- 2018-10-29
Alibaba's global ambitions
Alibaba is a company, but it likes to think of itself as a country. Jack Ma, the founder of Alibaba and a former English teacher, can dance with long sleeves like a seasoned diplomat. At last year’s G20 summit in Hangzhou, Australia’s Malcolm Turnbull, Canada’s Justin Trudeau and Italian Prime Minister Mattei Matteo Renzi has successively become Jack Ma’s guests.
In January of this year, he became the first Chinese businessman to meet Donald Trump publicly after the U.S. election—a full month before the first phone call between the U.S. President and Chinese President Xi Jinping. After that, Jack Ma met with the leaders of Argentina, Australia, Israel, Malaysia and Pakistan.
Jack Ma's expectations of Alibaba are equally international. This e-commerce company with a market value of US$309 billion was born in Jack Ma’s apartment in Hangzhou. By 2036, he hopes that the overall sales of Alibaba's platform will exceed the gross domestic product (GDP) of the world's fifth-largest economy, behind only the United States, China, Japan, and the European Union (EU). Alibaba's goal is to have 2 billion users, which is equivalent to a quarter of the earth's population based on current figures.
To achieve these goals, he proposed some ideas that sounded more like politicians (rather than business leaders). In order to enhance Alibaba's key core technologies, he swore in March: "We will build Alibaba's "Nasa"." Nasa is the National Aeronautics and Space Administration of the United States and planned the moon landing.
In the context of stagnant global trade negotiations, he also announced that he will promote the establishment of a trading platform, hoping that the platform will become the World Trade Organization (WTO) for small and medium-sized enterprises. He said in April that in the next ten to twenty years, businessmen will be driving globalization. He called this plan "e-WTO".
However, although Alibaba’s various internationalization plans are dizzying, it has not yet established a foothold in the United States or Europe (Alibaba hopes to use its e-commerce platform to create 1 million jobs in the United States. To reverse its unfavorable situation in the United States). Alibaba faces fierce competition in China, and there is always speculation that it may encounter political backlash from Beijing.
Many Chinese companies have stumbled when trying to expand overseas. However, not many observers are willing to bet that Alibaba will not succeed. "If Globalization becomes pregnant and gives birth to twin brothers, then the two brothers will be called Jeff Bezos (Amazon founder) and Jack Ma." Michael of Tompkins, a supply chain consulting firm • Zakkour (Michael Zakkour) said, "The two of them are the perfect embodiment of Globalization 2.0."
In China, Alibaba's tentacles extend to almost every aspect of life: shopping, finance, chat, medical care, entertainment and news. In China, you can spend a whole month without cash. You can use your mobile phone to pay for coffee, clothes, and water, electricity, and gas bills. Alipay, Alibaba's online payment platform, is so popular that even some homeless people accept this payment method.
Alibaba accounts for one-tenth of China’s total retail sales, and it owns the country’s largest money market fund, Yu’e Bao, with assets under management of RMB 1.14 trillion. It was this company that drove eBay out of China, defeated Yahoo, and acquired all of Yahoo China's business in 2005.
Treasures of Alibaba:
1. Core business and logistics
The earliest platform Alibaba.com, together with Taobao, AliExpress, 1688.com, TMall.com and Tmall Global, is a "business-to-business" (B2B) sales And brand merchants provide a portal for consumer sales (just like Amazon in the West). Alibaba has also copied the functions of eBay. Juhuasuan provides flash sales for various products. Cainiao is a logistics business under Alibaba
Joe Tsai, executive vice chairman of Alibaba Group, described the group as a "large-scale creative incubator." The future vision includes the development of facial recognition payment and the launch of one-stop online medical services from consultation to pharmacies. Alibaba's M&A team has been looking for investment opportunities: it has invested in Snap and Lyft as well as in many start-ups.
Not all of Alibaba's businesses make money. The cloud business may be one of the largest new ventures under the group, but the business loses 8 cents for every dollar of revenue generated. Cainiao, a logistics platform that supports light asset e-commerce operations and delivers 57 million parcels a day, is also consuming a lot of cash. Alibaba Pictures warned of a loss of $140 million.
Alibaba is not worried about this. It uses its e-commerce business to fund new and fledgling businesses and build its own ecosystem.
This model seems to have worked: In the last fiscal year that ended at the end of March, Alibaba's revenue increased by 56% to 23 billion U.S. dollars, with a net profit of 6 billion U.S. dollars, and its profitability far exceeded Amazon.
2. Digital Media and Entertainment
The digital media sector includes YouTube-like video site Youku Tudou, streaming service Alibaba Music, and smart TV operating systems. Ali Pictures is a film and television company. In addition, there is Ali Sports, which is engaged in the promotion and marketing of sports events and e-sports across China
Outside of China, Alibaba's largest business branch is in Southeast Asia. Alibaba holds a controlling stake in Indonesia's e-commerce group Lazada, and together with its affiliate Ant Financial, it has invested in the Indian payment platform PayTM, which supports mobile payments.
However, outside this region, Alibaba's expansion has been relatively limited so far, and has been expanding its global presence through acquisitions.
"I am a little skeptical now," said a consultant engaged in this industry. "Alibaba has failed to enter Europe. Many Chinese companies are struggling after implementing expansion, especially in the United States." Alibaba's early attempts in the United States The water has failed. One year after the establishment of the fashion e-commerce platform 11 Main, it was sold by Alibaba in mid-2015. At least two investments — Tango for messaging and Quixey, the "deep link" search engine — have not gone well.
3. Local Service
This sector includes local business platform Koubei (Koubei) and online food delivery platform Ele.me (Ele.me). Last year, Alibaba changed its online travel portal to "Fliggy" to cater to more and more Chinese who want to travel abroad
Alibaba disagrees with these blunders. It said that the purpose of investing in these projects is to learn as much as possible, and there is no shortage of substantial financial benefits from them. Jet.com is a good example. The e-commerce website in which Alibaba once invested was acquired by Wal-Mart for US$3.3 billion last year.
