Online shopping, the business of art and IKEA – from failure to success | Biz weekly

This episode of BizNews focuses on selling and buying products in China. How did Alipay contribute to the revolution in online shopping; auction house Christie’s has found that art is big business in Shanghai; how IKEA changed its strategy and – finally – became successful in China.

Alipay boosts online shopping in China

Almost ten years after launching Alipay, the popular online payment system, has changed Chinese consumer behaviour, mainly because of its 'buy now, pay after delivery' concept.

The growing popularity of online shopping can be seen as a revolution, as this is a market where, until a few years ago, consumers did not trust what they could not touch. Online shopping on Taobao and paying for the goods within seconds on Alipay is getting more and more common to China's new middle class. China's digital retail market, Reuters reports, has become the number one market worldwide, surpassing the US.

Jeff Walters, MD of the Boston Consulting Group, gives much of the credit to Alipay's payment system, as it “helped to accelerate the development of e-commerce in China", says Walters. He thinks that Alipay's innovative delayed payment system, in which consumers only pay for the goods after delivery and only when they are satisfied with the quality, has contributed to its success in China.
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Christie's Shanghai auction: art is big business

Christie's first art auction on China's mainland has been a success. The auction house has registered US$ 25 million in sales, a lot more than the US$ 16 million it had expected.

"Our first auction in Shanghai has illustrated how much demand and appreciation there is for art across categories,” said François Curiel, president of Christie's Asia. he 39-lot sale included works by Chinese artists as well as those by Pablo Picasso and Andy Warhol. Warhol's 'Diamond Dust Shoes' fetched about US$ 790,000. A red ruby necklace fetched the highest bid at 18 million yuan, or $3.4 million. Buyers from around the world participated, with online and telephone bidders joining the nearly 1,000 clients in the room.
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IKEA in China: from failure to success

At first, the Swedish furniture enterprise IKEA was not all that successful in China. Its low-price strategy created confusion among Chinese consumers while local competitors copied its designs. IKEA adapted its strategies to expand and become profitable in China, Business Today reports in a case study.

One of the main problems for IKEA was that its prices were higher than the average in China. Prices of furniture made by local stores were lower as they had access to cheaper labour and raw materials and had zero design costs. IKEA overcame this problem by building more local factories and resolving the problem of high import taxes in China. The company also saved on repair costs by performing local quality inspections closer to manufacturing.

Furthermore, IKEA adapted its global branding that promises low prices to fit the Chinese situation. The ‘cheap cheap’ strategy did not work in China because western products are seen as aspirational in Asian markets. IKEA started targeting the young middle-class population, that is better educated and is more aware of western styles. Targeting this segment helped IKEA project itself as an aspirational western brand.
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