US Brands Suffer Collateral Damage in Chinese Corporate War

(From AP News)

It was looking like a banner year for business in China. The U.S. clothing company was expecting a 20 percent jump in online sales on Alibaba’s Tmall, thanks to the e-commerce giant’s massive reach.

But executives soon learned that what Alibaba gives, it can also take away.

The company refused to sign an exclusive contract with Alibaba, and instead participated in a big sale promotion with its archrival, JD.com Inc. Tmall punished them by taking steps to cut traffic to their storefront, two executives told The Associated Press. They said advertising banners vanished from prominent spots in Tmall sales showrooms, the company was blocked from special sales and products stopped appearing in top search results.

Executives from five major consumer brands told the AP that after they refused to enter exclusive partnerships with Alibaba, traffic to their Tmall storefronts fell, hurting sales. Three are American companies with billions in annual sales that rely on China for growth.

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