Alibaba struggles with its US branding ahead of IPO

Mainland firm could have made dramatic entry into American market with bid for LA Clippers

PUBLISHED : Monday, 16 June, 2014, 3:07am
UPDATED : Monday, 16 June, 2014, 3:07am

Alibaba missed a perfect opportunity last week to dramatically define its brand and be part of US culture. While many consumers in Chinese and Asian e-commerce have heard about Alibaba and Jack Ma Yun's global ambitions, few average Americans know or care about it.

Few technologists respect it as anything more than a big logistics company with a website. Most US consumers find it is inaccessible and intimidating due to a high level of counterfeit goods, substandard products and poor service. A gigantic Chinese e-commerce company actually means little to Americans.

Two surprising and separate deals occurred recently in the intersection of the internet and sporting worlds. They showed how out of touch Alibaba is with its place in the internet world outside China. Ma announced on June 4 that Alibaba had acquired a 50 per cent stake in Guangzhou Evergrande FC, one of China's most prominent soccer teams. The deal's value was not disclosed but it is reportedly worth 1.2 billion yuan (HK$1.49 billion).

In the same week, Steve Ballmer, the former chief executive of Microsoft Corp, made a bold US$2 billion bid for the NBA franchise of the Los Angeles Clippers, which is being sold by Donald Sterling.

A gigantic Chinese e-commerce company ... means little to Americans

Buying Guangzhou Evergrande makes Alibaba look parochial and thoroughly provincial. The news was barely noticed outside China. That its founder cannot envision or elaborate his company's place in America gives Americans the impression that Ma is just another mainland Chinese businessman who knows little about America.

Alibaba should outbid Ballmer for the Clippers. The acquisition would represent far more than an investment in a sports team. Nothing else announces your entry as a key part of American society than being the owner of a professional sports franchise.

Ma would join the swaggering ranks of other technology titans and team owners like Mark Cuban (Dallas Mavericks), Charles Wang (New York Islanders) and Paul Allen (Portland Trailblazers and Seattle Seahawks).

And as part of what would be an exciting bid, Ma should offer Magic Johnson a role as partner, president and general manager. Imagine the tremendous coverage surrounding the Alibaba brand at Staples Centre when it is seen by millions of basketball fans during every regular season and playoff broadcast.

Don't forget Americans faced the same "resistance is futile" attitude with the Japanese invasion of the 1980s. But, if Alibaba can win their hearts and minds, it will successfully evolve into an American institution.

Alibaba's culture is simply too Chinese, too autocratic and too consumed with revenues, profits and global domination to question, value and define something as difficult to measure as brand.

Nothing enhances a company's brand in the US more dramatically than owning an NBA franchise.

Alibaba needs to understand America before it can dominate US and global e-commerce. Outside Wall Street, many Americans cannot comprehend why Alibaba matters more to their daily lives than Amazon and eBay.

US consumers are far more sophisticated, discerning and militant than emerging Chinese customers. Besides having no significant operational presence in the US, Alibaba does not appear to be the kind of consumer-facing organisation that effectively and warmly engages Americans at a cultural level.

So far, Alibaba's series of investments in US companies appears to be difficult to understand when compared to Facebook or Google which outright acquire companies or create vibrant, revolutionary products such as Google Glass eyewear.

However, taking over the Clippers is clearly feasible and would radically enhance, define and amplify Alibaba's brand to customers, who would have to take notice.

It would unveil a new and unique narrative for the Alibaba story that would engage and connect with American and international consumers on multiple levels. By signalling that it wants to be a core and relevant part of the American sports experience, Alibaba would become a genuine part of the consumer culture.

A brand represents a promise of something. After finalising its record-setting initial public offering, Alibaba needs to engage US consumers with its brand values. But first, it needs to tell Americans what it offers to benefit their lives.

Peter Guy is a financial writer and former international banker