Empowering SMEs Worldwide: The Alibaba Story

Brian A. Wong Senior Director International Business Development and Marketing

WSIS follow-up and implementation: Action Line Facilitation meeting "E-business

May 2008

An Unlikely Story. . .

Tea House Hangzhou, China

All About SMEs!

Big SME* market In China : 42 million SMEs In Europe: 23 million SMEs In US: 22 million SMEs

Critical to global economy and trade In China: 58% of GDP, 68% of import and export volume, 75% of employment

In Europe: over 50% of GDP, 60% of employment, over 100 million jobs
In US: over 50% of GDP, 67% of export volume, 67% of employment

* SME means all employer firms, self-employment nonincorporated and incorporated.

The Importance of SMEs in Developing Countries

SMEs are the driving force in many economies
Engine for job creation; Positive role in poverty alleviation; Cover almost all (productive) sectors; Are a main source for new products;

Diversify the economy and introduce flexibility

Challenges in Developing Countries for Ecommerce

But are they fully utilizing the technological tools available to prosper in the global economy?
Few fully utilize Internet and e-commerce: ICT not used in sales prospects or purchasing efficiencies. Lack of online payment logistics: perceived difficulties in introducing online financing and payment, and customs collection and taxation applications. Lack of trust on demand side. Lack of awareness even among TPOs: less than half TPOs canvassed indicated a specific e-trade component in their national export development strategies.
Source: International Trade Centre www.tradeforum.org/news/fullstory.php/aid/234/ETrade_Opportunities:_Are_Developing_Countries_Ready_.html UNCTAD Information Economy Report 2007-2008

A New Gateway to Global Trade

The advent of eMarketplaces has helped to address many of these issues. . . Challenges
Lack of sales prospects or purchasing efficiencies. Lack of online payment, logistics, etc. Lack of trust

Solutions
Online market research User forums/knowledge sharing Robust global online company database On-Offline partnerships (introducing relevant third party services in the export value chain) Introducing trust building mechanisms (authentication and verification, inspection services, etc.) Public-Private partnership (TPOs/TAs/IOs) to support e-commerce Education campaign s (e-business champion event etc.) and trainings to target SMEs directly
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Lack of awareness and limited TPO support

E-Marketplaces: The Alibaba Approach

. . . and Alibaba.com developed a particularly unique (yet simple) model A Hangzhou Teahouse
A marketplace provides the cups, tea and scenic surroundings to facilitate match-making between buyers and sellers Customers bring the products and ideas User generated content (Web 2.0) For members, by members, of members Small is beautiful

Jack Ma Chairman of Alibaba.com

Traditional Sourcing Work Flow

It addressed a key pain point for many buyers around the world. . .
Search/ Discovery Evaluate Negotiate Transact

Average sourcing cycle: 3.3 4.2 months

52% of time spent searching for/identifying appropriate suppliers 18% of time spent on RFQ development/ RFQ response 20% of time spent on screening/sorting proposals 10% of time spent on contract negotiations

Traditional Sources of Supplier Information

Referral (colleagues, associates) Trade shows Industry magazines, trade journals
Source: The Aberdeen Group

Industry associations Trade directories Existing suppliers

eMarketplaces: a Window of Opportunities for SMEs

. . . and in the process helped empower SME suppliers all over the world The eMarketplace Value Proposition:
Low entry barrier
Reduce business costs and time, particularly search Streamline supply- and export-distribution chains Brand building using cost effective media

eMarketplaces empower SMEs to become global players without the resources of a multi-national corporation

Aligned objectives within publicprivate partnership

Alibabas objective is consistent with the UN Millennium Development Goals (MDGs)
Goal 8: Develop a Global Partnership for Development

Target 18: In cooperation with the private sector, make available the benefits of new technologies, especially information and communications

Alibabas Vision

Marketplace

To Make It Easy To Do Business Anywhere

Community To Be an Essential Partner to All Businesspeople Long Term Vision

102
To Build a Company that Lasts 102 Years

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SMEs Spend More Marketing Dollars Online

Growing SME Usage of Online B2B Marketplaces
MM

Online Share of SME Marketing Budget

45
41.0 36.3

25%

20.4%

20%

30.6

30

15%
22.0

10.8%
16.0

10%

15
8.8 5.4 1.0 1.7 3.1

11.7

5%
2.1%

0 2002 2004 2006 2008E 2010E 2012E

0% 2002 2006 2012E

Source: iResearch

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Global network at your fingertips

A truly global network for importers and exporters of raw materials, component parts and finished goods
Manufacturers Trading agents Export e-marketplace Global Buyers

