Alibaba Considering Distribution Center in Detroit

As it looks to entice China’s burgeoning middle class with quality U.S. goods, the Alibaba Group is considering a distribution center in the Detroit area, company officials said at a recent event aimed at adding smaller manufacturers to its online marketplaces.

“No decisions have been made, but we talked about the potential for a presence here,” Joseph Tsai, vice chairman and co-founder of Alibaba, told Crain’s Detroit Business at the company’s Alibaba’s Gateway ’17 event. “The mayor is excited, but we’d need to do a feasibility study of the possibilities. But Detroit has made such an impression on us.”

Tsai said China’s middle class is expected to double from 300 million currently to 600 million by 2020. As in other cross-border markets, notably Latin America, U.S.-made goods and brands are generally viewed as high quality and coveted by Chinese consumers.

The event, which attracted 3,000, promoted cross-border sales into China via Alibaba’s Tmall and Taobao marketplaces generally, but targeted sellers of fresh produce, apparel, baby products and makeup, according to the publication.

The Chinese market is massive but thus far largely untapped by U.S. merchants, with many balking at barriers like shipping, translation and import costs. Goldman Sachs in a March report pegged ecommerce sales in China at $750 billion in 2016, projecting a CAGR of 23% through 2020. Nearly 25% of that total was made up of apparel, footwear and accessories, with Alibaba as the biggest seller. Another 20% came from electronics and appliances, categories where and Alibaba’s Tmall each have a 40% share.

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