Alibaba Group Holding Ltd (NYSE:BABA) announced today that it now has partnerships with 26 embassies and it will create more “country pavilions” in order to capture and grow the expanding Chinese market for foreign goods.
Alibaba‘s ambitions are less about expanding the global consumer base and more about bringing in foreign goods to the expanding Chinese market. They don’t necessarily want to have buyers in every country, rather, they would love to have seller s in every country, bringing every product from the around the world into the hands of the Chinese customer. This is due in part to the competitive market in the US and the local nature of Alibaba’s vision.
One way that Alibaba will grow demand for foreign goods and seller interest in the Chinese market, and for Alibaba to be the middleman through all of it, is to create “country pavilions”. Country Pavilions are pages dedicated to the products and culture of a specific country. This will allow consumers to buy goods, learn culture, and gather travel information on a certain country, all through Alibaba.
Alibaba has also seen the demand for foreign goods increase to a point where consumers cannot be simply looking for luxuries, there is real demand for goods not applicable only to an excess in income. According to Forbes, Jeff Zhang, the president of China retail marketplaces for Alibaba, stated that “China’s cross-border e-commerce is no longer just about purchasing luxury items…A lot of people buy daily necessities from overseas companies.” Thus, it may seem shortsighted for Alibaba to only focus on bringing in foreign goods, but in reality it is an opportunity for Alibaba to increase its control over the Chinese market.
Alibaba’s announcement came a day after it stated its intention to retreat from the US market. The company is dumping 11Main, the American website its started last year, and it displays problems in expanding into a global market run by Amazon and eBay. 11Main failed to garner loyalty from the company’s China headquarters due to merchant uneasiness with flagging sales.
Nonetheless, the embassy partnerships are a catalyst for Alibaba to use its ace in the hole, a huge interconnected group of Chinese buyers and sellers, while growing globally. And with the new country pavilions, Alibaba will seek to use the Chinese market to expand its reach and profitability.
Don’t be too late to the party – Click Here to see what 4500 Wall Street Analysts say about your stocks.