Alibaba’s Trade Assurance Program Covers B2B Platform
A trade manager for Xiamen Brandnew Color Steel Forming Co. is happy that India’s global conglomerate Tata Group finally placed a large order due to Alibaba Group Holdings trade assurance program. Just a few months back, Tata Group was planning to purchase steel forming equipment from Xiamen Brandnew but after several months of negotiations the company couldn’t make up its mind. From its comfort level with Xiamen Brandnew, Tata Group was not as confident and in their perspective the Chinese company was an unknown commodity dealer and no deals were done with the company. Tata Group had concerns on the product quality and the ability of Xiamen Brandnew to deliver the products on time and the after sales services.
This is where Alibaba comes in, the business to business or B2B e-commerce platform as Alibaba covers Xiamen Brandnew with their trade assurance program. This scheme promotes the trust between the merchant and buyer in the cross border trade. The buyers gets the protection coverage of Alibaba in the event the sellers or supplier fails to provide the right product quality or fail to deliver the product on time. As part of the program, seller and suppliers offers reliability to buyers and enjoy an increased coverage as Alibaba to include known and reputable companies into its program while extending a line of credit to sellers. And by promoting this trade on their platform, Alibaba is now more popular. Tata Group officials saw the merit in the program offered by Alibaba and bought the equipment from Xiamen Brandnew as the trade assurance program is good for both companies and becomes the norm as credit it important in the international trade.
The vice–president and the president of Alibaba’s B2B unit Wu Minzhi stated that the group trade assurance program extends to more than $3 billion in credit to Alibaba registered suppliers in 2015, which in turn encouraged global buyers in placing more than 1.2 million orders from Alibaba. Launched in 2014, the trade assurance program since have more than 100,000 suppliers benefiting from the program’s credit facility where a single supplier receives up to $1 million in credit. The assurance program extends only after a thorough analysis of the seller’s trading data, and a risk control model will be designed to calculate the credit quota based on the data. Any problems between the seller and buyer, Alibaba will pay the buyer as per seller’s credit quota. The credit service also covers the buyers as Alibaba is associated with several banks and financial institutions that offers credit to buyers.
The head of the trade assurance program Wei Qiang, said that the scheme is starting to become popular among overseas buyers, wherein in 2015 around 15 percent of overseas buyers with credit guarantee were new clients in the platform. Foreign trade orders increased by 51 percent in the past six months and trade assurance played an important role in Alibaba’s efforts in transforming and upgrading businesses.