Alibaba is China's largest e-commerce platform.
In its latest earnings report, Alibaba disclosed having 636 million
annual active consumers on its China retail marketplaces.
As a point of reference, that's almost double the entire population of the United States.
But despite its enormous Chinese following, Alibaba is still not a
well-known brand to many Americans.
There isn't a lot of reason for Alibaba to go after the American
consumer because their market in China is just so much bigger.
And it's still growing.
When you think about how big the middle class is and how fast it's
growing, there's 300 million people in the middle class that Alibaba can target.
That's more of a market than they would have here in the U.S.
Alibaba first threw its hat into the U.S.
market in 2014, when it IPO'd at the New York Stock Exchange.
At the time, it was the largest U.S.-listed
initial public offering ever, raising $25 billion.
The IPO made Alibaba founder and chairman, Jack Ma, the richest man in China.
Shortly after its IPO, Alibaba tried to dip its toe into America's
consumer market through an e-commerce website called 11 Main.
The website was shut down just a year after it launched.
Alibaba's 11 Main shut down after only one year simply because it wasn't working.
They were coming into a mature market where Amazon and eBay have
dominated for years and they couldn't gain any traction with American consumers.
Alibaba now says that its strategy has never been to compete with the likes of Amazon and eBay.
And the focus has always been on the American business, not the American consumer.
As far as Alibaba is concerned, what we're doing here in the United States is to help American farmers
and small business to sell back into China.
To export to China.
So, for example, we're helping Ocean Spray cranberries and Washington State apples.
All those guys that are producing fruits and farming products selling
into China, on our Alibaba platform.
That's a business for us that we see there's a lot of potential.
And we continue to execute that strategy here in the United States.
Back in 2017, Jack Ma articulated this strategy to then president-elect Trump.
Jack Ma has been talking for some time about trying to help American
small businesses sell their goods on the Alibaba platform.
And they discussed that today and here's how the president-elect and Jack Ma described the meeting.
We had a great meeting.
It's jobs, you just saw what happened with Fiat.
Were they are going to build a massive plant in the United States, in
Michigan. And we're very happy and Jack and I are going to do some great things.
Small business, right?
We are going to focus on small business.
A few years ago, Jack Ma, Alibaba's founder, stood up beside President
Trump and said that he was gonna bring a million jobs in the US.
But I think that this number was widely misunderstood.
Alibaba was never going to hire a million people in the U.S.
These were indirect jobs.
Alibaba says that it wants to facilitate American businesses selling
their products to the Chinese markets, to Chinese consumers.
And these jobs were going to be indirect.
These companies, because they were growing in China, would be hiring
more, but they were always through American businesses.
But trade tensions between the U.S.
and China caused Ma to back out of the promise.
In September of 2018, Ma told Chinese news site, Xinhua, "the promise
was made on the premise of a friendly U.S.
China partnership and rational trade relations.
That premise no longer exists today.
So our promise cannot be fulfilled."
The comment came just a few days after Ma announced that he would be
stepping down from his role as chairman of Alibaba.
He did add however, that Alibaba would "not stop working hard to
contribute to the healthy development of China-U.S.
trade." So far, Alibaba has worked with a number of leading U.S.
brands to help them get a foothold in the Chinese market.
Starbucks has a Reserve Roastery store in Shanghai that offers
customers augmented reality experiences powered by Alibaba's Taobao app technology.
Other American brands like Guess, Nike and Urban Outfitters use
Alibaba's Tmall marketplace to sell their merchandise directly to Chinese consumers.
Smaller businesses, like Emily's Chocolates and Nuts in Seattle and
handbag company, Welden, in Connecticut have also signed on to use Alibaba's selling platforms.
But Alibaba has some tensions with the U.S.
government. It came under fire for having counterfeit goods on its
consumer-to-consumer site, Taobao.
The site was listed on the U.S.
government's list of global marketplaces known for counterfeit and
pirated goods two years in a row.
For someone living in the U.S.,
it may be hard to grasp just how influential Alibaba is in China.
Alibaba's reach today expands far beyond e-commerce.
The tech giant's realm now covers cloud computing, digital media and
entertainment and even logistics services.
Alibaba is also part owner of financial services company, Ant Financial.
Alibaba is interested in the U.S.
consumer, but it's far more interested in American businesses.
American businesses want to tap this humungous market over in China.
Middle class of 300 million people, so Alibaba is trying to
facilitate American businesses actually going into China, trying to
sell their products to the Chinese consumer.
Which is a very exciting proposition and very valuable, lucrative proposition for U.S. businesses.
But that doesn't mean that Alibaba will not try again.
Alibaba expanding into the U.S.
is a pretty long term-priority for the company.
I think in terms of their retail operations, there are much bigger
priorities, expanding into Southeast Asia.
They expanded in part through an acquisition of a company called
Lazada. And I think they're trying to build out that presence more
across India, Thailand, Indonesia the Philippines.
That's priority number one.
I think expanding into Western Europe and the U.S. is a 5-10 year put.