Merchant Innovation

Alibaba Looks to Use Alipay to Grow US-to-China Trade

Most Americans were unfamiliar with the Chinese company Alibaba until last September, when the e-Commerce giant launched its IPO to an eager Wall Street and started the talk of an upcoming showdown between Alibaba and Amazon for the wallets of the public.

On Friday, Jan. 16, Alibaba took the next step in its quest for world domination by initializing plans to help American business sell goods to the growing Chinese middle class through its in-house payment program Alipay, and in the process, make the two nations’ economies closer than ever before.

Though only in its infancy, Alibaba has already helped establish trial balloons of Alipay in U.S. stores with fashion companies Neiman Marcus and Saks, though both declined to comment to Reuters about how well the trials were going. Starting in the fashion industry makes sense for Alipay’s “cautious” beginning because fashion designers seek a global audience, and with nearly 250 million potential customers being prodded by their government to spend more money and show off in the process, it’s a good indicator of the program’s strengths and weaknesses. As far as profits go, Alibaba is looking to get in on what some analysts are projecting to be a rapidly growing U.S.-to-China marketplace.

Though only $15 billion in sales goes from U.S. to China, this could increase to $291 billion by 2020, and Alipay could be responsible for a lion’s share of that growth by connecting markets without having to invest in a physical presence in either country to do so. In America, the transactions would be handled by ePass, which collects the funds and limits transaction costs that come with foreign market activity, as well as working with local distributors to disperse the goods. By creating this platform, Alipay will also give valuable insights into marketing to the Chinese middle class, emphasizing cultural differences to strengthen American business ties with China financially and culturally.

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