With data centers and banking, Alibaba is building a global empire

Business & Technology

By diversifying its range of services beyond ecommerce, Alibaba is building on its success in China by venturing into global markets from Asia to the Middle East and Europe.

Illustration for SupChina by Alex Santafé

In 1999, in a radical departure from the self-reliance policy during the Mao era, the Chinese government promulgated the Going Global strategy and encouraged Chinese enterprises to invest boldly in foreign markets. In the same year, Jack Ma (Mǎ Yún 马云) founded Alibaba Group 阿里巴巴集团 as an online wholesale marketplace. Since then, Alibaba has grown exponentially and become the largest retail commerce business in the world in terms of gross merchandise value.

Alibaba has also become one of the most zealous practitioners of the Going Global strategy, and to offset regulatory headwinds at home in recent years, the company has actively expanded its footprint outside China. As of March 2021, Alibaba had over 1 billion annual active consumers (AACs), composed of 891 million consumers in China and around 240 million consumers overseas. The rapid expansion of Alibaba’s overseas consumer base is credited to the swift growth of the company’s global ecommerce platforms, notably Lazada, Daraz, AliExpress, and Trendyol.

Regional ecommerce networks

Lazada is an ecommerce platform based in Southeast Asia, with the ambition to connect local consumers and small- and medium-sized enterprises (SMEs) with regional and global brands. Lazada had over 100 million annual active consumers in the twelve months ending March 31, 2021. Alibaba claims that Lazada also runs one of the largest logistics networks in the Southeast Asian market.

In a similar vein, Daraz, founded in 2012 and acquired by Alibaba in 2018, is also an e-commerce platform in Southeast Asia, but with a particular focus on Pakistan and Bangladesh. Daraz claims to have 100,000 SMEs in Pakistan on its platform.

Cross-border ecommerce

In June 2022, Alibaba-backed domestic logistics company Cainiao 菜鸟网络 announced a partnership with Daraz for cross-border ecommerce. Daraz customers in Pakistan now have access to full-link logistics services by Chinese merchants.

AliExpress is a global marketplace targeting consumers in more than 190 countries and regions. The platform enables consumers around the world to buy directly from manufacturers and distributors in China. AliExpress claims to have expanded its regional merchant networks and supply chains to serve consumers in various regions, in particular Russia, the U.S., Spain, France, and Brazil, which are the top consumer markets for AliExpress.

In July 2018, Alibaba acquired an 85% equity interest in Trendyol, a leading ecommerce platform in Turkey, marking a new stage in Alibaba’s international expansion.

Banking

Alibaba is also expanding its global footprint in other industries, notably cloud services and banking.

On June 6, 2022, Alibaba-owned fin-tech company Ant Group 蚂蚁集团 received the green light from the Monetary Authority of Singapore (MAS) to launch a digital wholesale bank, ANEXT Bank. The bank is incorporated in Singapore and provides digital financial services and solutions to local SMEs, primarily ones specializing in cross-border business operations.

The move marked a clear sign that Alibaba has entered the field of traditional banking services targeted at SMEs in overseas markets. Moreover, ANEXT Bank is a good match with Lazada, Alibaba’s e-commerce platform in Southeast Asia, which connects local consumers with SMEs as well as regional and global brands.

ANEXT Bank is the counterpart of Ant Group’s commercial bank, MYbank, in China. Established in 2015, MYbank was among the first batch of private internet commercial banks approved in China. MYbank is designated to provide supply chain financing solutions for SMEs and farmers, and in 2021 served over 45 million SMEs in China.

Cloud services

On June 7, 2022, Alibaba Cloud 阿里云, another core component of the global Alibaba empire, partnered with Saudi Telecom Company (STC) to set up two data centers in Riyadh, the capital of Saudi Arabia. Alibaba Cloud and the STC formed a joint venture, Saudi Cloud Computing Company, to operate the data centers. The facilities are designated to provide public cloud services in Saudi Arabia, and provide a wide range of secure public cloud computing solutions for local and regional clients in Saudi Arabia, the Middle East, and North Africa, according to the Saudi Press Agency. Alibaba has committed to invest up to $500 million over the next five years and to set up a new office in Riyadh to provide services.

Founded in 2009, Alibaba Cloud has provided cloud computing services overseas since 2014, with a string of data centers in Asia and a strong presence in North America, Europe, and Australia. In 2021, Alibaba Cloud’s revenues grew 50% year-over-year to surpass 60 billion yuan ($8.94 billion), per Alibaba’s latest annual report.

Prior to the deal with Saudi Arabia, Alibaba Cloud had struck a deal with Germany to set up its third data center in that country. The data center provides cloud computing products for storage, networks, and databases to support the growing digital transformation demands from customers across Europe. With the introduction of the new data center, Alibaba Cloud now boasts a network of 84 availability zones in 27 regions across the globe, as reported in the press release of Alibaba Cloud.

With its dominant position in China and growing global empire, Alibaba is more than the world’s most popular destination for online shopping. With banking and cloud services, Alibaba has evolved into a multi-faceted global player providing a diversified range of services.