Ever heard of Taobao? No, how about Tmall? Still no? How about Alibaba.com?
Still drawing a blank?! It’s okay, Alibaba, Tmall, and Taobao are massive in China not in the UK or the USA – well not just yet anyway – but these retail sites could be the next big thing in the West when Alibaba debuts on the US Stock Market next week. It’s only $5 billion away from overtaking Walmart in valuation as the World’s largest retail business.
Alibaba.com, Taobao, and Tmall are all owned by the Alibaba group which is chaired by the cheery Jack Ma. Through the invention of Alibaba.com, Ma addressed a growing need within China for businesses to find suppliers easily. While China became an international exporting giant, Ma and his group started to realize that maybe with the booming economy there would be the market for online retail platforms for both consumers and businesses alike.
Taobao is designed for consumers, it is similar to eBay in that people can set up their own shops online to sell their handicrafts and products to other consumers.
It surprisingly has provided an excellent opportunity in rural villages to build local economies. “Taobao village” is now a term used to describe rural villages where 10% of the population use Taobao to earn a living. There is even a Taobao University set up in a rural town in the southern province of Guangdong, so citizens can come to learn how to sell their products online. In Junpu, the local government has set up free wireless internet for residents to enable the local economy to thrive through Taobao.
Tmall is also transforming how China’s citizens shop. Where citizens in rural areas or less developed towns would travel to other towns to find brands not available at a local level, Tmall boasts brands such as Adidas and Nike in its inventory, giving consumers the opportunity to buy western brands easily.
It is predicted by 2020, the Chinese e-commerce market will be worth more than the current markets in the UK, the USA, Germany, France and Japan combined. That’s a big market for Alibaba so it’s no surprise that currently Alibaba is bigger than eBay and Amazon combined. On the subject of the Chinese government, Ma has made a point of not joining or doing business with any state-controlled companies but still appeases the government to avoid bankruptcy for his businesses and clients. It has been remarked that it’s so strange to have such contrasting views of China being parallel to each other. On one side, China’s citizens are enjoying the enormous freedom of unlimited consumerism through Alibaba but on the other are living sheltered lives through censorship and state-controlled media.
When Alibaba finally makes its debut in the US stock market, a lot of interested people will be watching. While Alibaba.com is accessible to the Western market, Taobao and Tmall are still only in China. Not that it needs a western market anyway; it dominates the Chinese ecommerce market already. 60% of all deliveries in China are made through Alibaba.
Ma has done something that others have failed to do which is to get the Chinese government on side without actually allowing them to have direct control. While you can condemn China for its authoritarian state, you can’t condemn their rapid economic growth which has allowed many innovative entrepreneurs to have a platform. If Alibaba makes a reasonable global debut, we could actually see some innovation and competition in the stale Western market.