Yahoo Finance Ben & Jerry, meet Alibaba
Cherry Garcia in Mandarin?
Unilever (UL), the maker of Ben & Jerry’s ice cream as well as Dove soap and a myriad of other consumer products, is teaming with Chinese e-commerce giant Alibaba (BABA) to increase its presence in China, especially in rural areas. The strategic partnership will allow Unilever to tap into Alibaba’s online marketing unit to improve its digital advertising strategy.
Under a previous agreement, Unilever has been selling products on Alibaba’s Tmall online marketplace since 2011. Alibaba CEO Daniel Zhang says his company is pleased to expand the relationship, although no specifics of the financial terms have been announced.
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Yahoo Finance’s Aaron Task says Unilever certainly can use the help after sales slumped 20% there in the fourth quarter of last year.
“Unilever’s numbers in China tanked in the last half of last year and this year in part because the Chinese economy was slowing,” he notes.
Task adds this new arrangement will help Unilever fight back against a big problem in China--bogus goods.
“Alibaba is going to put some codes on these to insure that they are verified products,” he explains. “For a Chinese customer, there are all kinds of concerns out there about knockoffs and counterfeit goods. Alibaba is going to help Unilever sell Unilever products to the Chinese as opposed to fake Unilever products being sold, which hurts the Unilever brand.”
Task points to the recent scandal involving KFC chicken in China as a prime example of why that’s so important.
“For companies like Unilever and any other consumer-facing company, the key issue is the credibility of your goods and not getting into a situation like Yum! Brands (YUM) got into when their brand was tarnished and people think it’s tainted goods,” he says. “So Unilever working with Alibaba-- they’re so big-- having a partner like them should help them.”
Plus, Task notes it’s pretty much a necessity for all businesses looking to boost their reach in China to strike deals with Chinese firms such as Alibaba.
“It’s critical for almost every Western company, no matter what business they are in, trying to do business in China, they need a local partner,” he argues. “Last week we did the story about Disney (DIS) opening the new Shanghai Disney, and they’re not even the majority owner of the park-- there’s a Chinese partner that owns the majority of the park itself. That’s just the cost of doing business in China.”
Note: Yahoo (YHOO), parent of Yahoo Finance, owns a 15% stake in Alibaba, which it is spinning off.
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