Photo by Alecs Ongcal/Rappler
MANILA, Philippines – Alibaba Group founder and executive chairman Jack Ma, on a visit to Manila, outlined the internet giant's long-term plan to get e-commerce to finally take off in the Philippines.
While e-commerce is viewed by most observers as the future of retail, it has been slow to take hold in the country. It captured only 0.5% of the total retail market in 2015, a figure projected to rise to 4.7% by 2025, according to a Google Temasek study.
"The number one rule is to keep on investing in the Philippines," Ma said at a press conference after he received an honorary doctorate from De La Salle University on Wednesday, October 25.
Last year, the Alibaba Group spent $1 billion to gain a controlling stake in Southeast Asia's dominant e-commerce platform, Lazada, and added a further $1 billion to increase that stake from 51% to 83% in June this year.
"In Southeast Asia, with Lazada and AliExpress, I honestly don't see any money coming back in 5 years. Luckily, we made a lot of money in China," Ma said.
"We come to countries like the Philippines not to make money from e-commerce initially, but to see what kind of infrastructure we can build for the Philippines that will enable Philippine small businesses to participate in e-commerce easier. That's the only thing for the next 3 to 5 years," he added.
Photo by Alecs Ongcal/Rappler
Building up e-commerce infrastructure
The first part of Alibaba's plan is to build up internet marketplaces locally through Lazada, and set up the infrastructure to facilitate e-commerce trade that crosses borders.
"These marketplaces," Ma noted, "will enable Filipino businesses to do business with China, Malaysia, Thailand, and Europe."
The second part of Alibaba's plan for the country involves establishing a sophisticated mobile payment system.
"This will allow young persons and small businesses to reach the money and will eventually build up to a cashless society in the Philippines. This is what we want," Ma explained.
To that end, Alibaba subsidiary Ant Financial entered into a joint venture with Globe Telecom and the latter's parent firm Ayala Corporation through a strategic investment in Globe's fintech arm Mynt earlier this year.
The final piece of the puzzle is solving the country's logistics system, which is hampered by the archipelagic geography of the country.
"We also have Lazada's logistics system here. It's not good at the moment but if we continue to invest in the system for another 3 to 5 years we'll be ready," Ma said.
Alibaba also broached the idea of eventually having training centers to help train entrepreneurs armed with the data that the group's platform provides.
"We are different from other multinational internet firms because when we come in here, the first thing we do is look for partners and enable them to be successful," Ma said.
"We'll build up the infrastructure here and let people get used to e-commerce. We don't expect to be successful next year; we're thinking in terms of 5 to 8 years," he added. – Rappler.com