Southeast Asian economies lure Alibaba

Southeast Asian economies are reaching a stage similar to China’s at the end of the last decade, when eCommerce began to take off, according to Alibaba Group executive vice-chairman Joseph Tsai.

“I don’t blame you guys for having some degree of excitement about Southeast Asia when you look at the economies here,” he has told a Singapore conference staged by Google and local sovereign wealth fund Temasek.

For example, he said, the per-capita GDP of Indonesia, the world’s fourth most-populous country, was about $2900. “That’s roughly the same as China’s per-capita GDP in 2009 and into 2010, a period when Alibaba’s C2C marketplace Taobao began to soar, adding about $50 billion in gross merchandise volume.”

This was one reason Alibaba had invested about $1 billion in Singapore-based Lazada Group last month. Launched in 2012, Lazada now has shopping websites in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. It began by selling inventory to customers from its own warehouses but now also runs marketplaces for third-party sellers, as well as using its own logistics networks for deliveries.

“We’re very excited about our investment in Lazada,” Tsai said. “It is starting from a very small base, but the potential is very, very big.”

By adding marketplaces in Southeast Asia, Alibaba can offer merchants already selling on its platforms a chance to sell into new markets. “It’s very, very helpful to be able to present something that is more of a geographically diverse platform,” Tsai said. Online healthcare and fintech companies such as Alibaba-affiliate Ant Financial, poised for rapid growth in China, could expand their services to Southeast Asia.

Tsai said he sees promise in the wide use of the mobile internet in Southeast Asia, a trend that typically gives rise to greater engagement and more purchases by online shoppers.