Empowering SMEs Worldwide: The Alibaba Story

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Empowering SMEs WorldwideThe Alibaba Story

• Brian A. Wong
• Senior Director
• International Business Development and Marketing
• WSIS follow-up and implementation
• Action Line Facilitation meeting "E-business
• May 2008

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An Unlikely Story. . .
Tea House Hangzhou, China
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All About SMEs!

• Big SME market
• In China 42 million SMEs
• In Europe 23 million SMEs
• In US 22 million SMEs
• Critical to global economy and trade
• In China 58 of GDP, 68 of import and export
  volume, 75 of employment
• In Europe over 50 of GDP, 60 of employment,
  over 100 million jobs
• In US over 50 of GDP, 67 of export volume, 67
  of employment

SME means all employer firms, self-employment
nonincorporated and incorporated.
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The Importance of SMEs in Developing Countries

• SMEs are the driving force in many economies
• Engine for job creation
• Positive role in poverty alleviation
• Cover almost all (productive) sectors
• Are a main source for new products
• Diversify the economy and introduce flexibility

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Challenges in Developing Countries for Ecommerce
But are they fully utilizing the technological
tools available to prosper in the global economy?

• Few fully utilize Internet and e-commerce ICT
  not used in sales prospects or purchasing
  efficiencies.
• Lack of online payment logistics perceived
  difficulties in introducing online financing and
  payment, and customs collection and taxation
  applications.
• Lack of trust on demand side.
• Lack of awareness even among TPOs less than half
  TPOs canvassed indicated a specific e-trade
  component in their national export development
  strategies.

Source International Trade Centre
www.tradeforum.org/news/fullstory.php/aid/234/E-Tr
ade_Opportunities_Are_Developing_Countries_Ready_
.html UNCTAD Information Economy Report
2007-2008
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A New Gateway to Global Trade
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The advent of eMarketplaces has helped to address
many of these issues. . .
Challenges
Solutions
Lack of sales prospects or purchasing efficiencies. Online market research User forums/knowledge sharing Robust global online company database
Lack of online payment, logistics, etc. On-Offline partnerships (introducing relevant third party services in the export value chain)
Lack of trust Introducing trust building mechanisms (authentication and verification, inspection services, etc.)
Lack of awareness and limited TPO support Public-Private partnership (TPOs/TAs/IOs) to support e-commerce Education campaign s (e-business champion event etc.) and trainings to target SMEs directly
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E-Marketplaces The Alibaba Approach
. . . and Alibaba.com developed a particularly
unique (yet simple) model

• A Hangzhou Teahouse
• A marketplace provides the cups, tea and scenic
  surroundings to facilitate match-making between
  buyers and sellers
• Customers bring the products and ideas
• User generated content (Web 2.0)
• For members, by members, of members

Small is beautiful
Jack Ma Chairman of Alibaba.com
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Traditional Sourcing Work Flow
It addressed a key pain point for many buyers
around the world. . .
Average sourcing cycle 3.3 4.2 months
52 of time spent searching for/identifying appropriate suppliers 18 of time spent on RFQ development/ RFQ response 20 of time spent on screening/sorting proposals 10 of time spent on contract negotiations
Traditional Sources of Supplier Information Traditional Sources of Supplier Information
Referral (colleagues, associates) Trade shows Industry magazines, trade journals Industry associations Trade directories Existing suppliers
Source The Aberdeen Group
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eMarketplaces a Window of Opportunities for SMEs
. . . and in the process helped empower SME
suppliers all over the world
The eMarketplace Value Proposition

• Low entry barrier
• Reduce business costs and time, particularly
  search
• Streamline supply- and export-distribution chains
• Brand building using cost effective media

eMarketplaces empower SMEs to become global
players without the resources of a multi-national
corporation
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Aligned objectives within public-private
partnership
Alibabas objective is consistent with the UN
Millennium Development Goals (MDGs)

• Goal 8 Develop a Global Partnership for
  Development
• Target 18 In cooperation with the private
  sector, make available the benefits of new
  technologies, especially information and
  communications

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Alibabas Vision
Marketplace
?????????? To Make It Easy To Do Business Anywhere
Community
????????? To Be an Essential Partner to All
Businesspeople
Long Term Vision
???????? 102???? To Build a Company that Lasts
102 Years
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SMEs Spend More Marketing Dollars Online
Online Share of SME Marketing Budget
Growing SME Usage of Online B2B Marketplaces
MM
CAGR 45.0
Source iResearch
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Global network at your fingertips
A truly global network for importers and
exporters of raw materials, component parts and
finished goods
Manufacturers
Export
e-marketplace
Global Buyers
Trading agents
Manufacturers
Import
e-marketplace
Trading agents
Global Suppliers
Retail shops
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Worlds No.1 Online B2B Marketplace for
International Domestic Trade
Alibaba.com represents a phenomenon which is
changing the way SMEs around the world conduct
business
Sellers
Buyers

