As Amazon-Walmart battle heats up, Alibaba lies in wait
Tuesday, August 29, 2017
If you asked the average resident of North America or Europe what the largest tech companies in the world are, you'd probably hear a list of familiar names: Apple, Microsoft, Amazon, Samsung, Google and so on. Those people would be exactly right.
However, outside of the West, there exists an economy of massive tech brands in modernizing China that largely aren't players in the highly-developed world. With China's massive population and sprawling metropolises, it's not too hard to imagine a future in which Chinese brands are topping the global earnings sheets.
As reminder of China's sheer amount of people power, China Telecom and China Unicom — two state-owned corporations in the Chinese internet sector — provide internet services to 1 of every 5 people on the planet with a broadband connection.
Those kind of staggering numbers mean that companies like Tencent, JD.com, Xiaomi and Huawei don't even have to make a dent in Western markets to be known tech players on a global scale.
Yet, Alibaba — perhaps the most well-known of China's huge tech companies due to its record-setting initial public offering on the New York Stock Exchange in 2014 — has its sights set on America in more ways than one. Alibaba operates in the e-commerce sector, handling business-to-business transactions between firms around the globe and marketplaces for consumers in the Chinese-speaking world.
Amazon is currently the biggest name in global e-commerce, and its competition with Walmart — the world's largest retailer — has epic, economy-changing potential. But Alibaba is stunningly close to Amazon in size, despite Amazon's incredible $300 billion increase in market capitalization since the start of 2015.
Alibaba has had a similar soaring value recently, going from $143 billion in September 2015 to a current market cap of $435 billion over the weekend of Aug. 25. Furthermore, Alibaba has recently become a stock market darling on the back of new Wall Street investment and massive earnings growth.
Alibaba, led by former school teacher Jack Ma, doesn't need outside help to continue its ascendancy. But the company might be getting it from the Chinese government, whose new cybersecurity law went into effect June 1 and will make it harder for foreign companies to do business in the country.
Meanwhile, Ma has the West in his sights after making friends with the new administration in America, including a January meeting with then-President-elect Donald Trump in New York in which Ma promised the creation of 1 million new jobs in the U.S. According to The Guardian's Benjamin Haas, that fulfilled promise "would decrease the number of unemployed workers by a staggering 14 percent."
That's a lofty target by any stretch of the imagination, and especially when Ma's business dealings in America are already coming under scrutiny. But Ma plans to achieve at least some of that job growth by helping small businesses and mom-and-pop shops to sell their goods globally on already-existing Alibaba platforms like the Amazon.com-esque Tmall.
In June, Ma held a conference in Detroit for hundreds of small businesses to tout the opportunity for American business owners to sell to a growing Chinese middle class.
Alibaba will likely never occupy the same retail space as Amazon or Walmart in the states. Yet, due to its ambition and potential in its home market, it very well could become a bigger global name — and soon.
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