I agree, that we have not seen dramatic improvements in online trade media since Global Sources (GS) launched its online platform in 1995. Most of today’s business models, including Alibaba.com, rely heavily on what GS created and fail to deliver new/significant efficiencies to their users.

While I do think it will be some time before we see an end-to-end global trade solution online, I do expect to see new businesses with interesting solutions threaten Alibaba.com and Global Sources.

One company to keep your eye on is MFG.com as they are coming to the market with a unique platform and funding. They have a growing presence in North America/Europe and Asia is ripe with opportunity for them. With offices in China and India, I expect them to begin carving out market share before the end of this year. I will add a posting on MFG.com later this week.

Global Sources (GS) has just modified its print products business model for web use. Alibaba enjoyed a big advantage to start with - it had no baggage of print products like GS had, but it hasn’t found a right business model even after 10 years.

Both Global Sources and Alibaba have the resources and yet they have hardly done anything to make ecommerce in bulk products import export (with least of human intervention) a reality.

Is it they lack ideas or motivation? Is it that they don’t want to take any risks?

To start with, none of them ever did anything in building an independent and importer-friendly user each engine. There have been so many good search engine platforms around which they could have used or duplicated.

Something like Tootoo should have been there at least 5 years ago. thefind.com was something Alibaba or GS should have had any day.

And what is their contribution to bring bulk import export trade into ecommerce fold? Is it really so difficult to do? Yes cost-effective payment gateways and dispute resolution mechanism do posses difficulties. But has any effort been made to address those issues? It has to be an ongoing process because things are rapidly changing. What was not feasible yesterday is feasible today.

It is interesting to take a look at the history of Alibaba and other ventures which came on the scene in end-1990. It coincided with the growth of China’s small and medium enterprises (SME).

The web portals don’t require heavy investment. Unlike print products, it is quite cheap to set up a web portal. Getting support from advertisers was not difficult either. China has so-called ad sales channels, which operate on 40%-50% commission. And on top of it, some of the lucky ones were blessed with free money from the dot.com funds.

Most of the small factories till this day don’t keep marketing staff. So they consider Alibaba and other web portals as their marketing staff.

By the end of 1990, a big change had also taken place in the marketplace, particularly in developing countries. The small and medium buyers started coming to China on their own instead of buying from local importers.

Smaller Chinese enterprises practically got business on a platter. China’s low labour costs and aggressive pricing were the key factors.

Actually, China’s pricing more or less was like a secret until 1994, known mostly to Hong Kong and Taiwan exporters.

Lacking any marketing ideas and long experience in dealing with overseas markets, Chinese factories engaged in price reductions and sparked the deflation in consumer goods prices somewhere in 1995

Consumer goods prices were declining practically every 15 days in developing countries between 1996 to 2005.

Both Hong Kong/Taiwan traders and overseas importers started feeling the pinch, because Chinese enterprises were obliging new importers with smaller quantities at same prices.

How to manage inventory levels in the face of these regular price declines and still make a decent profit was something the big importers could not figure out. Instead of competing with small importers a large number of them went out of business.

The setup was perfect in 1998 when most of these web based trade portals, including Alibaba, were born:

(a) Small assembling factories of China were willing to accept smaller quantity orders.

(b) So doors had opened for smallest of the re-sellers to become an independent importer and buy directly from the source.

(c)Thanks to WTO regime, Customs clearance had become easier and cheaper.

(d)Logistics was no more restricted to serving the big boys. Courier and small parcel services had matured and become a substantial part of freight business.

(e)A good number of cost-effective inspection agencies were getting into into the act.

And the missing link between the sellers and the buyers was provided by Alibaba’s communication services and merchandising tools - all for free.

Alibaba happened to be there when it was most needed.

Looks like, this year is going to be very tough for all of them as China is keen to phase out processing trade which grew from $2 billion in 1981 to around $960 billion in 2006.

As pointed by you PPI has gone up by more than 6% and at least 30% of factories, particularly those involved in processing trade are likely to close down this year.

New labour legislation, currency appreciation on a daily basis and rising costs of raw material are the factors small factories can’t cope with.

Will Vietnam and Indonesia benefit out of it?

Looks like so. Vietnam is suddenly swarming with a host of B2B trade media platforms, all copies of Alibaba, and Vietnam promoters, masquerading as exporters, are inviting Alibaba users to join them.

Alibaba, despite its shortcomings, has done signal service in giving buyers and sellers free sourcing and merchandising tools.