Alibaba targets global expansion
Alibaba, the largest business-to-business e-commerce site in China, plans to go global in the next few years.
The unlisted Hangzhou-based company had raised its sights since its US$1 billion merger with Yahoo China in October last year, said Porter Erisman, vice-president of international marketing and business development. 'We plan to expand to India, Southeast Asia, even Europe,' he said.
Companies in India and Southeast Asia 'have found Alibaba's B2B service useful. Even at this moment, we have Indian companies as members', Mr Erisman said.
Alibaba's popularity among Chinese companies has grown steadily since former English teacher Jack Ma, the chief executive, founded it in 1999.
Its Chinese-language site, which is exclusively for domestic trade, has 13 million members. Its international site, which is in English and focused on import-export dealings, has 2.3 million members in 200 countries.
To assist its global expansion, Alibaba planned to triple the size of its overseas staff within a year or two, Mr Erisman said. The firm employs about 4,300 people, including 40 in Hong Kong and 10 in foreign centres.
Moreover, Alibaba is looking for local partners to assist its operations overseas. Publishers of trade magazines could be a good fit.
'They have close relationships with local small and medium-sized companies. Also, as their traditional publishing business is shrinking, they would be eager to partner with us and grow their online business,' Mr Erisman said.
He added that acquisitions also were possible as part of the global expansion plan, although neither a time frame nor a budgetary allocation had been set. Alibaba had more than US$250 million of cash on hand, said Mr Ma.
Of the US$1 billion that Yahoo paid for its 40 per cent stake in Alibaba, US$750 million was used to buy back shares from earlier venture capital investors, company managers and employees, he said.
'We are already profitable. The B2B site contributes 70 per cent to 80 per cent of Alibaba's revenue and covers all of its costs,' Mr Ma said.
Alibaba collected more than US$100 million in revenue last year and expected to make more than US$200 million this year, Mr Erisman said. Much of the revenue comes from subscription services on its B2B site.
On the international site, 16,000 members are paying US$5,000 to US$10,000 a year each to be 'gold suppliers', certified by a third-party credit agent. Another 8,000 members pay US$589 a year each for a lesser form of certification known as Trustpass.
On its China site, 100,000 members pay US$300 per year for the Trustpass.
Besides the B2B site, Alibaba runs Taobao, the largest online auction site in China.
