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One Belt One Road

Map of One Belt One Road. Source: Chinainvestmentresearch.org

HSBC’s Asia Pacific Chief Executive, Peter WongTung-shun has stated that the ‘One Belt One Road’ trade initiative will require the banking sector in the region to raise up to US$6 trillion of funding over the next 15 years. This is because no single government is able to raise a large sum of money without help from the banking sector.

The ‘One Belt One Road’ project was announced in Beijing in 2013, and aims to establish linkage between mainland China to India, the Middle East and Southeast Asia to promote cross-border trade.

The project leads have already visited Thailand and Malaysia in May to explore opportunities, and plans to visit Indonesia and Singapore next month to analyze the market potential there. The aim of the project is to serve governments, international firms and SMEs and boost logistics for these businesses. The new infrastructure should also provide trade linkages between the countries, which could then lead to the internationalization of the yuan currency.

One Belt One Road Ecommerce Potential

Alibaba founder, Jack Ma has expressed his interest in following the One Belt One Road initiative announcing that the most important regions for his company were countries involved. This aligns with Ma’s aspirations for SMEs to have access to global markets, but are held back by complex regulations, poor global access and lack of access to financing.

The potential for an inter-connected e-road will boost SMEs and potentially fix one of Southeast Asia’s biggest ecommerce bottlenecks; logistics and infrastructure weaknesses. Countries in the One Belt One Road path have large populations, but they are not utilizing their trade potential, and Ma has slowly been penetrating needy markets such as Thailand, investing in online payments and acquiring Lazada. If One Belt One Road receives the funding it requires to fully enable trade along the regions, then it could create even more opportunities for The Alibaba Group, ultimately enabling ecommerce as a whole.

A version of this appeared in South China Morning Post on June 19. Read the full article here.

Southeast Asia fintech opportunity

Source : Bidness etc

Alibaba Group Holding Ltd.’s financial affiliate is planning to purchase a 20 percent stake in Thailand’s Ascend Money in a bid to seize Southeast Asia fintech opportunity. Investment in fintech startups in Asia reached US$797 million in 2014.

An investment into Ascend Money, parent of True Money and Ascend Nano, would help Ant Financial expand its online payments and small loans business in Southeast Asia.

Ant Financial, which is said to be valued at about $60 billion, is following billionaire Ma’s aspirations for global expansion. The Ascend Nano unit is a microfinance and personal loans provider with staff throughout Southeast Asia. True Money provides cash cards and electronic wallets, and holds financial-services licenses in key Southeast Asian markets. The division’s goal is to spread ecommerce and electronic payments services to places where many users lack bank accounts such as Myanmar and Indonesia. This could pave the way for Alipay to dominate Southeast Asia’s payment problem.

A version of this appeared in Bloomberg on June 18. Read the full article here.

alibaba-sec-probe

Source: Bloomberg, June 2016

Due to the Alibaba SEC probe, Alibaba shares have dropped 6.4 percent to $75.92 since May 25 when the company said that the SEC is looking at data reported from the company’s Singles’ Day promotion, Alibaba’s biggest shopping day, and how the company consolidates results from affiliates, including logistics partner Cainiao Network.

Prominent short sellers including Jim Chanos and John Hempton have been red-flagging Alibaba for months, suggesting that its growth figures might be too good to be true. Bearish bets spiked in the past two weeks after the company disclosed a regulatory probe of its Chinese delivery unit and SoftBank Group Corp. disclosed plans to sell a $10 billion stake. The Alibaba SEC probe is worrying.

“If the SEC was to find Alibaba’s accounting isn’t proper and Alibaba has to restate its results, that’ll be very detrimental. Because Alibaba’s so high profile, it will cast an even greater shadow of Chinese companies listed in U.S,” said Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles.

While SoftBank’s divestment comes as part of a broader strategy to find new investments in startups and strengthen its debt-heavy balance sheet, the move can be unsettling to investors as the Japanese technology giant first bought into the company 16 years ago, said Henry Guo, a New York-based analyst at M Science.

Alibaba, which claimed more than 75 percent of the e-commerce market share in China last year, made history with a record $25 billion initial public offering in September 2014. Traders in New York clamored for the stock, which was priced at $68 a share, as a way to tap into the potential profits available from the country’s growing middle class.

 

Read full story on Bloomberg by Elena Popina and Bonnie Cao, here

Nestle brand commerce strategy with Alibaba

The Swiss company yesterday kicked off the six-month campaign by launching 67 products on Tmall.com, Alibaba’s leading B2C online-shopping site, that have never been available in China before, including Nido milk powder from the Netherlands, Nestlé Damak chocolate from Turkey, Nescafé Gold from France, and Nestlé and Wyeth infant nutrition products from Switzerland, the U.K. and Germany. The three-day Super Brand Day promotion features discounts on a total of 154 products from 30 Nestlé brands.

Other marketing activities Nestlé has planned in the months ahead will showcase its brands to Chinese customers countrywide via what Alibaba calls its “ecommerce media ecosystem,” a growing digital marketing network encompassing social, mobile and web-based media outlets.

