Alibaba Group’s (NYSE:BABA) big data has been very helpful during the pandemic in helping Chinese companies refocus their production to local needs. With export orders plunging from March due to the pandemic, businesses turned to the domestic market where with the help of Alibaba’s big data, they knew what consumers were looking for and shift production.
Chinese firms focus on domestic sales
For instance, toothbrush manufacturer Tommy Tu shifted focus to producing products that became local hits. His factory started producing battery-operated electric toothbrushes going for $1.5 (9.9 yuan). The shift in strategy helped Tu recover the majority of the lost export sales and reduced dependence of the Jiangsu-based company in exports to around 60% of sales from 90%.
Due to the pandemic’s economic devastation, several Chinese factories that previously exported most of their products have now shifted focus to the domestic market of around 1.4 billion. The firms have turned to e-commerce companies such as Alibaba, JD.com Inc., and Pinduiduo Inc., which have deep pockets and experience of observing consumer behavior to be a long-term pillar.
Tu, who doesn’t see strong overseas demand returning to pre-pandemic levels, says that they now have to focus on the local market. He said that businesses should now move from blindly sticking labels on products to active research, design, and building a brand.
Platforms such as Alibaba vital to manufactures focusing on the domestic market
It is not only the economic downturn caused by the COVID pandemic that Chinese firms are worried of. There has been flaring political tension between Beijing and the US, Canada, and Australia, threatening export trade. Also, the rise in material and labor costs is pushing foreign customers to affordable exporters from Southeast Asia.
For most firms, the focus will be on the domestic market, and Alibaba’s VP Wang Hai said that most exporters have started expanding their domestic sales. In three months, Alibaba saw over 300,000 export factories tap directly to local demand. Alibaba’s Taobao Deals app, which went online in March, had more than 40 million active users by June.