Video Case Alibaba and Global E-Commerce: Should Amazon Be Afraid? From rural farmers to…
Video Case Alibaba and Global E-Commerce: Should Amazon Be Afraid? From rural farmers to multimillionaires, millions of people in China are reaping economic opportunities from the growing never thought about my future or had any belief in it,” the e-commerce market. One entrepreneur earns $5 million in sales annually from his ladies' handbag e-commerce business-a far cry from his humble origins. Although his success might be the exception to the norm, many Chinese ceived of an online portal that could connect Chinese consumers with similar backgrounds have found jobs work manufacturers with buyers from other countries. He chose ing in e-commerce. “We grew up in a rural area which left us few choices. entrepreneur says. At the center of this is Alibaba, an online marketplace founded by entrepreneur Jack Ma in 1999. Jack Ma con- the name of Alibaba because it was globally recognized Chapter 3 Global Business 91 Another issue that Alibaba is coming across as it expands involves counterfeit products. In China counterfeit goods have traditionally been more accepted than in other based on the famous character in the collection Arabian Nights. Today this multibilion dollar firm has 500 million registered users. Its sales surpass those of eBay and Amazon combined. Alibaba runs a number of businesses countries. Its international e-commerce site AliExpress has that handle approximately 80 percent of all online shop ping in China. Unlike Amazon, it does not own is owr merchandise but acts as a portal to bring buyers and sellers together. gained widespread popularity in Russia, the United States, and Brazi, but its rise in popularity has been accompanied by a rise in counterfeit goods sold through the site. Regulators are worried that the site is allowing counterfeits This is just the beginning for Albaba. In 2014 it was listed on the U.S. stock exchange with an intial offering of $25 billion, the largest IPO to date. To emphasize its global intentions Alibaba opened offices in France, Germany, and Italy. It is also focused on selling more international brands such as Macy's, Apple, and L'Oreal. In its quest to expand into media, Alibaba entered into licensing agreement with Disney to sell a streaming device that will broadcast movies, television shows, e-books, games, and mone to go straight from Chinese manufacturers to consum- ers on a global scale. In fact, Kering SA-a French luxury group-filed a lawsuit against Alibaba accusing the firm of knowingly allowing the sale of counterfeit products. Alibaba denies the charges and is working with government bodies to improve counterfeiting controls. Despite the risks of investing in a firm that they cannot actually own, investors were eager to purchase shares during Albaba's initial public offering. China is overtaking the United Although it is listed on the U.S. stock exchange, investing States as the largest e-commerce market, and the opportuni in Albaba differs from the traditional model due to regulatory ties are too good for many investors to pass up. They believe and legal barriers. The Chinese government restricts foreign Alibaba has the potential for massive global growth as it is investment in certain areas, meaning that global investors outside of China cannot own shares of Alibaba outright. In reality, investors purchased shares of a shell corporation in the Cayman Islands. Alibaba itself owns all of its non-Chinese Questions assets. Jack Ma has the most power in the company, and some investors are concerned about his tendency to make large decisions or transfer ownership without consulting less capital intensive and therefore more flexible than global rivals such as Amazon.com.3 1. What are some of the barriers Alibaba is facing as it expands globally? 2. Why would the sale of counterfeit products through its sites be damaging to Alibaba? Apr 08 2022 02:05 PM
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