Chinese e-commerce giant Alibaba is eyeing business opportunities in Australia following a freshly inked free trade agreement with China. The company is launching a new e-commerce platform as well as Alipay, one of the country’s most popular payment systems with more than 300 million registered users.
Alibaba has a cult following among international investors after its $US25 billion float on the New York Stock Exchange in September, making its IPO one of the largest in history.
The cashed up internet giant is eyeing expansion opportunities both at home as well as abroad. Sabrina Peng, a board member of Alibaba and the head of Alipay International explained the company’s global strategy in an interview with Business Spectator.
“We have a very clear strategy, we want to focus on cross-border trades and leverage our huge user base in China. We have 300 million registered users, representing the country’s enormous purchasing power. This is a resource that every international seller craves,” she said in an exclusive interview before the launch of the new platform.
Apart from Alibaba’s 300 million strong registered users, the company is also home to some of the country’s most popular e-shopping platforms such as Taobao and T-Mall. “Australian, European as well as American businesses all want to use our platforms to access the Chinese consumer market,” she said.
Transactions on its online sites totalled $US248bn last year, more than those of eBay and Amazon.com combined. Alipay, a related company to the listed Alibaba but a privately controlled entity, processed $US9.8bn worth of merchandise on the so-called Singles Day on November 11.
Peng, who is one of the most senior executives at the company, speaks highly of Australia as a potential supplier to the booming Chinese e-commerce market.
“Australia is endowed with so many resources. The country has excellent agricultural products as well as cosmetics and they are very popular in China.
“Many small and medium-sized enterprises in Australia don’t have good access to sales channels in China,” she said.
The newly signed free trade deal would further boost Alibaba’s business in Australia.
“I am so thrilled to hear the news about the signing of the Australia-China free trade agreement. It will help our business without a shred of doubt. The new policy setting is great for SMEs, where our focus is,” she said.
The company is keen to promote its popular payment system outside of China, which already has millions of users from Russia to Brazil. “Though we have tens of millions of international users on the Alipay system, unfortunately they are not even aware of our brand and services,” Peng said.
Alipay is signing up global partners from Korean conglomerates like Lotto to high-end American department stores like Macy’s, Bloomingdales, and Saks Fifth Avenue to access the booming Chinese consumer market.
One of the key target areas for Alipay’s international push are countries and regions with low levels of credit card use.
“In developed markets like the US and Europe where credit cards are widely used, payment systems are not really a problem,” she told Business Spectator, “But in places like south-east Asia, or BRIC countries, where bank cards are not common, there is real need to turn people’s cash into a reliable and secure payment system.”
While Alibaba is expanding its footprint globally, it is also eyeing opportunities at home -- especially in the country’s vast hinterland, where close to half of the country’s 1.3 billion people live.
Alibaba’s research shows that e-commerce is growing fast in China. The company estimates the size of the rural market could be 180 billion yuan in 2014, almost tripling it to 460 billion yuan in 2016. Rural consumption accounts for almost 10 per cent of Alibaba’s online sales.
“That is why we are pushing into rural China to serve these people,” she said. “What is interesting about rural China is that it has skipped the PC stage in favour of the mobile revolution. Though many of them don’t have computers, nearly all of them have smartphones.”