'Watch out Tesco, Alibaba is on its way'

Alibaba may one day supplant Tesco or Carrefour, as the e-commerce giant rides the crest of the online and mobile shopping boom, according to Martin Sorrell, chief executive of the advertising agency WPP.

"For the first time, the manufacturers have an opportunity to outmaneuver the big box retailers everywhere. Alibaba is theoretically in an extremely powerful position," he says.

"We need proximity retailing, as opposed to big box, because we live in cities and we don't have much time. We use e-commerce. What Alibaba and Amazon can do is control those relationships."

Manufacturers of consumer products have given up some of their ability to communicate with customers due to the rise of the major retailers, but e-commerce platforms like Alibaba are now bringing that back.

"The big risk is that Alibaba and Amazon will replace Tesco and Carrefour and WalMart, and maintain a stranglehold on the relationship with the consumer," he says.

Sorrell, who enjoys close ties with UK Prime Minister David Cameron, was speaking at the Bund riverfront on the eve of the Great Festival of Creativity Shanghai, an event promoting British business interests in China.

Part of the broader global "Great Britain" campaign, it is being co-organized by UK Trade and Investment.

The Duke of Cambridge, who arrived in Beijing on March 1 for his first China trip, and Alibaba chief Jack Ma both made appearances on March 2 - Ma in a one-to-one discussion with Sorrell.

At the event, more than 500 companies planned to showcase British creativity at a time when China is giving innovation in business as it shifts from a manufacturing to consumption-based economic model in line with the government's 12th Five-Year Plan.

"As China moves increasingly up the value chain, we want the UK and China to become the No 1 creative partners of choice," said Mark Logan, head of communications at the British consulate in Shanghai.

Sorrell would not be drawn on how much business the UK hopes to attract from the three-day festival but British media reports have given targets of up to 1.45 billion yuan (150 million pounds) over the next five years in fields such as digital media, advertising, film and TV.

A slew of deals were announced on March 3 in the tourism, healthcare, e-commerce, financial services, film and TV sectors.

Shanghai Asian Brokers Co Ltd will become one of the first Chinese insurance brokers to set up in the UK. Royal Mail announced that it is launching a new shop front on Alibaba's Tmall Global e-marketplace. And Phynova of Oxford has received the first-ever market approval for a traditional Chinese medicine from the UK's regulatory body.

The ongoing campaign ties is part of a major push to court China that began in earnest around the time of the 2008 Beijing Olympics.

London Mayor Boris Johnson made a similar six-day trip in October 2013. He won over Chinese Weibo users by riding the Beijing subway and promoted fold-up bicycles and other UK interests on the Bund. His tour coincided with a trade mission led by UK Chancellor George Osborne.

Cameron made another gesture last month in the form of an official Chinese New Year's greeting as the UK continues to fast-track visas for Chinese applicants.

"We often think of Chinese food, technology and clothing - they're a big part of our lives in Britain - but today, it works both ways," he said. "Look at China's supermarkets and you'll see British salmon, British whisky. Look at China's roads and you'll see Jaguars, Land Rovers. In fact, China is JLR's biggest market."

In contrast to its history of empire-building, the UK has become overly dependent on the 28-member European Union for trade ties and now desperately needs to forge links in Asia and India, Sorrell says.

"Our patterns of trade - this is why the EU referendum is so controversial - are still very German, French, Italian, Spanish. So what we have to do is develop better penetration of China, of Brazil, of Russia, of India. And because of the shift to consumption (in China, the biggest target for British industry should be here."

The 70-year-old media mogul has been promoting the UK's business interests abroad for decades.

He recalled visiting Ma's headquarters near West Lake in Hangzhou, Zhejiang province, several years ago and being laughed at by his peers for speculating how much it would go public at. With a market cap of $212.05 billion, Alibaba has recently been trading places with Facebook ($221 billion) in terms of which is worth more.

Undaunted by seeing the group's share price retreat following a record-breaking $25 billion IPO on Wall Street in September, former schoolteacher Ma added to his philanthropic activities last year by launching a huge incubator fund for start-ups in his hometown.

Acquaintances and those in his inner circle often refer to the diminutive business mogul, whose interests now extend to banking, mapping and entertainment, as an unwilling billionaire. But clearly not one lacking in ambition.

WPP is also moving from strength to strength by investing in technology, data and content in China.

"We're finding those three areas differentiate us," Sorrell said.

Building on global revenues of US$20 billion in 2014 it is forecasting growth of "at least" 3 percent this year. This rate could double in China, WPP's third-biggest market, for revenues in excess of $1.6 billion despite an industry cool down and a "bumpy" 2014 as it continues to expand in West China and other third-tier cities, Sorrell says.

matthewhodges@chinadaily.com.cn