Alibaba looks to Brazil for growth
Updated: 2014-09-22 04:34
By ZHANG FAN in Sao Paulo(China Daily Latin America)
AliExpress, Alibaba's online shopping website in Brazil with Portuguese version, has attracted 12 million visitors this July, three times larger than Ebay, and 2 million Brazilians have registered accounts of the website. Zhang Fan / China Daily
Alibaba, China's largest Internet-based e-commerce company, is planning to further explore its Brazilian market as a main way to enlarge its international customer group, founder and CEO Ma Yun said in a closed-door meeting with investors in Singapore on Sept 16.
Alibaba did not comment on Ma's words but the Wall Street Journal reported that Brazil, Russia and other Asian countries will be the next main focus of its global strategy.
The Hangzhou-based company just raised $21.8 billion in its IPO on the New York Stock Exchange on Sept 19, making it one of the most valuable companies in the US.
The company's stock traded as much as 46 percent higher than its initial public offering price of $68 and its worth reached $228.5 billion, more than Amazon, Ebay and Facebook, according to the NYSE.
Though Alibaba sent shock waves through New York and global stock markets, about 88 percent of Americans have never heard of the company. Its main competitors Amazon and Ebay invested $300 million and $50 million respectively last year on advertising, according to the Paris-based global communication group Havas.
Compared to the US, Brazil is proving to be a more welcoming market for the e-commerce giant. ComScore, an American Internet analytics company, recently released data showing that more than 12 million Brazilians visited Alibaba's online shopping website AliExpress in July, three times than that of Ebay, and an increase of 40 percent over June.
AliExpress entered the Brazilian market in 2007, offering a Portuguese-language version for the convenience of local customers. Chinese media reported that by the end of 2013, about 2 million Brazilians had registered an account on AliExpress. Insiders say that it is because Brazilian customers need to find cheaper products to ease the pressure of high commodity prices.
AliExpress allows Brazilian customers to buy products from China at a much lower price. A pair of men's Nike Air Max 90 tennis shoes sells for $52 on AliExpress, while the price at a shopping mall in Sao Paulo, Brazil's largest city, can reach about $168.
Brazil's Center of Studies on Information and Communication Technologies (CETIC) shows that 51percent of Brazilians aged above 10 are using the Internet, which means Brazil has 85.9 million netizens, ranking it in the top five in the world.
To enhance the shopping experience and shorten the shipping time, Alibaba partnered in July with Correios, Brazil's state-owned postal service company. The arrangement also allows Brazilian traders to sell their products through AliExpress and Tmall, a large Alibaba-owned retail website in China.
"Alibaba and the Brazilian post office Correio are big companies," said Gilmar Masiero, a professor with the Asian Studies program at the University of Sao Paulo. "Strategic alliances between big companies with a monopoly or at least a large share of the market are difficult to not deliver the planned results or intentions of their owners."
However, challenges still exist. Luis Antonio Paulino, a professor of politics and economics at Sao Paulo State University, said the Brazilian market is still relatively closed and the government is protective of local companies, along with logistics and labor costs, and Alibaba still needs to overcome these obstacles.
"Alibaba will have an influence on local online shopping websites but such competition is positive and will help to advance local companies," he said, adding that Brazilians are more confident in the quality of Chinese products and Alibaba enjoys a bright future in this country.