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Sales drop in China sees Unilever pair up with Alibaba to reel consumers back in

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It was recently announced that Unilever’s sales in China had dropped by 20 per cent. The company claimed the market slow-down in China had “led to trade de-stocking” across its distribution channels. CFO Jean-Marc Huet, who is set to leave Unilever in October, said that it had a negative impact on the company given that most of its sales came from abroad.

He explained that China was worth $2.5bn (£1.60bn) in business for Unilever, specifically when it came to personal cleansing, hair care and laundry. It also represented four per cent if its global sales.

China had reported a 7.3 per cent increase in gross domestic product – its lowest statistic since 2009. Unilever’s sales were also pulled down by Brazil being in a recession, said Huet.

Despite retail sales falling, ecommerce giant Alibaba reported gains in gross merchandise value. To capitalise on Alibaba’s success, Unilever has made a deal with the company that will see it reach more consumers in China. Buying goods from China to UK

The partnership, which is set to start on 22 July, will focus on Unilever’s use of Tmall. Unilever has operated an online store on the Alibaba-operated B2C platform for five years, but the agreement will mean gaining access to more rural distribution channels.

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Marijn Van Tiggelen, Unilever’s North Asia president, said: “Alibaba has changed the shopping habit of Chinese consumers. Its mission is to make it easy to do business everywhere, and its vision is to build the future infrastructure of commerce. This meets Unilever’s development needs in China.”

Unilever will be expanding its application of big data to optimise its digital advertising strategy through Alimama – Alibaba’s online marketing business. The company is also set to collaborate with Alibaba’s Blue Star programme, where each product is tagged with a unique QR code that allows the consumer to verify its authenticity and origin.

This comes at a time when food and product safety scandals in China have prompted demand for goods manufactured in other countries. Half of Chinese food plants failed inspections in 2014, while a Chinese subsidiary had reportedly sold expired meat to fast food chains such as McDonald’s and KFC.

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