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Mixed reactions as Chinese e-commerce giant Alibaba opens Australian HQ

Jack Ma gives a speech at the launch event of Alibaba's Australia-New Zealand headquarters.
Jack Ma gives a speech at the launch event of Alibaba's Australia-New Zealand headquarters.

ABC: Kai Feng

One of the biggest e-commerce companies in the world, the Alibaba Group, recently opened their Australia-New Zealand headquarters in Melbourne. But who will welcome this Chinese giant, and who will feel anxious about its arrival?

"Although Australia is good, we cannot use [the Chinese version of] Taobao here."

This is a typical complaint among Chinese students in Australia.

However that may be about to change, with the arrival of the father of Taobao, and executive chairman of Alibaba Group, Jack Ma in Melbourne.

Jack was in town to officially open the Alibaba Australia-New Zealand headquarters just after Lunar New Year.

Alibaba was established in 1999 and it's now one of the biggest e-commerce platforms in the world, comprising businesses Tmall and Taobao among others.

Nowadays most Chinese people can hardly live their life without Taobao, a platform similar to eBay. Buying things on the site using Alipay, an online payment solution developed by Alibaba, is a common thing to do.

The success of Alibaba has made Jack Ma a celebrity in China. According to Forbes' China Rich List, Jack Ma is the second richest person in the country.

Jack Ma (right) and managing director of Alibaba Australia-New Zealand headquarters Maggie Zhou
Jack Ma (right) and managing director of Alibaba Australia-New Zealand headquarters Maggie Zhou speak at the launch press conference.

ABC: Kai Feng

Jack first visited Australia in 1985, to stay with Ken Morley and his family in Newcastle. He'd met them by chance in China. It was a friendship that had a big influence on him.

Thirty-two years later he went to Newcastle again and donated $26 million to the University of Newcastle to establish a scholarship program in his friend's memory.

Jack once admitted that apart from China, Australia is his favourite country.

Why Australia and New Zealand?

"In the past, people have come to Australia for the gold, however the next gold of Australia will be the clean water, air and soil," says Jack.

He admires Australia and New Zealand for protecting the environment, which could make them good partners for a country like China looking to import products they can't produce themselves.

"What Chinese consumers want is health and happiness, this is what Australia and New Zealand are good at. You have beautiful nature, and [a] beautiful clean heart, this is what China needs to learn from."

- Jack Ma

Jack Ma, Victorian Premier Daniel Andrews and other guests cut the ribbon for the Alibaba Australia-New Zealand headquarters.
Jack Ma, Victorian Premier Daniel Andrews and other guests cut the ribbon for the Alibaba Australia-New Zealand headquarters.

ABC: Kai Feng

At present, there are 1,300 Australian and 400 New Zealand brands selling on Alibaba platforms.

For 80 per cent of those brands it's their first time selling products in China, which shows how much Chinese customers love products from these two countries.

Who will benefit, and who will be worried?

Professor Heling Shi from Monash University thinks that consumers will benefit most from this significant move of Alibaba, because it will mean a more competitive marketplace.

Allan Qiu, an Australian partner of Alibaba's and Melbourne business owner says other businesses like local service providers, suppliers, logistics and warehousing companies can also benefit.

Furthermore, Chinese students in these two countries may also take advantage of the move.

"Chinese international students can take advantage of their knowledge of Chinese culture and language skills, because local companies may need to recruit people with those skills."

- Allan Qui

Alibaba and Australia Post signed a memorandum of understanding at the launch event.
Alibaba and Australia Post signed a memorandum of understanding at the launch event.

ABC: Kai Feng

So who may feel worried about the arrival of Alibaba in Australia?

Professor Shi says it depends on what type of products you're selling.

"According to a recent economics study, standardised goods - such as flight tickets or books - can almost be sold entirely online. However differentiated and specialised goods, or products requiring customers to experience them in person - such as cars and artworks - are difficult to trade online," he says.

"Therefore, businesses selling standardised products may be affected by Alibaba, and those who sell specialised goods will not be influenced."

- Professor Heling Shi

Allan's view is that although Alibaba is now operating in Australia, they provide a point of difference to other companies already in the online market.

This is a good thing for the entire retail ecosystem because the more players, the greater vitality this ecosystem will have, and consumers will have more options to choose from.

The difficulties of introducing Taobao and Alipay to Australia

Chinese consumers in Australia want to know when they can use Taobao and Alipay in Australia like they do in China.

One of Alibaba's websites
One of Alibaba's websites.

ABC News

Professor Shi says if Alibaba is going to promote Alipay in Australia, they will face several difficulties.

Firstly, Alipay will have to comply with Australian government regulators: the Australian Securities and Investments Commission and the Australian Prudential Regulatory Authority.

Secondly the key reason why Alipay is so successful in China is that credit cards are not as widely accepted there, and people feel more comfortable using Alipay to make purchases online.

"Using a credit card in Australia is very common and convenient. It's difficult to introduce another way to pay to consumers and expect them to change their habits."

- Professor Heling Shi

Professor Shi also believes that promoting Taobao in Australia is also quite hard: "Firstly, Australia is a sparsely-populated country, the shipping cost per unit will be much higher than China.

"Secondly, if many small Australian businesses run a Taobao shop, the consumers will have a 'searching cost' and 'comparing cost', and they will also face a risk of buying fake products."

However, Allan is looking forward to Alibaba's next move.

"I hope Alibaba can do more in building a healthy e-commerce environment in Australia, encourage more Chinese players to join in, and… boost the communications between Chinese and Australian e-commerce companies."

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