On Thursday November 28th, 2019, we held a presentation by an Alibaba official from Germany at a lecture hall at the University of Zurich. Prof. Dr. Xinhua Wittmann welcomed Michael Plagge, the Business Development Director at Alibaba Cloud Germany. He spoke to those in attendance about this fascinating Chinese company which aims to expand its operations in continental Europe.
Alibaba was founded back in 1999 by entrepreneur Jack Ma in an apartment in Hangzhou, China with a group of around 17 partners. Today, Alibaba Group employs around 100,000 people and has a valuation of around $460 billion (US dollars).
Alibaba is Big
Alibaba is a company that does…well, a lot of things which you cannot really compare to its American counterparts. Part eBay, part Amazon, part Google, part lots of other internet companies, Alibaba is a digital company that even provides financial services such as Alipay. But Alibaba is a platform more than anything else, where sellers and buyers come to meet and exchange goods and services.
During his talk, Plagge provided some interesting figures about China. 900 million internet users (out of a population of 1.4 billion), 400 million in the middle-class, which is expected to grow to 600 million within the next 3 years, 102 cities with more than 1 million in population – in 10 years that figure is expected to be 220. Which helps explain how Alibaba is now the world’s largest e-commerce operator with such a consumer base at its disposal.
Alibaba in China has a strategy of keeping its customers within their eco-system of online services as much as possible. For example, image search for products is a service that Alibaba provides its customers. Consumers can take a picture of a product they see out and about somewhere and search for it online and perhaps find it on offer on Alibaba’s platform. Plagge also said that Chinese consumers have a higher interest in the details of a product and how it is more than consumers anywhere else. This makes engaging consumers in China a more interesting prospect with lots of potential.
Perception vs. Reality
Plagge stated that Alibaba’s aim is to provide a seamless, wholistic integration of data on customers to give them as top-notch a service as possible. Something that Western companies are still unable to achieve with their consumer data stored in a silo configuration.
Plagge also spoke about perception vs. reality. The way Westerners see the Chinese population vis-à-vis how young Chinese people see themselves. The hint was that Westerners have an outdated notion of China which today has an economy fuelled by young professionals who see themselves as dynamic and modern.
The other perception vs. reality he spoke about is in terms of the trust of Western consumers. There is a reticence in the West to trust the goods and services of Chinese brands. But Plagge pointed out that data protection at Alibaba is superior to that of many American internet companies but that consumers in the West need to overcome those trust issues in order to engage the litany of connected services the Alibaba Group can potentially provide.
In terms of Switzerland, he also talked some about the issue of ‘Swissness’. Another obstacle for not only Alibaba, but even European and American companies looking to do business in Switzerland. The issue being that Swiss companies prefer to do business locally and with other business partners they are familiar with and trust.
Plagge also spoke of the challenges for Alibaba doing business in the West. Cultural differences as well as practical – language, time-zones, etc. But he closed his presentation by stating his belief that Alibaba can become a bridge between China and the West.