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Alibaba: Can A Chinese E-Commerce Company Save The American Dream?

Donald Trump’s meeting in New York with Jack Ma, the founder of China’s Alibaba Group—the world’s largest and arguably most dynamic e-commerce company—raises fascinating questions about how to create jobs in a rapidly changing global economy.

Ironically, after years of unbridled China-bashing, a Chinese company might be instrumental in empowering Trump’s rural America , which, today, finds itself cut off from the country’s urban economic nodes. And could this same Chinese company open the door to increased trade at a time when the topic of globalization continues to incite contempt?

The Jack Ma meeting also raises questions about the changing business culture in Washington, which seems to be sliding toward a more opaque China Inc. model, where backroom deals and making the right connections are increasingly the order of the day.

Mr. Ma has promised to create one million new jobs, if only ordinary Americans were able to sell their wares and services on Alibaba’s global platforms. While actual numbers would be hard to validate, the premise is plausible, and worthy of further discussion.

America’s Taobao Villages

Most Westerners know very little about Alibaba. It’s best described as a mashup of companies like Amazon, Google, Ebay and Paypal, plus a variety of other e-commerce services, all bundled together into a massive platform ecosystem. The e-commerce juggernaut has disrupted the traditional business landscape, with hugely beneficial results for the proverbial “little guy.” Its e-commerce platforms are connecting small business enterprises in remote, rural and under-developed regions of China directly to the global market place. When it comes to technical prowess in emerging and undeveloped markets, Alibaba is well ahead of its Western counterparts.

Alibaba platforms like Alipay and Ant Financial have indeed revolutionized peer-to-peer sales and micro finance, while ensuring trust and security for billions of daily transactions. Other platforms such as CAINIA seamlessly connect logistics resources and facilitate global trade management for cross border commerce. It’s true that for millions of previously excluded market participants in China, long-standing barriers to entry have been eliminated.

The Alibaba platform ecosystem has empowered hundreds of thousands of “e-tailers” in the now famously named Taobao Village network across China. And it has clearly created thriving micro-markets in some of the most unlikely places.

So why shouldn’t the good people in the struggling towns of rural America and the Rust Belt have their own version of a Taobao Village? When the money starts to come in, it won’t matter to small business owners where in the world their customers and strategic partners are located— despite the globalization backlash that has been so widespread.

In the long-term, connecting a broad swath of people to markets via digital platforms and collaborative networks has the potential to create far more jobs than Mr. Trump’s high profile corporate witch-hunts. Arm-twisting U.S. companies such as the Carrier Group and Ford Motor Company may result in symbolic “America First” victories, but will not deliver the required number of new jobs. These corporate welfare deals will have little impact in the broader context of the Twenty First Century economy.

To be fair, Alibaba’s commitment to small businesses is part of a broader, long-term strategy to dominate the emerging economic landscape. The plan: ubiquitous high tech infrastructure and connectivity must be intertwined with the development of hard infrastructure such as roads, ports and energy grids.

Western tech companies should pay close attention to the Alibaba plan, and get on board, wherever they can. Ma’s company has been working closely with the Chinese government to build e-commerce capacities into the construction of China’s One-Belt-One Road (OBOR) initiative, the largest infrastructure project in human history. Beijing has a $100 billion war chest at its disposal, which it plans to use to accelerate the development of fintech and e-commerce.

Free trade is also an integral part of a robust e-commerce environment, and (again, ironically) Alibaba is a pioneer. Mr. Ma is currently in discussions with the World Trade Organization to roll out a global trade platform – eWTP – which could expedite, simplify and substantially increase the volume of cross border e-commerce transactions. When this comes to fruition, it could help millions of small business that previously missed out on the benefits of free trade agreements, largely due to the excessive costs of compliance and the confusing assortment of rules, regulations and red tape.

In the true spirit of a tech company, Alibaba would continue to form collaborative partnerships with U.S. firms and open-source its product development, as it currently does. Between the benefits to small businesses and other stake holders, it looks like Mr Trump’s meeting with Jack Ma could yield some promising results.

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