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Alibaba sees bigger potential for e-commerce in ASEAN

By Yang Jie ( Updated: 2014-09-16 21:46

Cross-border e-commerce is more likely to experience fast and explosive growth in ASEAN countries than in US or Europe, according to Jack Ma, chairman of the Alibaba Board of Directors.

The US and European countries have a mature IT infrastructure and a well-established business environment, which make them more difficult to adapt to new technologies in e-commerce or the Internet, said Ma in a video speech at the opening ceremony of the 2014 China-ASEAN E-commerce Summit on Tuesday.

In comparison, the relatively underdeveloped economic block of ASEAN, which boasts a huge consumer market and a large number of small and medium-sized enterprises in the absence of large monopolistic companies, is more agile to accept new things and has a bigger potential for the future growth of the e-commerce industry, because it doesn't have to overturn an old successful business model before embracing a new one, continued Ma, who was in US when making the remarks.

With a total population of 618 million, the aggregate GDP of ASEAN, the 10-member association of Southeast Asian nations, stands above $2 trillion.

Jack Ma is not alone in observing the big potential for future e-commerce growth in ASEAN. Investment companies such as Beijing-based Well Trend United Consulting Inc have reported that Alibaba's preference of ASEAN over US and Europe would not harm it's stock price when its shares begin trading on Friday at the New York Stock Exchange after its IPO on Thursday.

"Investors care more about the profitability of a company instead of where the company plans to do its business," said Jing Ji, a senior investment consultant with Well Trend United Consulting. "The discovery of new growth point can actually boost the stock price of publicly listed companies."

While online retail accounts for 10 percent of total retails in China, the figure is less than 1 percent in many ASEAN members, which means the revenue can easily rise by 10 times if our ratio just levels with that of China, said Marcelo Wesseler, CEO of Singapore-based SP eCommerce Pte Ltd, a member of the Singapore Post Group of Companies.

Alibaba announced in May that the company would invest around $250 million in Singapore Post to jointly develop an advanced logistics network across ASEAN for the better development of the e-commerce industry.

Alibaba's commitment to the e-commerce of ASEAN goes far beyond a single investment. Under cooperation with the local government in Nanning, in Guangxi Zhuang autonomous region in Southwest China, the Chinese e-commerce leader started construction of the Alibaba Nanning Industrial Belt in 2013, aiming to boost the development of cross-border e-commerce between China and ASEAN.

With the launch of the e-commerce website of the industrial belt in July, Chinese retailers are now able to sell their products to consumers in ASEAN members and the work for ASEAN retailers to sell to Chinese consumers is also in progress.

ASEAN welcomes more cooperation with China. A big advantage for ASEAN to grow its e-commerce industry is that it's very close to a big neighbor, China, from whom ASEAN members can learn a lot. "I think we can probably leap-frog some of the steps other countries have to go through (by learning from China), " Wesseler said.

The geographic vicinity of China and ASEAN can also bring bilateral e-commerce cooperation with more tangible benefits, like logistic convenience. "We already have a lot of shipments from Shenzhen,South China into Southeast Asia because it's very fast, and there are many flights every day from Shenzhen to Singapore and other Southeast Asian countries," explained Wesseler."It's much easier than shipping from other parts of the world.", a B2B e-commerce website specializing in trade with Vietnam, has achieved preliminary success after it was launched in December 2012 by simultaneously establishing two websites in two countries updating commercial information about one another.

"We are planning to copy the Vietnam model in other ASEAN members," said Lu Xianghong, CEO of VCCN. "Our next step is thinking about Indonesia, which has a large online population."

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