Online alliances that deliver success

Royal Mail and Alibaba tap e-commerce potential between Europe and the Chinese mainland

The United Kingdom's privatized mail operator, the Royal Mail, has recently responded to heavy criticism since its privatization with a trail-blazing move to capture the delivery market across the Chinese mainland.

Royal Mail has announced a tie-up with Tmall, a website owned and operated by Chinese e-commerce giant Alibaba. Tmall has quickly risen to become the biggest international buying site for UK products online.

Royal Mail is setting up an online shop via Tmall and is far from alone in its ambitious quest to tap into the Chinese mainland's prize delivery market. European competitors such as France's La Poste as well as Australia Post, Singapore Post and the Brazilian Post have all also have recently signed up with Tmall.

So, the message to the European postal service sector, indeed the European service sector generally, is loud and clear: China has moved on from low-cost manufacturing and is more and more open for business across its rapidly modernizing service sector, too.

Europe's mature service industry players are also well placed to expand into the Chinese mainland and work with the Chinese service sector. European service providers are experiencing increasingly competitive pressures in their domestic markets, too, another reason to look seriously toward emerging markets and China in particular for much-needed overseas expansion

Such competitive pressures have not been felt by anyone more than Royal Mail, especially in its parcels market. Royal Mail is also facing an irreversible decline in letter volume.

No doubt Royal Mail's privatization and its newfound entrepreneurial freedom have played a part in its ambitious expansion plans for China. Royal Mail's lead is definitely one that many European competitors could and should follow very soon.

Few European players in the delivery market can ignore the attractive market opportunity that China presents. Postal operators are scrambling to adapt to the rise of e-commerce. China, with a 25 percent share of overseas purchases bought over the Internet from the UK, looks a prize market.

Royal Mail's online shop on Tmall will be used to promote, sell and deliver more than 40 well-known, prestigious British brands including Clarks shoes, Austin Reed clothing, and Cow and Gate baby formula. But perhaps most important of all the brands to be promoted through Royal Mail's online shop on Tmall are the customized bicycles produced by British fold-up bike manufacturer Brompton.

Not only are European service firms moving into China, but so are an increasing diversity of manufacturers, and they are doing so with detailed understanding of, and adaptation to, the Chinese market.

Brompton's bicycles made for the China market have been designed to carry a British brand heritage theme, with one sporting the colors of the Union Jack and another proudly displaying traditional English racing green.

Tmall also appears a shrewd choice by Royal Mail for its domestic dominance and reach. Tmall represents the perfect vehicle for the multitude of European firms now looking more and more seriously at selling across the Chinese mainland.

Even Tmall's major global competitor Amazon, yet to establish a firm presence in China, has opened a store on Tmall.

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