• International Marketplace
• 4.4 million registered users (1)

• Across more than 200 countries
• Companies of all sizes
• Diverse end markets

• Typically SMEs
• Ten to a few thousand employees
• 5,000 product categories in 30 industries

China Marketplace 23.2 million registered
users (1)

• Note
• Company data as of Dec 31, 2007

• Note
• Company data as of December 31, 2007

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A Premier Global Brand
In a Different League from Its Peers
Recognition by Global Thought Leaders
Best sites for global entrepreneurs

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Alibaba.coms International Marketplace

• With over 4.4 million registered members from 200
  countries regions, its truly a global
  community

EU 9
UK 6
India 8
China 7
Canada 3
US 18
South East Asia 13
Australia 3
Middle East 4
South America 3
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Integrated eCommerce Platform
Search
Taobao C2C B2C
Alibaba China - B2B
Shop
Overseas Buyers/Importers
Consumers
Alibaba International - B2B
Choose
Transact
Exporters
China Wholesalers
Retailers/ Power Sellers
Pay
China Wholesalers
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One Stop Services for SME Exporters
www.alibaba.com.cn (China Marketplace)
www.alibaba.com (International Marketplace)
Export to China
Export to Globe
SMEs
Export to Japan
New
www.alibaba.co.jp (Japan Marketplace)
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Alibaba.com partnerships
Alibaba.com cooperates with leading organizations
all over the world. . .
and is looking for more partners including
public-private partnership!
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Success Story Pakistan Seller
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With Alibaba, we are worldwide!"
Member Mr. Hammad Kanwal Company FASHIONS CARE
Type Manufacturer Size 11-50 people Country
Pakistan Products T-shirts, polo shirts, denim
jeans, cotton gloves

• Amazingly, I got orders within five days from
  Europe after joining! I was really surprised to
  see such quick results with Alibaba
• After joining TrustPass, I started getting about
  20 per week.
• Now, our customers cover from Italy, France,
  China, America, Ireland and Spain.

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Success Story Sellers(TrustPass members)
2014?1?13?6?11?
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80 of Our Business Comes From Alibaba!

• We have been associated with Alibaba for two
  years, and since that time we have had a
  significant amount of serious enquiries. There is
  not a single day that goes by when we don't get
  enquiries routed through Alibaba. Alibaba's
  service is also an invaluable source of
  commercial news that not only provides
  information but also forecasts the rising trends
  in the global market. Being a TRUSTPASS member
  has seriously added more credibility to our
  business and increased our number of
  fraud-prevented customer inquiries.
• As a TrustPass member from India, we are
  extremely happy with the services Alibaba
  provides. We received our first buyer form
  Alibaba and there have been many more since.
  Today, we receive 80 of our business through
  Alibaba and we believe that this will only
  increase in future.

Member Mr. Moola Ram Potalia Company TOWN AART
Country India
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Success Story Big Buyers
2014?1?13?6?11?
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Alibaba.com Holds Private Sourcing Event for
Woolworths Limited

• The Woolworths China Sourcing Event was a great
  success. It allowed the Woolworths sourcing team
  to meet many quality new suppliers. Alibaba was
  very professional in its preparation and
  management of the day, leveraging its extensive
  knowledge of quality suppliers to target the
  right companies to meet our long-term sourcing
  needs.

Woolworths Limited is the largest retailer in
Australia, serving customers across the nation
for over 80 years. Woolworths is one of
Australia's top companies by market
capitalization, with sales reaching A42.5
billion in the 2006/2007 financial year.
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Success Story SME Buyers
2014?1?13?6?11?
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"I have also posted buy leads attracting quick
and good quality responses from the suppliers."

• "I have discovered Alibaba.com at Ambiente 2004
  where the Alibaba team introduced me the company.
  I have since been using the website on a regular
  base (at least once per week) and I think it's a
  great sourcing tool.
• I find Alibaba very professional and easy to use.
  I searched and found many suppliers and I have
  also posted buy leads attracting quick and good
  quality responses from the suppliers."

Customer Mr Fernando Lomely Company Genesis
Ferran S.A. De C.V. Country Mexico
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• Roadshow video Im an Alibaba member! 2mins

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• 1/13/2014 611 PM

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Thank you! Brian_at_alibaba-inc.com