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Home / Business / Chinese company behind "Amazon Coat" hit jackpot in the US, eschews China

Chinese company behind "Amazon Coat" hit jackpot in the US, eschews China



By Pei Li and Melissa Fares

JIAXING, China / NEW YORK (Reuters) – When Kevin Chiu left his job in 201

2 to try his luck by starting an online clothing business in a rural Chinese city, his main goal was to Take more time to spend with your wife and newborn.

It never came to mind that his Orolay buffer jacket would be a big hit, celebrated as "Amazon Coat" in American social and traditional media – and held up as a budding competitor to the premium brand Canada Goose.

By using the appeal of China's Hebei and Anhui provinces, polyester coatings are priced between $ 80 and $ 139. Canada Goose jackets, however, start from about $ 575 in the United States.

"We made more money in January than we did for the whole of 2017," said Chiu, 32, to Reuters at his factory in the eastern Chinese city of Jiaxing.

He estimates the company has made $ 5 million in sales last month and expects to bring in $ 30- $ 40 million this year. US sales – almost all of them sold through Amazon.com Inc – account for 70 percent of total revenue.

However, Orolay's success is not just a story of competitive pricing and a design that benefited US consumers. 19659008] Chiu is among a wave of Chinese sellers who have benefited from initiatives introduced by Amazon in recent years, which have made it easy for foreign suppliers to sell on their side.

There is provoked concern among American sellers on Amazon that they are outgunned. And in industries such as clothing, experts say, brick-and-mortar dealers can't ignore the threat caused by the influx of small brands, many of which are based in China.

"It's the synergy that is happening in the industry from all these brands. When you add them, they only take market share," said Robert D & 39; Loren, CEO of Xcel Brands Inc, whose trademarks are sold by Macy & # 39; s Inc and on Amazon.com [19659011] Amazon refused to comment on the view that US companies are being subjugated by Chinese sellers using the site. It does not bring down the number of sellers on their sites by country.

The number of Chinese sellers on Amazon is Set to grow further as fierce competition and rising costs have made it less attractive to sell at local e-commerce sites such as Alibaba Group Holding Ltd is Tmall, analysts say.

In fact, Chiu no longer sells in China, Orolay's other markets are Europe , Japan, Taiwan and Australia.

"We sold Alibaba in the early days … but the competition in China is stiff," he said, adding that increased costs for using local websites also was a factor.

In addition to fees for using Chinese e-commerce sites, sellers also face other costs such as investing in customer service teams. Alibaba refused to answer questions from Reuters about whether the cost of suppliers had increased.

Analysts say that the number of Chinese salespeople selling on Amazon's US site began picking up over the past five years after introducing measures that allowed sellers worldwide to store products on Amazon stockpile and provided they deliver them to the customers.

Later last year, the retail giant also launched a program that refers to China-based sellers to local lenders. In comparison, Amazon offers loans to selected US, UK and Japanese based small businesses that sell on their site.

Chiu credits Amazon for much of the company's success but thinks of branching, saying dealership deals include invitations to sell online from Walmart Inc and the US shopping area Rue La La.

A Walmart spokeswoman said the firm had no agreement in place with Orolay. Rue La La did not respond to requests for comment.

Expansion plans include expanding Orolay's product line to cotton clothing and men's outerwear. But for now, Chiu is still curious about how his business has become so successful in a market he barely knows.

"I went to New York for vacation twice last year and was so excited to see that people on the street are" 19659022] "I was very eager to ask them how they like jackets but didn't do it because I do not speak much English. "

(Reporting by Pei Li in Jiaxing, China and Melissa Fares in New York; Writing and Additional Reporting by Brenda Goh in Shanghai; Editing Vanessa O & # 39; Connell and Edwina Gibbs)


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