What is 1688.com?
What Alibaba is for the World, 1688.com is for mainland China. In Chinese, 1688 is pronounced as “Yao Liu Ba Ba” which sounds like “A Li Ba Ba” and makes it obvious that both platforms are somehow related. Being part of the Alibaba Group, 1688 is the biggest B2B trading platform dedicated solely to the Chinese domestic market. Furthermore, the international version Alibaba.com is mostly ignored by domestic buyers. To get access to the growing domestic market, even multinational corporations have started offering their products in 1688 such as BASF, Evonik and Dow Chemical.
Pros of 1688.com:
The hidden gems: Only a fraction of all legally registered factories in China is listed on alibaba.com. This means by being able to access 1688, you will be able to find decent suppliers that your competitors do not have access to. These suppliers choosing not to be on the world’s largest B2B platform can have several reasons: 1) They have enough business in the mainland, so there is no need to look outside for clients. 2) They have no English speaking staff 3) they don't have an export license. This does not mean that all suppliers are on one of these two platforms, in fact, some are on neither and are doing just fine.
Cheaper prices: This is only partially true. The price of a product is closely related to several factors such as quality of the product; quality of customer service; English support; experience with international customers; size and success of company etc. On average it will be possible to find cheaper per-piece-prices on 1688.com, this, however, could come at the expense of quality and other unforeseen issues. Many of these firms have never sold their goods overseas and struggle with the basic lingo and terms used in international trade.
Fast responses: The 1688.com mobile app is a top-notch messaging app and much better than its international counterpart. The only downside: no English support. Because labor cost is still comparatively low, most suppliers will have a bunch of their sales staff be always on alert and respond within seconds, yes seconds.
Great for sub-suppliers and complex projects: If you are managing a more complex sourcing operation with several sub-suppliers sending semi-finished goods to the same assembly address, 1688.com can be a great option. Most issues when dealing with 1688.com will evaporate if they supply to a fellow domestic business.
Cons of 1688.com:
No English Support: Finding a sales guy on 1688.com who can speak at least basic English is like searching for a needle in a haystack. If you do not speak the language yourself, it is better to have a native speaker translate for you. The best option would be to have a mandarin speaking employee in your team, but also hiring a translator or sourcing agent can do the job. The worst is definitely using translation apps. Above options offer varying degrees of cost, trust, and effectiveness.
Payment: Domestic factories are used to being paid with domestic payment methods, which include cash, domestic bank transfer, Alipay or wechat. It can be very troublesome for Chinese suppliers to receive money from overseas, be it USD, EUR or any other currency. On the other hand, it is very cumbersome to use domestic payment as an international buyer. And the worst: No Paypal!
Missing Export License: Having little or no experience with foreign clients, many domestic business owners did not acquire an expensive export license. There are ways to circumvent this problem, but this depends on your order size and buyer’s leverage. Many sellers will simply refuse the hassle for too small of an order.
Lack of International Client experience: Having to deal with an international client will confront the Chinese supplier with many unforeseen obstacles and unknown risks. INCOTERMS and international contract formalities are largely unknown.
Lower quality: Suppliers that sell internationally know that quality standards are higher when selling abroad. On the local market, it is different and you can find both very high quality but also very very low quality as well.
What is Alibaba.com?
Alibaba.com is the international version of the 1688.com B2B platform and is mainly focused on international trade. Nowadays it became the go-to website to procure goods manufactured in China. While the majority of Sellers on the platform are of Chinese origin, Alibaba is making efforts to increase the number of international sellers. On the flipside, there are virtually no Chinese buyers on the platform, as they prefer 1688.com and other local sites. Alibaba.com is probably the source of the majority of products being sold through Amazon worldwide.
PROs of Alibaba.com
Customer Support: Compared to local sites, Alibaba.com has great customer support towards international clients. Being a registered seller means paying several thousand dollars of membership fees a year, which makes sure only suppliers that are serious about it can upload their information. English speaking staff that often work in shifts to cover different time zones are employed by most accounts.
Payment: Alibaba’s own “trade assurance” is a great way to make a safe third party escrow payment. Here your funds are first transferred to Alibaba’s Hongkong account and held in escrow until you receive the goods in excellent condition. Other convenient options are PayPal for smaller orders or TT wire transfers to the supplier’s Hong Kong bank account.
Quality: Having extensive experience with international customers, a supplier knows what quality is acceptable overseas and which is not. In can be said that on average the quality on Alibaba.com is a few levels higher than on domestic platforms. Naturally, this is reflected in the manufacturing cost and sales price.
Design: Design trends and standards in China are different than for example in the US or Europe. While local producers design goods for local tastes, suppliers on alibaba.com are more aware of the design requirements of overseas buyers.
Amazon Experience: Many Alibaba sellers have the majority of their clients selling their goods on Amazon via the FBA service under a private label. These manufacturers know the special requirements of shipping to Amazon’s warehouses such as labeling procedures and packaging instructions.
Cons of Alibaba.com
Intransparent Pricing: Most of the Prices and MOQs displayed in the search results are just a placeholder to get a client’s attention. Only after contacting the supplier and exchanging several messages, you will receive a real quote. This can be cumbersome and time-consuming when comparing prices.
High Minimum Order Quantities(MOQs): Often suppliers will ask for higher MOQs because it is not worth selling overseas when the order size doesn't cover the startup costs. It can also be the case that Chinese suppliers will charge higher MOQs to foreign clients than they would do with local ones. However, MOQs are not carved in stone, most suppliers are willing to lower it considerably if the price is adjusted.
Trading Companies: Many Trading Companies will disguise as suppliers and only reveal their true identity after an in-depth investigation. Trading companies can often be spotted by simply having the term “trading” in their account name. Others may be the real manufacturers of let's say “Item A”, but will sell you “item B” without telling you that it's being manufactured by another company. In any case, only a factory visit can erase any remaining doubts.
Bad user interface: Compared to 1688.com, both the desktop and the mobile version of Alibaba.com are organized in a confusing way and its messenger app is laggy and outdated at best. Since the platform is an almost-monopoly in its industry, there seems to be little pressure to change this anytime soon.
Conclusion:
There is no clear winner here as both platforms fulfil a certain purpose and cater to their own clientele. Alibaba is definitely the better option for beginners with smaller order sizes and less experience. The english support and foreign-trade-friendly environment will make the sourcing process much smoother. Also medium sized enterprises can find reliable suppliers and save time and cost when sourcing for goods made in China. 1688 is for those who are seasoned in procurement in China and want to give some of their products a competitive edge. The ideal strategy is to access both platforms to get the best of both worlds.
Sources:
https://www.basf.com/hk/en/media/news-releases/cn/2018/04/1688.html
https://corporate.evonik.com/en/media/search/pages/news-details.aspx?newsId=70974
https://www.yicaiglobal.com/news/dow-chemical-joins-rivals-with-store-on-alibaba-online-wholesale-market
https://finance.yahoo.com/news/think-youre-buying-amazon-actually-alibaba-192708862.html
Comments