traditional retail MMFs are not linked to e-commerce platforms.

Alibaba is also considering expanding its financial services to import businesses in future, said Liu.

In 2014, Alibaba listed on the New York Stock Exchange with the biggest U.S.-listed IPO of 21.8 billion U.S. dollars. Endi