Nestle Brand Commerce Strategy With Alibaba is Aggressive

For example, Nestlé marketing will be featured prominently on popular video programs on Alibaba Group’s Youku Tudou video streaming site, one of China’s top online video platforms. The campaign includes a Nestlé video that can be viewed on virtual reality headsets, marking the first time Youku Tudou has worked with a brand partner on a virtual reality campaign in China. Starting in August, Nestlé also plans to feature its products on Alibaba’s Tmall Country Pavilions.

Alibaba Group CEO Daniel Zhang said his company is combining digital media with data on consumer behavior to enable multinationals like Nestlé to undergo a “digital transformation,” building their brands and managing customer relationships in innovative new ways. “We will continue to expand on our partnerships and infrastructure to deliver access to the widest selection of the best products from around the world to consumers,” Zhang said in a statement, “whether they live in Beijing or a rural village in the farthest edges of the country.”

Nestlé is basing its upcoming China campaign on its 150thanniversary. The company launched its first Tmall virtual store in 2008 and has 14 flagship outlets on the platform.

Faced with disappointing growth in China recently, Nestlé is focusing on ecommerce to help jumpstart sales, according to aBloomberg story. Nestlé’s ecommerce business is growing at triple-digit rates in China and is more profitable than sales in physical stores, according to Bloomberg.

Read the full story on the Alizila blog, written by Jim Erickson.

Alibaba hosted intellectual property event

Alibaba has been in hot water over counterfeit controversy. Source: johnib.wordpress

Alibaba held an “Inaugural Rights Holders Collaboration Summit” involving international brands and the Intellectual Property (IP) enforcement community to fight against counterfeit products, Retail News Asia reports.

Over 100 Chinese and international brands, as well as trade associations attended the event including Adidas, Apple, Burberry and Louis Vuitton including the Quality Brand Protection Committee. This event follows Alibaba’s recently launched anti-counterfeit algorithm, which will allow tracking of fakes on the site.

Jessie Zheng, Alibaba Group Chief Platform Governance Officer, comments

The Rights Holders Collaboration Summit and IP Joint-Force System are many ways Alibaba is working closely with rights holders in our efforts to eradicate counterfeits both online and offline.

All brands in the “Good faith takedown’ program are eligible for the IP Joint-Force System, which was effective in June. The system aims to build a more collaborative working relationships with international brands as Alibaba continues its fight against counterfeits and IP infringement. Brands such as Adidas and Apple are part of the program’s phase 1.

With more than a billion products listed across its marketplaces at any given time, Alibaba Group’s data analytics and processing technologies enabled it to remove more than 120 million infringing product listings last year.

The IP Joint-Force system assigns participating brands with an online portal and an account manager. The system will allow Alibaba to directly and efficiently seek information from rights holders regarding suspected counterfeit listings. Brands and ecommerce marketplaces will therefore work together to combat counterfeiters.

This platform could prove to be a game changer, and if varied attendance at the company’s Intellectual Property event is any indication, it seems that a lot of global brands and organizations are on board for change.

A version of this appeared in Retail News Asia on June 7. Read the full version here.

Alibaba’s recent entry into the International AntiCounterfeiting Coalition (IACC) was an ironic one. Being the first ecommerce company to enter a non-profit organization dedicated to fighting against product counterfeiting, whilst its website contains a high volume of fake designer bags. Despite Alibaba being committed to being the global leader of ecommerce companies to fight against counterfeiting, it has created quite a stir in the last couple of months amongst luxury brands.

The fallback from Alibaba’s counterfeit problem

In early May, the IACC suspended Alibaba’s membership. This is due to the backlash it received from Gucci and Michael Kors, in which both brands quit the association. The IACC board also received an anonymous email threatening a mass walkout unless Alibaba was suspended. The plot-line thickened after it was revealed that IACC President Robert Barchiesi has stock in Alibaba, previously undisclosed to the IACC members.

Alibaba's counterfeit problem

Southeast Asian shoppers pick and choose from a variety of platforms, with different marketplaces owning various types of products, the grey market problem is one to watch out for

The Grey Market: Not just a Chinese Problem

However, as pointed out by this opinion piece on Business of Fashion, luxury brands should realize that counterfeit isn’t as big of a problem as grey market sales, a real issue embedded in Southeast Asia. As grey market continues to expand its platform onto WeChat (for Chinese consumers), Thai shoppers browse through Instagram, Facebook and Line to purchase luxury goods. As marketplaces leverage brand prices, the consumer’s relationship with luxury brands weaken. Granted, counterfeit products are bad for brands, but what they should be concerned about is the threat of the grey market, especially in Southeast Asia.

How ecommerce can help both Alibaba’s counterfeit problem and brands

An ecommerce buildout is essential, either on a brand site or an authentic partnership with the likes of Alibaba. Western luxury brands should not be fighting with Alibaba, but instead should be forming strategic partnerships in order to benefit from the platform’s consumer base and ecommerce know-how. This is a problem that will also occur when Alibaba fully infiltrates Lazada in Thailand, as Thai shoppers also buy goods through social commerce, largely supplied by grey market. This doesn’t just apply to luxury fashion brands, but beauty and apparel as well. A partnership of some kind would potentially go onto solve Alibaba’s counterfeit problem, hereby fixing the bigger problems of brands in Southeast Asian markets as well.