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Chinese firm behind the Amazon Coat jackpot in the US escapes China



JIAXING, China / NEW YORK (Reuters) – When Kevin Chiu left his job in 2012 to test his luck in launching online attire in a rural Chinese city, his main goal was to spend more time to spend his wife and newborn baby

Orolay's founder and executive director, Kevin Chiu, creates a picture during an interview with Reuters, a company in Jiaxing, Zhejiang, China on January 28, 2019. The puffer jacket would become a huge hit, celebrated as the "Amazon Coat" in American social and traditional media – and detained as a starting contender for the Canadian Husar brand premium.

Using a duck down from the provinces of Hebei and Anhui in China, polyester prices cost from $ 80 to $ 139. By contrast, the goose jackets in the US start at $ 575.

"We made more money in January, than for the whole 2017 year, "32-year-old Chiu told Reuters at his factory in the eastern Chinese city of Jiaxing.

He calculated that his firm had made $ 5 million in sales last month and expects that this year it will bring $ 30-40 million. US sales – almost all of which are sold through Amazon.com Inc. – account for 70% of total revenue.

The success of Orolay is not just a story about competitive prices, but a design that has benefited consumers in the United States.

Chiu is one of the waves of Chinese merchants who have benefited from Amazon's efforts in recent years that made it easy for foreign salespeople to sell on their site.

This has caused concern among US sellers on Amazon that they prevail. And in such industries as clothing, experts believe that retailers can not ignore the threat from the influx of small brands, many of which are based in China.

"This is the collective influence that occurs in the industry from all these brands. When you add them, they only take the market share," says Robert D'Lauren, executive director of Xcel Brands Inc., whose products are sold in Macy's Inc. and Amazon.com.

Amazon declined to comment on the idea that American firms are being undermined by Chinese traders using their site.

The number of Chinese merchants on Amazon continues to grow , because of rigid competition and growth It's less attractive for sale at local e-commerce sites such as Tmall from Alibaba Group Holding Ltd, analysts say.

Indeed, Chiu is no longer sold in China. Other markets for Orolay are Europe, Japan, Taiwan and Australia.

"We were selling to Alibaba in the first days … but competition in China is tighter," he said, adding that increasing the cost of using local sites is also a factor.

In addition to fees for the use of Chinese e-commerce sites, vendors also face other costs, such as investing in customer service teams. Alibaba has refused to answer Reuters questions about whether the costs for suppliers have increased.

Analysts argue that the number of Chinese traders who sold on Amazon began climbing over the past ninety years after it introduced measures that allowed sellers around the world to store products in Amazon warehouses and provided assistance with delivery of these goods to customers.

At the end of last year, the retail giant also launched a program that refers to Chinese vendors with local lenders. For comparison, Amazon offers loans to select small businesses in the US, UK and Japan that sell on their site.

Chiu lends to Amazon for most of the firm's success, but thinks about the branching, saying offers from retailers include an invitation to sell online with Walmart Inc and US Shopping Rue La La.

A Walmart spokeswoman said that the firm does not have an agreement with Orolay. Rue La La did not respond to comments requests.

Slideshow (3 images)

Expansion plans include the expansion of Orolay's range of cotton and clothing for men. But while Chiu is still wondering how his business has become so successful in the market he hardly knows.

"Last year I went on vacation twice to New York, and I was very happy that people on the street wear our jackets," he said.

"I really wanted to ask them how they like our jackets, but did not do it because I do not speak English."

Pey Li Reports in Jiaxing, China and Melissa Faarer in New York; Brenda Goh's Writing and Additional Reporting in Shanghai; Editing: Vanessa O & # 39; Connell & Edwin Gibbs

Our Standards: Principles of Trust to Thomson Reuters

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