Alibaba’s chairman tells US businesses: ‘You can sell almost anything’ online in China
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Jack Ma, chairman of China’s dominant e-commerce company, says Alibaba can help U.S. businesses sell to the more than 500 million consumers expected to make up China’s middle class by 2025.
Alibaba Group doesn’t want to compete with Amazon.com Inc. for sales inside the United States—rather, the Chinese e-commerce giant wants to help small and medium-sized U.S. businesses sell online in China, Alibaba executive chairman Jack Ma said today in Chicago.
“We are the e-commerce enabler,” Ma says. “We do not buy and sell like Amazon because we think that SMB’s already know how to sell easily and effectively. We help others do e-commerce, find customers, help with payment and help with logistics.”
Ma is making a tour of the U.S., following a similar one to Europe last week, seeking to introduce a company that is mainly known in the West for its record-breaking $25 billion stock offering on the New York Stock Exchange in September.
Ma spoke today with Kenneth Chenault, CEO of American Express, at the Chicago Millennium Knickerbocker Hotel today. No partnership between American Express and Alibaba was announced, although Ma did say “[Alibaba] should leverage and work with global companies like American Express.”
Ma explained that Alibaba is already helping small U.S. businesses sell to China, and he emphasized the opportunity represented by China’s growing middle class, which he said will number more than 500 million by 2025, Ma said. In 2014, the value of purchases consumers and businesses made on Alibaba’s sites totaled $390 billion. And the 10 million mostly Chinese small and midsized business that sell on Alibaba’s marketplaces, particularly the Taobao and Tmall retail shopping portals, accounted for 95% of those transactions, Ma said. In the next five years, Ma predicts Alibaba’s transaction volume will reach $1 trillion. In 10 years, he hopes 40% of sales will come from businesses outside of China.
“[Alibaba] should leverage and work with global companies like American Express.”
“When you have 120 million people shopping on our site every day, you can sell almost anything,” he said.
Because China does not have the extensive bricks-and-mortar retail infrastructure of the United States, Chinese consumers rapidly moved to shopping online, Ma said. E-commerce is expected to make up 24.2% of Chinese total consumption by 2020, Alibaba says. As an example of the opportunities open to foreign companies, Ma pointed out that Chinese consumers bought 300,000 “German lake crabs” in one day last year on Alibaba’s site. Farmers from the Pacific Northwest sold 600 tons of cherries through Alibaba last year, after selling 180 tons in 2013, Ma wrote in a column published this week in the Wall Street Journal.
Ma said that Chinese consumers love American products, and that imports represent a big part of the continued growth of not just Alibaba but also China. His trip to the U.S. follows a recent visit to Europe, in the hopes of enticing foreign companies to sell on Alibaba sites. Ma said his goal is to and turn Alibaba into the largest import platform in the world.
“In the next 20 years, China will grow to be the largest importer country in the world,” Ma says. “But, Chinese resources like the water, soil and air could never support such a huge demand. I think if China keeps exporting we will never see the blue sky in China. We have to leverage global resources to serve the 1.3 billion people.”
While Ma downplayed suggestions Alibaba intends to compete with U.S. e-retailers, it has been investing in the United States. That includes taking stakes in Snapchat, a mobile image sharing app; TangoMe Inc., a video call app maker; Quixey Inc., a mobile search provider; and ride-hailing service Lyft Inc.
Last year, the company also launched 11Main.com, a shopping portal for boutique U.S. retailers.
Questions & Answers
Q.What is Alibaba's stated strategy regarding competition with companies like Amazon.com Inc. In the US?
What is Alibaba's stated strategy regarding competition with companies like Amazon.com Inc. In the US?
Alibaba Group does not intend to compete with Amazon.com Inc. For sales within the United States. Instead, the company wants to assist small and medium-sized US businesses in selling their products online in China.
Q.What proportion of Alibaba's transactions in 2014 came from small and midsized businesses?
What proportion of Alibaba's transactions in 2014 came from small and midsized businesses?
In 2014, the small and midsized businesses selling on Alibaba's marketplaces, primarily Taobao and Tmall, accounted for 95% of the total $390 billion in transactions.
Q.What is Jack Ma's long-term goal for Alibaba regarding international sales and imports?
What is Jack Ma's long-term goal for Alibaba regarding international sales and imports?
Jack Ma hopes that in ten years, 40% of Alibaba's sales will originate from businesses outside of China. He also aims to transform Alibaba into the world's largest import platform.
Q.Has Alibaba been investing in US-based companies, despite its stated strategy for the US market?
Has Alibaba been investing in US-based companies, despite its stated strategy for the US market?
Yes, Alibaba has been investing in the United States, taking stakes in companies such as Snapchat, TangoMe Inc., Quixey Inc., and Lyft Inc. The company also launched 11Main.com, a shopping portal for boutique US retailers, last year.
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