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Nestle strengthens partnership with Alibaba to tap China’s e-commerce potential

FBR Staff Writer Published 06 June 2016

Global food retailing major Nestle and Chinese e-commerce major Alibaba announced plans to extend their partnership.

As per the upgraded partnership, Nestle will roll out its biggest e-commerce campaign ever with its wide range of products that are currently sold on Alibaba's expansive e-commerce platforms such as Tmall, Xinhua reported.

Marking the company's 150-year anniversary, Nestle executive vice president for Asian, Oceanian and African markets Wan LingMartello said: "Our partnership with Alibaba is all about the consumer. What is so exciting about China as a market is not only its size or population, but that Chinese consumers are a step ahead of consumers in other markets in the digital way they consume."

Martello said that China is the right place to begin Nestle's next 150-year growth story as consumers in the country have a more developed understanding compared to their global peers.

Chinese consumers are in quick to adopting new consumption technologies and show great passion for innovation, Martello added.

Alibaba CEO Zhang Yong said consumption patterns in China have changed fast, with digital platforms gaining momentum as young customers increasingly opt to shop online.

China witnessed a jump in the volume in online purchases by over 12 times during the period January 2011 to April 2016, even as the per capital income went up by 27%, according to a joint report released by Alibaba's financial services platform Ant Financial and a private economics research institute.

In 2015, Nestle signed a strategy cooperation partnership with Alibaba to boost its online sales and strengthen its brands. Last year, Nestle saw half of its sales in China coming from online purchases.

In June last year, Nestle planned to increase ice cream production in China by investing CNY100m ($16.1m) at two of its plants in Tianjin and Guangzhou.

Nestle operates two ice cream factories in China, which produce its brand products as well as the local brand 5Rams.