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Chinese internet behemoth Alibaba has revealed plans to significantly expand its presence in Australia, and will open its first local office in Melbourne later this year, as part of its long-term quest to connect two billion consumers with millions of merchants around the world.
The $US200 billion ($263 billion) company's global president Michael Evans described Australia as a "huge part" of the company's globalisation effort, and detailed a four-pronged strategy to build out its e-commerce, online payments, logistics and cloud-computing businesses in this country.
In a wide-ranging interview with The Australian Financial Review ahead of meetings with key suppliers, Mr Evans downplayed concerns over imminent changes to e-commerce regulations inside China that have spooked investors and hit share prices of ASX market darlings Bellamy's and Blackmores throughout the year. And the former senior Goldman Sachs banker dismissed fears about the health of the Chinese economy. "I think the Chinese economy is doing much better than most people think," he said. "There are lots and lots of challenges in China, particularly from a financial perspective. But I see those as manageable."
"China is one of the few bright spots in the global economy. People say it is growing slowly, I'm very happy with 6.7 per cent." E-commerce platforms Alibaba, which completed the biggest IPO in history in 2014, is best known for its e-commerce platforms, which are used by a number of Australian merchants including Bellamy's, Blackmores, Woolworths and Chemist Warehouse, to sell products to 423 million active buyers inside China.
Last November, Australia ranked as the fifth biggest selling country in the company's Singles Day promotion, the biggest online shopping event in the world, the company says.
Mr Evans revealed Alibaba's platforms are also used by a sizeable base of users inside Australia, who buy products from merchants offshore. "We connect with about half a million consumers here," he said. "They are actually not all Chinese speaking consumers".
However, Alibaba's tentacles span into myriad industries and Mr Evans said its presence in Australia would go beyond its core business.
"We are going to engage in e-commerce going both ways, export to foreign markets, import to Australia," he said. "Secondly, we are going to build our payments business [Alipay], for people who live here, and for people who visit here."
"Number three, we are going to build a cloud business and that is designed to service the smaller companies. And the final piece, which might turn out to be the most important piece ... is the logistics infrastructure."
China's changes Chinese authorities recently moved to impose tougher restrictions and higher taxes on certain imported goods sold via cross border e-commerce platforms. The regulators later backed down, delaying the new rules, which could involve changes to the registration and labelling of products, and the zones through which they are imported, until May next year.
Mr Evans said these changes simply reflected the evolution of China's economy towards domestic consumption. "China really wasn't a big import market ten years ago, but it's becoming bigger and bigger, so these are all important things for the government to focus on," he said. "I wouldn't even hazard a guess what they will do next May because I'm sure it will change 15 times between now and then."
Alibaba chief executive Jack Ma has declared ambitions to serve 2 billion consumers globally by 2036. Mr Evans said Australia would play a significant role in that process."Where does Australia fit into that? It's a huge part of quality products that these consumers want to buy," he said.
He said Alibaba, which already employs a handful of people in Australia, will expand its local workforce, and likely open additional offices as it builds out its operations. "We don't believe you can build a business here without people. Some of our competitors have tried," he said. " "We are going to have quite a large number of people working here in the next five to ten years. "
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