Dubai’s Alibaba: OConnect bridges distance between Chinese sellers and buyers in UAE
A Chinese company looking to provide a business-to-business version of Alibaba’s e-commerce platform has opened a showroom in Dubai to introduce local wholesalers to Chinese vendors.
OConnect’s new facility is capable of displaying products from up to 120 Chinese vendors at any time, and vendors are being rotated every three months.
OConnect was only founded last September to operate physical showrooms and warehouses displaying products from vendors who use its parent company OSell’s website and mobile apps.
OConnect’s UAE managing director Frank Ji said that the company is already trading from seven locations outside China, and is planning to double this to 15 within the next one to two years. It also has a network of more than 35 showrooms within Chinese cities and employs 600 staff.
Mr Ji said Dubai was the second location conceived following the initial opening of a warehouse in Moscow last year. Others have followed in Warsaw, Toronto and Ho Chi Minh City, and two new outlets will open in Tehran and Jakarta next month.
Mr Ji came to Dubai in November to apply for the necessary trade licences and find the premises, and said that to date the company has invested Dh20 million in its UAE venture.
“In three years we will have Dh30m more to come,” he said.
Its 15,000 square feet unit in Dubai is part showroom, part warehouse. Currently about 60 manufacturers have goods on display, ranging from home security systems and power tools to tableware, roller skates and false eyelashes. Each display contains a QR code linking to the manufacturer via the OSell app, and buyers can speak to them directly via a machine translation facility to order. Smaller quantities can be bought from the on-site warehouse.
Mr Ji said OConnect had gained support from the Chinese government, which is keen to boost exports through its One Belt, One Road policy. Part of the Dubai warehouse, for instance, is currently taken by the trade board for Huoshan, a city in the Anhui province, displaying 150 products from 19 of its manufacturers.
OSell has been trading since 2009 and is owned by Hong Kong-based Dalongwang. It has gained VC funding from the former chief technology officer of Alibaba Group and Yahoo China, John Wu, through his Singapore-based FengHe fund, from Beijing-based Northern Light Venture Capital and SIG Asia Investments.
Zoe Chen, the deputy director of OConnect’s overseas board, said that OSell’s business model was different to Alibaba, as it targeted business-to-business customers, sourcing vendors directly from business parks, as well as offering add-ons such as logistics and customs clearance.
Mr Ji said that his main challenge in Dubai has been challenging people’s perceptions about the quality of Chinese goods — particularly those who have spent time at Dragon Mart, which he described as “like a theme park” with goods of varying quality.
“Not every product can be shipped into our warehouse,” he said. “We have procedures to check whether it’s good enough. The price has to be right, but the quality matters most.”
A study published last week by consultancy ValuStrat stated that there had been strong demand for industrial property over the past 12 months, with average rents increasing by 5 to 10 per cent. Rents vary between Dh40-55 per sq ft, with units at Dubai Investments Park, Jafza and Jebel Ali commanding the highest premiums.
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Updated: August 15, 2016 04:00 AM