A favorite hobby among analysts and journalists is comparing Chinese companies with American or European competitors. Alibaba has little in common with Amazon. The differences are often larger than the similarities, says business analyst Ben Cavender. And getting into the China market is certainly not easy, he adds at the BBC.
The BBC:
Investors have shown unbridled enthusiasm for Alibaba this year. The company’s shares were up 5% on the results, and they are up 81% this year.
While these numbers seem almost unbelievable by US or European standards, some analysts think there’s still plenty of room for growth.
“That’s the challenge evaluating these companies because the market dynamics are so different than in the US and Europe,” said Ben Cavender, from China Market Research Group.
He says e-commerce still only accounts for about 15% of the total retail market in China, so there’s still plenty of untapped potential…
And while Amazon has a presence in China, it hasn’t made huge inroads.
“They don’t have the funding, they don’t have the brand recognition. They don’t have the product that people want at the end of the day,” said Mr Cavender.
On its home turf, Alibaba might be more worried about Walmart, which has a significant bricks-and-mortar presence, and has also formed an alliance with Alibaba’s local rival JD.com.
South East Asia, with its rapidly expanding middle class, is shaping up as the next battleground for global e-commerce giants.
“All of these players are looking at where the emerging spending growth is coming from,” said Mr Cavender.
Amazon Prime has dipped its toes into South East Asia by setting up shop in Singapore.
Alibaba has opted for a different route by partnering with established local players.
Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.
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