The jewelry seller threatens Alibaba by investing millions of dollars in marketplace platform CTFHOKO.com and offering goods at cheaper prices.
Alibaba is challenged by the Chow Tai Fook brand, which took nearly nine decades to turn into a family business – including shopping centers in Hong Kong, the biggest jewelry chain of the world and casinos – to provide a net worth of $10 billion to the tycoon, Cheng Yu-Tung.
The Chairman and founder of the Chinese e-commerce company, Jack Ma, took less than five years to earn e-commerce wealth nearly three times greater than that. Now, the holding company of Cheng family is taking a measure to chase the Hangzhou-based company and other online retailers by extending its online presence.
In December, it invested a sum of $54 million (350 million Yuan) in marketplace platform CTFHOKO.com, and in a mall to exhibit products delivered online. Its website provides genuine imports like diapers, cosmetics and infant formula, at prices at least 10% less than those charged in shops across China.
The jewelry chain is building on its decades-old image. The Cheng Family owned Chow Tai Fook Jewelry Group joins a number of other retailers to improve its e-commerce business, which has been led by Jack Ma’s company and other online trading companies for long.
It has also seen its conventional business suffering from its worst year since 2011, as the anti-graft campaigns and slowdown of the Chinese economy cut down demands for luxurious goods. The share price of the retailer has decreased by 4% in 2016, compared to the decrease of the HK-based Hang Sang Index by 7%.
The prize is a $100bn-a-year online China market for imports like diapers and cookies, revealed a report by British market research organization, Mintel Group, as buyers continue to be worried about domestic products following a number of scandals over counterfeits.
JD.com and Alibaba lead the e-commerce industry of China with market shares of 20% and 52% respectively. Amazon.com is also planning to compete with Alibaba as it intends to capture the growing cross-border online trading market of China, which by 2020, will probably expand to $1 trillion industry while offering services to 900 million buyers, as revealed in June report from the research division of Alibaba, Accenture and AliResearch.
While other conventional retailers have tied up with developed platforms to enter in the online market of the country, like the collaboration between JD.com and LVMH-owned French cosmetics chain Sephora as well as the Chinese department store operator Intime Retail Group’s project with Alibaba, the Cheng Family’s company is ready to go at its own.
To complement its e-commerce offerings, Chow Tai Fook developed a companion shopping center in free trade zone ‘Qinhai’ located in Southern city ‘Shenzhen’ to display products delivered online, while some have also been offered for sale at the shops.
Since the initial phase of the 3-storey mall established in December, the jewellery seller has given invitations to 21 HK brands, such as cosmetics retail chain Sa International Holdings and Maxim’s Cakes to display their wares and deliver on its website.
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