Which is the biggest ecommerce company in the world ? Take a guess. Amazon ? E Bay ? You would be wrong if you guessed either of them. The biggest e commerce company in the world is Alibaba. Its portals handled a sales volume of some $ 170 bn. That is more than the volumes handled by Amazon and E Bay combined.
No, this is not some elaborate hoax dreamed up from 1001 Nights. Alibaba is indeed the largest e commerce company in the world. The reason you may have never heard about it is that it operates almost exclusively in China. It started life as simply Alibaba.com , a business to business portal. It then added Taobao - a consumer to consumer portal, whose similarity to E Bay is, of course, entirely coincidental. Now it has started Tmall, a business to consumer portal, which again, bears a completely coincidental similarity to Amazon. All this in just fourteen years. The last two, if you click on the link, you will see are entirely in Chinese. And therein lies the issue. Can Alibaba really be a global major, while being largely only in China.
One of the trends you may have not noticed is that China has overtaken the US as the largest ecommerce market in the world. Chinese love to shop. And they are merrily shopping online. There is terrific internet penetration in China. And Alibaba, thanks to its visionary founder, Jack Ma, is reaping the rewards.
But then, can it be really the dominant player in the world ? I can't see shoppers of virtually any other country migrating to Taobao or TMall, even if it is in English. "Open Sesame" worked for the fictional Alibaba, but its hard to see the doors opening that easily for the real Alibaba. There is a huge brand image problem to be overcome, not just of Alibaba, but even of China. As Huawei and a clutch of Chinese companies have discovered, it is not easy going global.
Even in the home market, Alibaba's position will surely be under threat from competition. However big the Chinese market may grow into, its hard to see any company being the world's dominant major, being exclusively in China. As Britain discovered a century ago and the US is discovering now, the sun does set on everybody who thinks he alone can dominate the world.
What of the supposedly more tech savvy India. India does not even have a pipsqueak of an ecommerce company. Why ? The blame for that is squarely on Ramamritham. He has made internet connectivity one of the most difficult things in India to obtain. He has virtually made impossible an Internet Cafe industry. He does not allow easy payment systems to emerge. He goes after those who try, like Flipkart, and brings his full attention on them by lodging all sorts of cases. And he does not allow the global majors to come in.
And therein also lies the risk for Alibaba. Thus far, the Chinese
equivalent of Ramamritham , Li Xiao has left them alone. But then Li
Xiao is not a bureaucrat. Li Xiao is from the Party. Ramamritham is
completely predictable - he will create every obstacle possible, but do
nothing else. Li Xiao is entirely unpredictable. If Alibaba attracts
political attention, then its fate is sealed.That's probably why the wily Jack Ma is stepping down as CEO. And he is planning an IPO. An IPO that might even best the Facebook IPO.
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8 comments:
:) another gem of a news post frm thalai :))
adadaa, gils onnum thamizhified english-la comment pannalaye .... udambu sukamillayo? veyyil romba polukku gils oorila ... muahahahaha :)
Oh, am I supposed to comment on the original post too? hahaha
Ok, seriously, when I read Alibaba's "Tmall" I could only think of the Thamizh "damaal" sound ... hahahaha
Ok, really, seriously, it always amazes me how much India has managed to prosper despite the best efforts of the state and central governments to screw things up.
It is amazing that thirty years of Chinese growth hasn't made Chinese brands familiar to the world outside of China. Compared with how much the world is familiar with South Korean brands. Or, for that matter, prior to that with Japan ... I suppose the huge internal market that China has is that way a disadvantage, as opposed to the Korean and Japanese businesses that had to always look to the outside?
http://www.youtube.com/watch?v=S57Dv1wKo3c
All road towards China.
There are people who say Chinese companies can survive even without stepping out of china. Going global is a pain and challenge for everybody. Going to China is much more a bigger challenge :)
@Gilsu - As sriram says, we missed you much here. Minus your inspired comments, this space is very ordinary indeed.
@sriram - Much tickled by your Tamil. That you remember anything of it after decades of being away from it is very creditable.
China actually has an extremely insular culture. Has been so all through history. Because of their system of governance, their contact with the outside world is actually very curtailed - no international media, no foreign newspapers, no foreign TV, strictly limited foreign movies, no real global social media, etc etc. The real worry of such a system is that coupled with their undoubted economic power, such a culture can easily lead to nationalism and jingoism - there is every evidence that this is a huge issue already. That is probably why few Chinese global brands have emerged.
@Zeno - No zeno, I don;t think so. You can survive by being only in China, but I don't think you can rise or grow beyond a point. Its not only about size of a market. Its also about global talent, cultures, imbibing the best of different work cultures etc. Its also a fact that some countries and cultures are better at doing some things than others - for eg, innovation can simply not thrive in China, given the context there (China can copy iphones, but it is not likely that they will ever produce one).
So shutting yourself to the world is a very bad idea, I believe.
So true, but i think innovation might thrive :) cause it is the natural evolution. Din't even Japan started the same way in the earlier stages later on moved to innovation?
@Zeno - One big difference - Japan is a much "freer" society than China. You need freedom and chaos for creativity. Even Japan was constrained by the deference to authority and elders which is part of their culture. You need the freedom and cauldron on talent that America is for innovation to be really sustained.
I have lots of admiration for China and expect great things from that country. Innovation is not one of them.
It's amazing Ramesh the way u manage to hold our attention when the very same matter written in say a newspaper wouldn't have merited 2 secs[atleast mine;-D].
@Reflections. Awww. Thank U. Much honoured.
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