As people learn more about Alibaba Group, they want to know about its international plans. They are especially curious about the company’s strategy for the U.S. market.
Our U.S. strategy is simple and clear: We want to help U.S entrepreneurs, small business owners, and brands and companies of all sizes sell their goods to the growing Chinese consumer class. Chinese consumers will get to buy the American products they want. This, in turn, will help create American jobs and increase U.S. exports.
This week I am visiting the U.S. to meet with potential American partners to discuss how we can work together to make it easier to sell more of their products to Chinese consumers.
I feel most at home with entrepreneurs because a group of friends and I founded Alibaba Group 16 years ago believing that we could use technology to level the playing field, giving anyone who wanted to participate in global commerce a chance to succeed. We connect buyers with sellers, supplying aspiring entrepreneurs with everything they need to start, run and grow a business—including financing, payments, logistics, marketing, analytics and even cloud computing. Today there are about 10 million entrepreneurs running small businesses on Alibaba’s retail marketplaces in China, and our ecosystem has generated 14 million jobs.
Alibaba Group was founded in China but created for the world. We want to connect small businesses in the West with the largest, fastest-growing market in the East.
This strategy may come as a surprise to some, because many people view China through an outdated lens. The China of 2015 is virtually unrecognizable from the country a decade ago. While the first wave of globalization created a large working class in China, the next wave of growth has created a thriving middle class. Today China’s middle class is equal in size to the entire U.S. population and is expected to double within seven years. This is an enormous number of new consumers with plenty of disposable income. How they spend it is important for America’s small businesses.
It is important to remember that in China we don’t have the extensive bricks-and-mortar retail infrastructure common in the U.S. There are no national retail chains to speak of, and just over two shopping malls per million people—around one-tenth the rate in America. With the widespread availability of Internet access and online marketplaces, like those provided by Alibaba, Chinese consumers have leapfrogged the in-person shopping experience and are shopping online in big numbers.
Chinese consumers spent $440 billion online in 2014, and sales are expected to rise to $1 trillion by 2019. Online retail is expected to grow at triple the rate of overall retail, with half of sales coming from third-tier cities and smaller. Alibaba has more than 350 million annual active buyers on its ecosystem; in March there were 94 million monthly active users on its mobile platforms. Our smart-logistics network operates more than 1,800 distribution centers and handles over 30 million packages a day. Last year on Nov. 11, China’s largest annual shopping day, we processed 278 million packages.
Middle-class Chinese are eager to buy goods from abroad. Cross-border purchases by China’s online shoppers have grown tenfold since 2010, from less than $2 billion to more than $20 billion in 2014. And the market includes more than imported luxury apparel and accessories. Chinese consumers shop online for high-quality goods of all kinds, including fresh food, baby products and cosmetics—and they want these products from places like the U.S. and Europe. They buy seafood from Alaska, pork from Iowa, children’s toys from Rhode Island and sports gear from Oregon and Maryland.
We’ve already seen some early cross-border successes. I am especially proud of our work with American farmers. In 2013, for example, farmers in the Pacific Northwest sold 180 tons of cherries to China via Alibaba’s platform. It set off a cherry frenzy in China, and sales in 2014 more than tripled, to 600 tons. This success can be replicated for other everyday purchases.
Together, we have a great deal of work to do. This won’t be easy and it will require us to continue to take on many tough issues, including counterfeiting of goods. But we are committed to opening the Chinese market to U.S. businesses. I believe in the power of e-commerce to truly level the global playing field, making it possible for the smallest of businesses to reach consumers wherever they may be.
I admire America’s entrepreneurs, who are strong role models for the world. While as a person I am 100% made in China, I feel a great kinship with the United States. I first discovered the Internet while on a trip to Seattle and learned to speak English from American tourists who were visiting China. Those tourists came to China only because of President Richard Nixon’s historic trip to Hangzhou, my hometown and Alibaba’s headquarters.
I’m excited to visit the U.S. this week and, more important, to continue to work with American small businesses and companies of all sizes. Together we can fuel growth on both sides of the Pacific.