Watch out, Alibaba.com. Here comes Tradesparq, a start-up aiming to provide buyers and suppliers with a more efficient and cost-effective way to verify potential trade partners.
Established in 2010, the Shanghai-based business-to-business (B2B) trading platform is trying to get a step ahead of Hangzhou-based Alibaba.com, the world's largest B2B e-commerce service provider, envisioning a new online marketplace where Alibaba meets LinkedIn, a social networking site for professionals.
Tradesparq enables registered users to search a directory of suppliers and match those results against their own social networks. Membership costs US$150 a year, including product and company profiles.
Brian Hager, chief executive of Tradesparq, touts the use of matching capabilities as an efficient method to save traders' advertising costs.
"As we began to see the rises of Facebook and LinkedIn, we realised that there was a great opportunity to utilise the social media network to match potential buyers and suppliers," he said. "As we began to conceptualise this platform, we realised there was a big problem with Alibaba in finding the right partners" because it was difficult to narrow the search.
Alibaba.com was privatised last week after its parent Alibaba Group agreed to buy Yahoo's 40 per cent stake in the Hong Kong-listed subsidiary. Alibaba.com, which has operations in 240 markets and 79.8 million registered users, said it would conduct sweeping reforms of its operations to improve services to clients.
The website charges buyers and suppliers looking for partners US$5,000 to place an advertisement.
Tradesparq is among hundreds of global businesses looking to cash in on the mainland's increasingly active social media population. Users can share suppliers' contacts and product comments with their connections within the website.
Mainland China has the world's most active social media population, management consultancy McKinsey says. Of the 513 million web users, 95 per cent had registered on a social network site, it found in a recent poll.
Tradesparq was founded by Hager and Michael Kleist, both of whom were former executives with US Nasdaq-listed Global Sources, an online trading company that specialises in mainland China.
"What we focus on is being the collection point for a buyer or a seller to view the reputation of potential trade partners and to manage the reputation," Hager said.
On the mainland, where social media sites such as microblog service Sina Weibo are increasingly influencing purchasing patterns and decisions, more companies are using the services as one of their primary digital tools to woo customers. But social media services have yet to be widely used by mainland suppliers seeking foreign customers.
The Chinese manufacturing market was valued at US$1.9 trillion last year, representing about 20 per cent of the world's total.
Hager said the market suffered well-documented problems over supplier quality and reliability.
"Tradesparq wants to be a clearing house of information about the suppliers," he said. "We believe we are doing it in a different way."
On Alibaba.com, a search for a supplier of a certain product may result in thousands of candidates.
"We winnow that down to a dozen top-rated firms that you can check for references against your social network," Hager said.
Tradesparq now has 650,000 products from 82,000 suppliers. It expected to handle 3.5 million enquiries this year, Hager said. About 2 per cent of the enquiries would lead to transactions, he estimated.
A stronger yuan, rising labour costs and weaker external demand have dented Chinese exports in the past few years. But Hager believed Western buyers still welcomed Chinese-made products and that opportunities abound.