Dive Brief:
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Alibaba has announced a new program called AliLaunch, designed to help foreign companies seeking to enter the vast Chinese market sell products, find partners and navigate the numerous regulatory requirements that China’s government imposes on international firms.
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Alibaba is aiming to sign up 50 new partners through AliLaunch over the next year. German software firm SAP is the biggest customer so far, and is planning to use the Alibaba cloud platform to sell its Hana data software and services.
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Alibaba's cloud group is the Chinese e-commerce giant's fastest-growing business. While the unit contributed less than 5% of the company's overall revenue for the first quarter of 2016, Alibaba is heavily investing in its growth.
Dive Insight:
Alibaba providing foreign companies help in navigating China's dense market entry restrictions—guidelines that offer Chinese companies like Alibaba an unfair advantage over foreign companies seeking to compete—is perhaps the definition of irony.
However, as China's native economy wobbles, it's a natural and smart move for Alibaba to launch a program like this. A company so big must continue to find ways to keep its massive revenue engine humming, whether it does that by entering new markets like the U.S. itself, or by making it easier for foreign companies to use its platforms as their sales channels into China.
As a foreign company, should you use Alibaba in this manner? With many billions of dollars in play in China, and some of it ready to be spent on your products, it seems like a slam dunk... assuming you can work your way through those darn government restrictions.
However, companies using AliLaunch also need to proceed with caution, and some awareness of how the relationship could evolve over the long term and possibly affect their long-term goals in China. In much the same way that companies in the U.S. might use Amazon's marketplace to jumpstart their e-commerce dreams, you're putting your business in the hands of a much larger market incumbent that could decide to compete with you at some point.
Although, come to think of it, maybe Alibaba should seek Amazon's help in fulfilling its own U.S. market ambitions.
