Alibaba to fly its colors on Main Street

Alibaba recently announced that two of its wholly owned US subsidiaries will soon launch a new e-commerce site in the US, further signs of its ambitious international expansion plans.

Last week, an Alibaba representative said subsidiaries Vendio and Auctiva will introduce a site brand-named 11 Main. The site's aim is to support select merchants with high-quality products in fashion and jewelry.

Despite the fact that Alibaba's Taobao and T-Mall sites both enjoy great popularity across China, the company has experienced limited success overseas.

Alibaba's international expansion steps, no matter how small, should not be interpreted in the same way as other companies at a similar stage of expansion and with similar global ambitions.

Entrepreneurs often eschew the typical, market research-led approach and make market expansion decisions largely on an intuitive feel and heuristic judgment.

The fast-moving world of e-commerce provides a perfect example of an industry in which such an entrepreneurial style could not be more appropriate. Alibaba, which has retained a strong entrepreneurial culture despite rapidly expanding, is well-placed to maneuver swiftly and deftly in the US and other overseas online markets.

Alibaba's plans to penetrate the US market, in preference to other markets closer to home, also signifies its strong determination and inner belief.

Chinese companies, quite understandably, often select Asian or Middle Eastern markets for their initial or first-wave of overseas expansions. Geographic proximity also tends to be central to the typical market research-led approach to international expansion, in which cultural similarity and economic considerations prevail over global ambition and intuitive market understanding.

Alibaba's US market strike will be managed by the company's relatively small business-to-business unit, Alibaba.com, in keeping with an entrepreneurial approach to market expansion. The small unit should allow Alibaba to retain an entrepreneurial business model in the US, where innovation and flexibility are key to future success and expansion.

Its initial choice of industries, fashion and jewelry, also indicates a shrewd and positive strategic maneuver. These industries, with their high-quality branded products and consumer decision-making based on high levels of emotional attachment, should provide an excellent platform and association for Alibaba's corporate brand image.

Fashion and jewelry are the hallmarks of quality and premium brand image. Alibaba has rejected low cost and low quality, which are still far too often the central tenets of Chinese companies' corporate strategy and culture.

Alibaba's distinctive entrepreneurial culture is likely to infuse other Chinese companies and budding Chinese entrepreneurs with confidence and motivation.

The author is a visiting professor at the University of International Business and Economics in Beijing.

(China Daily Africa Weekly 02/21/2014 page22)