Sleeping with the devil?

This week  Sainsburys announced a deal enabling them to sell in China. They are not opening stores nor have they bought an existing chain. They are going to distribute some of their product via Alibaba, the Chinese equivalent of Amazon.

The first reaction maybe of thinking this was good news , that is one of our leading retailers exporting their product to China. My view is that long term the flow may not always be eastwards .

Within the last couple of months Alibaba purchased a chain of about 1200 electrical stores in China. Part of the rationale was to enable a ‘click and collect’ function for Alibaba and their electrical wares.

Many of you will know that Alibaba also created a site called Aliexpress. Part of the function of Aliexpress was to create a more consumer orientated site aimed at pursuing Amazon consumers in the west.

All jolly interesting stuff but so what ? I maybe putting 2 and 2 together to equal 5, it maybe me being overly cynical and overtly sceptical. Sainsburys have 1200 stores in the UK. In the long term I can’t see Alibaba getting over excited about some Sainsburys ‘taste the difference ‘ or ‘So Organic’ items . Incidentally, this is what Sainsburys have said they will be distributing in China. But I can see them getting very excited about having  1200 ‘click and collect ‘ stores in the UK. Why the UK and not a European chain? Because the UK has by far the highest per capita spend online in the world. Furthermore, it will give Alibaba, or Alixpress some credibility with the consumer.

It may never happen. Maybe my sums don’t add up. But then in it’s present form I don’t see the sums of the other two parties adding up either, without something else in the formula . 

If I am right then we would be looking at the flow westwards of Chinese goods coming directly into the homes of the UK  consumer possibly direct from the factory……in China.

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