Alibaba also uses more and more Chinese outbound travel to promote the growth of Alipay's international business. About 110,000 merchants overseas accept Alipay. It is also looking for new partners. Earlier this month, Alipay reached a cooperation agreement with First Data in the United States. In the future, 4.5 million US corporate users of this commercial technology provider will be able to choose to accept Alipay.
Richard Windsor of Radio Free Mobile, an independent research organization, said Alipay is a "Trojan horse" for Alibaba to enter the US market. If the above agreement is fully implemented, it will allow Alipay to enter 4 million US merchants at once, which is comparable to Apple's ApplePay. Souheil Badran, President of Alipay North America, said: "Our goal is to provide reliable payment services to more than 4 million Chinese consumers who visit North America each year."
However, Windsor warned that the expansion of service availability does not necessarily mean increased usage, because compared with other existing services in the United States, Alipay’s QR code payment system “has much room for improvement in terms of convenience and interesting user experience. ".
He wrote in a report to his customers: “The ordinary experience based on developed market standards is a huge improvement for China’s offline experience. This is how I think QR codes are very successful in China but in China. Reasons for the failure of developed markets."
4. Payment and financial services
Ant Financial is derived from Alipay. Alipay combines an online payment system and a digital wallet. Ant Financial includes wealth management, private banking, credit scoring and financial cloud computing services
Alibaba has also been controversial overseas. The U.S. Securities and Exchange Commission (SEC) conducted an investigation into its standards for calculating gross merchandise transactions (GMV). At the end of last year, Washington included Taobao on the blacklist of the "notorious market" on the grounds that counterfeit goods were sold on Taobao.com.
Although Alibaba has recently worked hard to clean up counterfeit goods on the platform website-it can be said to be a never-ending task-but Jack Ma had earlier sarcastically said that "fake goods are of better quality than genuine products, and the price is lower." Still let brand merchants and regulators worry about it.
Perhaps the most important step in Jack Ma's global chess game is the new global trading platform that Alibaba is developing. This "Electronic World Trade Platform" (eWTP) was announced last year and has all the classic characteristics of Alibaba: small businesses, Pratt & Whitney-and the initiative that Jack Ma took away from the government.
Regarding the Doha round of trade negotiations under the WTO framework that began in 2001, Jack Ma said in Malaysia in April that this round was too long and he felt sorry for the WTO people. Malaysia is the first overseas member of eWTP. eWTP will actually provide channels for cross-border trade: logistics, customs clearance management, and preferential tariffs.
5. Cloud computing, advertising and data management
Alibaba Cloud is China's largest public cloud computing provider, providing cloud infrastructure services similar to those provided by Amazon and Microsoft. Alimama (Alimama.com) is an advertising and data management platform.
Alibaba launched its ambitious plan for "borderless global trade" with a bilateral agreement that aims to facilitate the passage of goods shipped by small and medium-sized enterprises between China and Malaysia. The agreement will focus on infrastructure including an order fulfillment center and cooperation in electronic payments and financing. The two parties will establish a digital free trade zone in Malaysia through public-private cooperation. So far, it is still limited to logistics: preferential tariffs are still being negotiated.
It is reported that Alibaba is conducting negotiations aimed at turning Russia into the next hub, which will be even more challenging. Russia is one of the largest markets for AliExpress, an international business website under Alibaba.
Ma Yun's plan faces numerous obstacles, such as opposition to trade liberalization. But if this plan gains momentum, he will be able to prove that companies, not governments, are holding high the banner of globalization. In order to strengthen its presence in the United States, Alibaba has adopted a plan, hoping to win favor in the United States under Trump. The plan promises to allow cherry growers, clothing manufacturers, and even candlestick manufacturers to export to China through Alibaba's e-commerce platform, thereby creating 1 million American jobs.
For critics who denounce the promise of 1 million jobs as empty talk, Alibaba cited the example of China, claiming that it has created 33 million jobs in China in the past 15 years: each of its 10 million merchants on Taobao "at least "Create 3 jobs, including supporting services such as logistics.
However, Duncan Clark, a consultant based in Beijing who wrote a book on Alibaba, pointed out: “There are already various platforms in the United States for small and micro businesses to operate online.” Alibaba has more to compete. Platforms like art and handicraft websites Etsy, as well as larger eBay, Amazon, etc.
Others think that Alibaba has a chance to fight. "Three years ago, (Americans) didn't know about Alibaba. That's why listing is so important," another analyst said. "I bet that many American farmers watch CNBC, the financial news channel. They are all in the final analysis. businessman."
Ironically, perhaps it is the domestic imitators that pose the biggest challenge to Alibaba. Baidu and Tencent, which together form the three giants of China's Internet technology "BAT" with Alibaba, compete fiercely with them in almost all areas. Tencent has a 37% share of China's US$5.5 trillion payment market, while Alipay has 51%. Several giants have accumulated a large number of shares in areas such as car-hailing applications, food delivery, shared bicycles, and media applications, while the cost of Internet companies buying video streams and other content is soaring.
Clark stated that the desire to enter every field is "like in the next game of checkers, you can't miss any step."
Faced with all these challenges, Alibaba said that it was in awe that allowed it to maintain its leading position. The operators of Alibaba have neither government outlets nor engineering qualifications. Soon after the company was founded, it caught up with the bursting of the Internet bubble and gave birth to its core Taobao business when the SARS virus swept Hong Kong and southern China.
Or as Cai Chongxin said. He told investors in February this year: "We have always held a paranoid mentality. We think this is the hallmark of a great technology company."