Jan 11, 2017
Alibaba founder's promises to Trump not necessarily favorable for U.S. e-commerce business
Jan 11, 2017
Alibaba founder Jack Ma, one of first major Chinese business executives to meet Donald Trump, knows how to sell a deal. The e-commerce tycoon told the president-elect his company will create one million U.S. jobs. Trump, whose manifesto has been largely based on promises of creating employment, was predictably pleased, and says he and Ma will do "great things" together. There may be less to both statements than meets the eye.
Ma has a messianic reputation in China, but to U.S. business he may not be entirely benign. His company's flagship Alibaba.com platform helped Chinese factories export low-priced products to the United States, which has contributed to challenging conditions for U.S. industries like furniture. Inside China, Alibaba's Taobao consumer market is often exploited as a sales channel by vendors peddling counterfeit wares, including knock-off U.S. brands.
Ma's promise to create one million new U.S. jobs isn't much of in the way of reparations. Alibaba's plan to enter the U.S. market and sign up American exporters predates Trump getting elected, and economically it's not much to get excited about. For one thing Alibaba - which employs a few hundred people in the United States - won't be adding a million jobs directly; that number is derived from the assumption that one million American firms will sign up for Alibaba's platforms and each hire one person to fulfil the orders pouring in from customers in China. That seems optimistic. Tmall Global, Alibaba's walled garden for foreign retailers, hosts only 14,500 foreign brands at present, according to Alibaba data.
Success would come partly at the expense of U.S.-based e-commerce firms already selling in China, such as Amazon. And order fulfilment is the online equivalent of fruit picking - seasonal and low pay.
Improving a business relationship with Trump can't hurt. A friendly U.S. President could help get Alibaba off of the U.S. Trade Representative's "notorious markets" list, or suggest the Securities and Exchange Commission wind up its investigation into his new friend's companies. For Trump, warm words about how Jack Ma might do great things for America can't hurt either, so long as nobody in the United States takes them too seriously.
© Thomson Reuters 2023 All rights reserved.