Manufacturers Import

Trading agents
Retail shops

e-marketplace

Global Suppliers

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Worlds No.1 Online B2B Marketplace for International & Domestic Trade
Alibaba.com represents a phenomenon which is changing the way SMEs around the world conduct business
Sellers

Buyers

Typically SMEs Ten to a few thousand employees 5,000+ product categories in 30+ industries

International Marketplace 4.4 million registered users (1)

Across more than 200 countries Companies of all sizes Diverse end markets

China Marketplace 23.2 million registered users (1)

Note: 1. Company data as of Dec 31, 2007

A Premier Global Brand

Recognition by Global Thought Leaders In a Different League from Its Peers

Forbes Magazine Best of the Web 2000 - 2006

US Entrepreneur Magazine Best Website for Entrepreneurs June 2004

Best sites for global entrepreneurs

Far Eastern Economic Review Best Global B2B Marketplace 2000

Business for Diplomatic Action CIAs World Fact Book Economist Intelligence Unit The World Banks Doing Business Database U.S. Department of Commerces International Trade Administration

HBS Case Studies 2000 and 2001

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Alibaba.coms International Marketplace

With over 4.4 million registered members from 200 countries & regions, its truly a global community
UK 6% Canada 3% EU 9% India 8%

China 7%

US 18%

South East Asia 13%

South America 3%
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Middle East 4%

Australia 3%

Integrated eCommerce Platform

Search

Alibaba China - B2B

Overseas Buyers/Importers Alibaba International - B2B

Taobao C2C & B2C

Consumers

Shop

Choose

Transact Exporters China Wholesalers Retailers/ Power Sellers

Pay

China Wholesalers

One Stop Services for SME Exporters

www.alibaba.com (International Marketplace) www.alibaba.com.cn (China Marketplace)

Export to Globe
SMEs

Export to China

Export to Japan New www.alibaba.co.jp (Japan Marketplace)

Alibaba.com partnerships
Alibaba.com cooperates with leading organizations all over the world. . .

and is looking for more partners including public-private partnership!

Success Story: Pakistan Seller

With Alibaba, we are worldwide!"
Member: Mr. Hammad Kanwal Company: FASHIONS CARE Type: Manufacturer Size: 11-50 people Country: [Pakistan] Products: T-shirts, polo shirts, denim jeans, cotton gloves

Amazingly, I got orders within five days from Europe after joining! I was really surprised to see such quick results with Alibaba
After joining TrustPass, I started getting about 20 per week. Now, our customers cover from Italy, France, China, America, Ireland and Spain.

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Success Story: Sellers(TrustPass members)

80% of Our Business Comes From Alibaba!
We have been associated with Alibaba for two years, and since that time we have had a significant amount of serious enquiries. There is not a single day that goes by when we don't get enquiries routed through Alibaba. Alibaba's service is also an invaluable source of commercial news that not only provides information but also forecasts the rising trends in the global market. Being a TRUSTPASS member has seriously added more credibility to our business and increased our number of fraud-prevented customer inquiries. As a TrustPass member from India, we are extremely happy with the services Alibaba provides. We received our first buyer form Alibaba and there have been many more since. Today, we receive 80% of our business through Alibaba and we believe that this will only increase in future.
Member: Mr. Moola Ram Potalia Company: TOWN AART Country: [India]

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Success Story: Big Buyers

Alibaba.com Holds Private Sourcing Event for Woolworths Limited
The Woolworths China Sourcing Event was a great success. It allowed the Woolworths sourcing team to meet many quality new suppliers. Alibaba was very professional in its preparation and management of the day, leveraging its extensive knowledge of quality suppliers to target the right companies to meet our long-term sourcing needs.

Woolworths Limited is the largest retailer in Australia, serving customers across the nation for over 80 years. Woolworths is one of Australia's top companies by market capitalization, with sales reaching A$42.5 billion in the 2006/2007 financial year.
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Success Story: SME Buyers

"I have also posted buy leads attracting quick and good quality responses from the suppliers."

"I have discovered Alibaba.com at Ambiente 2004 where the Alibaba team introduced me the company. I have since been using the website on a regular base (at least once per week) and I think it's a great sourcing tool. I find Alibaba very professional and easy to use. I searched and found many suppliers and I have also posted buy leads attracting quick and good quality responses from the suppliers."
Customer: Mr Fernando Lomely Company: Genesis Ferran S.A. De C.V. Country: Mexico

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Roadshow video Im an Alibaba member! 2mins

4/27/2012 11:33 PM

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Thank you!

Brian@alibaba-inc.com
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