Week in Review: Let’s not put Alibaba on a pedestal
By Karamjit Singh June 25, 2018
- Its DFTZ partnership with Malaysia should be judged based on impact to businesses
- Jack Ma in Malaysia to get government reassurance of support for his initiatives
IT was only an official office opening on June 19 but it attracted no less than its founder and executive chairman, Jack Ma, and, two senior Malaysian ministers with Lim Guan Eng, Finance Minister and Gobind Singh Deo, the Minister of Communications and Multimedia.
Of course Ma was really in town to see the new Malaysian leadership led by Prime Minister Dr Mahathir Mohamad, to both reaffirm his commitment to Malaysia and get reassurances that the government welcomes Alibaba and its initiatives in the country especially its Digital Free Trade Zone (DFTZ) that is part of its eWTP or electronic world trade platform. Ma’s eWTP is the platform he envisions for the creation of a series of digital free trade zones around the world that will allows small and medium-sized enterprises (SMEs) to easily plug into global trade via e-commerce.
But Ma also came to tell the world that his inspiration to launch his e-commerce startup in 1999 was triggered by Malaysia’s own Multimedia Super Corridor (MSC) vision that was launched in 1997. (Historical anecdote. I was actually there, amidst a sea of palm oil trees, when Mahathir launched Cyberjaya, the smart city that was to be the heart of the MSC.)
That revelation has clearly surprised his own team. The Alibaba Wikipedia page has still not added this gem of a snippet to its History section. Perhaps his team was busy preparing the glowing press release that hailed the office opening as a one-stop centre geared to boosting the technology capability of Malaysian SMEs and our young entrepreneurs while helping our businesses identify global trade opportunities and increasing their innovation capabilities. Right.
While Alibaba can say whatever it wants about its office here, I urge Malaysians to be more discerning over its claims of helping upgrade Malaysians from a digital skills point and in helping our entrepreneurs expand their markets.
The digital skills it is teaching are not rocket science nor proprietary to Alibaba. Many Malaysian companies offer the same with iTrain Sdn Bhd run by Bikesh Lakhmichand but one example.
The proof of helping our companies is a story best told by the over 2,000 Malaysian SMEs that have signed on to its Digital Free Trade Zone (DFTZ) online platform to help them market their products to China specifically and the world. The experience of these companies should be what we use to judge whether Alibaba has indeed made a difference in Malaysia with its presence and through its investments.
To me, the litmus test will come after the one year membership of these SMEs is over. How many of the over 2,000 SMEs will renew their subscription to the Alibaba platform. And don’t get me wrong, I hope the vast majority of them do because that will mean they have extracted value from it and are willing to invest and pay the full fee versus the subsidised fee they paid for their first year.
And speaking of investments, this is where it gets difficult to judge how serious Alibaba is or how confident it really is about Malaysia’s prospects in the digital economy. Where most investors will place a dollar amount on the investments they plan to make, an Alibaba spokesperson tells me that they don’t reveal the monetary value of their investments into a country or specific initiative nor do they comment on any amount that gets bandied about by the media even when that amount is way off.
In Malaysia, this has led to criticism that the government has given too much to Alibaba in setting up the DFTZ. It is also hard to judge what value Malaysia gets from being the first eWTP location outside of China, a point Alibaba likes to highlight as being significant.
Yet this significance, if one buys into it, seems diminished when compared to the digital hub Alibaba has committed to in Thailand in April which a Hong Kong publication and a Thai English publication have estimated to be worth a few hundred million US dollars over the period of the investment. I have been told the amount being attached to its Thai investment is wrong but Alibaba won’t comment on this.
Interestingly, while Alibaba is not calling its Thai investment as part of its eWTP, rather describing it as a digital hub, the breakdown of what it plans to do there is remarkably similar to what it plans for Malaysia.
Now, is this a big deal? Should Malaysia get upset? Not really. Like any global company, Alibaba will do what’s best for Alibaba though Ma may tell world leaders like the Thai Prime Minister that he is not solely looking for profits because Alibaba already has enough. Right.
What Malaysia and its companies need to do is to leverage on any digital platform they can that offers them a better way into particular overseas markets and stop complaining that we are giving foreigners an easy entry in Malaysia. Malaysians are already global e-shoppers. Our businesses now need to attract global shoppers themselves and Alibaba has clearly shown that it can help businesses better connect with Chinese buyers in China. But it is not the only platform for China, it just has the strongest brand thanks to the Jack Ma brand.
But that does not mean we have to put Alibaba and anything it does in Malaysia on a pedestal. Let’s judge their impact based on the value they actually create for Malaysia and Malaysian businesses.
With that, I wish you a productive week ahead.