Shipping containers

Two things seem crazy about Tradesparq. The first thing is that it’s an Internet startup in China founded by two Americans. The second is that it thinks it can take on Chinese giant Alibaba and its business-to-business marketplace.

Tradesparq was founded in Shanghai in 2011 by Brian Hager and Michael Kleist, who started the company after leaving executive positions at Global Sources, an early Alibaba competitor. Hager and Kleist think Alibaba – whose B2B trading arm alone was valued at $6 billion when listed on the Hong Kong Stock Exchange – has an outdated approach and one glaring weakness: You can never really be sure who you’re trading with.

Tradesparq’s solution is to make B2B trading social. The founders pitch its as “LinkedIn meets Alibaba.com,” betting that it can become the “safest” place for global trade by building mutual trust between trade partners. Now the company has taken the trust element a step further: It has become the first B2B website to combine US Customs data with online social verification.

The customs data gives Tradesparq users access to exporter and importer names, shipment descriptions and dates, and where the shipments came from. Using that data, manufacturers, buyers, retailers, and other traders can see who their competitors are buying from, who they’re selling to, trends among their potential trading partners, and big-picture trends in the industry – for example, if DVD player shipments to the US fall dramatically, the data will make that pretty obvious.

Other sites, such as Panjiva and Import Genius, offer customs data, but they charge for it. Tradesparq is offering it free because it thinks it will benefit all players along the supply chain by adding transparency and therefore reducing risk.

Taking on Jack Ma and Alibaba in a space that the Chinese giant has dominated for the last decade would seem like a fool’s errand. Alibaba already has user trust, the sales pipeline, and the sheer numbers to stare down any upstart competitor. Between its three marketplaces – the English-language version alibaba.com, a China-focused domestic marketplace, and a wholesale platform called AliExpress – it claims more than 70 million users.

Hager and Kleist are aware of the magnitude of the challenge in taking on Jack Ma and his global juggernaut but think they have the B2B backgrounds and social nous to pull it off. “We like to go for big shit,” Hager says by way of wry understatement.

Tradesparq, which has 20 employees, raised $800,000 in seed money and is now looking to raise a Series A of between $3 million and $5 million. It plans to open an office in the US in the second quarter. In the last six months, Hager says, its traffic has picked up significantly, now sitting at 130,000 users. Last month, the site saw growth of greater than 50 percent.

Foreigners face many challenges in starting businesses in China – not the least of which are regulatory – but Hager says its important for the company to be operating from a country that is still the king of the supply chain. “We look at this as a China-out play, not a China-in play,” says Hager.

[Picture by Flickr user igb]