Alibaba to nearly triple R&D spending to $15 billion over three years – China’s latest business and technology news

Business & Technology

A summary of the top news in Chinese business and technology for October 11, 2017. Part of the daily SupChina newsletter, a convenient package of China’s business, political, and cultural news delivered to your inbox for free. Subscribe here.

This picture taken on August 26, 2016 shows a driver uses his smartphone to pay the highway toll by way of Alipay, an app of Alibaba's online payment service, at Pengbu toll station on the Hangzhou-Ningbo Expressway in Hangzhou in Zhejiang province on September 21, 2016.

Ecommerce giant Alibaba is furthering its push into new technologies such as quantum computing and artificial intelligence with a $15 billion initiative that will “launch eight research bases in China, Israel, the United States, Russia and Singapore,” Reuters reports. The research and development (R&D) unit leading the initiative, set to spend the money over three years, the Wall Street Journal says (paywall), is called the Alibaba Academy for Discovery, Adventure, Momentum, and Outlook (DAMO).

Will Alibaba DAMOnate in tech?

  • Reuters notes that the project “comes as Beijing prioritizes state funding in quantum computing, AI and big data, urging provincial governments, universities, the military and private firms to play a bigger role in developing advanced technology.” In other words, government support for this and future R&D initiatives seems assured.
  • But the Journal says that DAMO’s funding is still a fraction of what American tech companies, for example, spend on similar research. In 2016, Google parent company Alphabet spent $13.9 billion on R&D, and Amazon spent $16 billion, whereas Alibaba spent just $2.6 billion in the fiscal year ending in March 2017. The new announcement will nearly triple Alibaba’s investment, but even so, these companies will continue to have an edge in recruiting and maintaining global talent, the Journal indicates.

Meanwhile, Alibaba faces competition in a different sector back home: luxury sales. In China, JD.com is “launching a standalone luxury ecommerce platform to target buyers in the country’s smaller cities,” where 80 percent of online luxury sales occur, the Financial Times reports (paywall). The service, called Toplife, will feature “dust-free” warehouses and bring a signature white-glove delivery service to nearly every door in urban China. Learn more about JD.com’s luxury delivery system in this July piece (paywall) in the New York Times.