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East Meets Midwest

If you want to visit the future of global commerce, just click on over to www.tmall.com.

A business-to-consumer website, tmall.com is a spinoff of Taobao, China’s largest e-commerce site. It was set up by the Michigan Economic Development Corp., which recently launched the Pure Michigan Export Now pilot program to help in-state companies sell their products directly to Chinese consumers.

Don’t let the words “pilot program” fool you. By hooking Michigan businesses up to Taobao, the Wolverine State has opened the door to the world’s largest e-commerce portal. The Chinese site has an astounding 370 million users–more than double the 152 million active accounts logged by the U.S. web goliath, Amazon.

If the program proceeds as planned, Chinese consumers may soon be ordering bacon cheddar popcorn from Bricktown or automotive accessories from Sterling Heights.

Several major brands, including Procter & Gamble, Nike and Samsung, already have stores on Tmall.com. China’s e-commerce sales reached about $73 billion in 2010, and some project it could bypass the U.S. as the world’s largest e-commerce market in a few years, according to recent study by Bain & Co.

The MEDC is partnering with Akron, OH-based Export Now to guide companies through the process.

“This is an overseas e-commerce solution that allows any Michigan company to sell online in China, but to do so basically as easy as it is to post on eBay in the U.S.,” Export Now CEO Frank Lavin, a former U.S. ambassador and undersecretary of commerce for international trade, said in an interview with mlive.com.

Export Now’s services typically cost $3,000, but the MEDC is chipping in $1,000 and Export Now is offering a $1,000 discount to Michigan businesses, bringing their cost to $1,000.

Michigan companies can ship their products on consignment to an Export Now depot in California, where shipments are sent on to Export Now’s Shanghai distribution center. Export Now takes care of listing the products on Tmall.com, translating descriptions and converting prices.

Companies have to pay an e-commerce fee, shipping and any tariffs. But they avoid paying a wholesaler, distributor and retailer as they might do in the United States, Lavin said. So in some cases, the prices and margin are similar to their domestic sales.

Products will be featured in a Pure Michigan virtual store on the website. According to Lavin, the demand should be great for specialty goods, since China already has an abundant supply of generic, low-cost products.

The program can help companies that want to try exporting for the first time or are already selling to stores or distributors in China but don’t have a way of directly reaching consumers because of overhead costs associated with warehousing, said Laura Deierlein, international trade development manager at the MEDC.

MEDC will cover $1,000 for the first 100 Michigan companies to sign up. “We anticipate this can have a farther reach than that,” Deierlein told mlive.com. “Even at $3,000, it’s definitely a high value.”

The MEDC will be holding informational sessions on the program this month in Detroit, Grand Rapids, Lansing and Saginaw. We’ve got one question for them: Suppose all 370 million of Taobao’s users decide they want to buy the same item at the same time?

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