This edition of the Alibaba Tracker begins with the news that the Office of the U.S. Trade Representative (USTR) has placed Taobao, Alibaba's online marketplace, on its annual Notorious Markets blacklist.
In the report, the USTR wrote: “The Taobao.com eCommerce platform is an important concern due to the large volume of allegedly counterfeit and pirated goods available and the challenges right holders experience in removing and preventing illicit sales and offers of such goods.”
A few days before the USTR blacklisting, Alibaba said it was leveraging its cloud computing capabilities to fight the growing threat of pirates and counterfeiters. The Chinese eCommerce giant said that its own Operation “Cloud Sword” led to the arrest of more than 300 counterfeit gang member suspects in 164 investigations. Unsurprisingly, Alibaba is unhappy with the USTR decision to blacklist Taobao.
But despite the current backlash, Alibaba continues to keep its eyes on international markets, while working on maintaining a dominant position in the Chinese domestic marketplace. China's 13th Five-Year Plan (2016–2020) for national economic and social development —along with advocating for advancing scientific research, manufacturing innovation and maintaining GDP growth — set goals to move ahead on construction of national smart cities.
Near the end of last month, Ant Financial — Alibaba Group Holding's FinTech arm and the group behind Alipay — announced its role and goals for facilitating a smart nation. Ant Financial reported that it had teamed up with 352 cities in 25 provinces with plans to construct credit systems and public mobile services. What a country it could be if Alipay's functionality were integrated into a national smart grid of sorts.
Alibaba isn't alone in smartening up China's cities. Competitor companies Tencent and Baidu are also reportedly on the job. Baidu reportedly signed a deal with Ningbo, a city of 3.6 million in East China's Zhejiang Province, to leverage the company's artificial intelligence, Big Data and cloud computing technologies for the sake of smarter cities. Tencent similarly partnered with the city of Jiaxing, also in Zhejiang Province to use its Big Data and cloud computing technologies toward facilitating a smart city.
No word on whether the competitor companies will create compatible technologies, but as the smart city projects are government-backed with a focus on national prosperity, one would assume cooperation could be key.
Heading eastward, Alibaba Cloud, Alibaba's cloud computing arm, launched its services in Japan in mid-December, bringing the total number of economic centers where Alibaba Cloud is present to 14, including the U.S. and Singapore, along with other new additions in Germany, Australia and the UAE.
“The new data center in Japan will enable us to better serve the needs of existing clients who are expanding globally and require scalable and secure cloud computing services. Our global network will enable customers to truly manage their IT infrastructure in different regions with one global account,” said Ethan Yu, VP of Alibaba Group and general manager of Alibaba Cloud Global, in a statement.
The cloud services for Japan are provided via a local data center in Toyko and is hosted by SB Cloud — a joint venture between Japan-based telecom SoftBank and Alibaba Group.
Moving south, Alibaba Investment Limited is in the process of raising its stake in Singapore Post (SingPost), Singapore's domestic and international postal service provider. Alibaba is SingPost's second-largest shareholder. Alibaba’s stake in SingPost will rise to 14.4 percent, up from its current 10.23 percent stake. The rise, targeting completion by the end of February this year, has been in the works since late 2015. There's no time like the present now that competitor Amazon is penetrating Southeast Asia, starting with Prime and Fresh operations in Singapore in Q1 2017.
Alibaba also has a hold on logistics in Thailand from its deal with Lazada — Alibaba got the go-ahead to advise Thailand’s postal service, Thailand Post, on shipping and logistics. Alibaba has focused on international growth to balance out losses from a slowing domestic market, as well as to compete with growing threat Amazon.
Everyone wants a piece of Southeast Asia. The region, with its population of over 620 million, is predicted to be the next site of an eCommerce boom. Southeast Asia's internet economy is projected to become a $278 billion market by 2025. As of 2016, Southeast Asia has about 150 million digital customers.