The Chinese Belt & Road Initiative (BRI) has introduced new means of regional as well as global connectivity. It has successfully created new “fascination”, “anticipation” and “trepidation” about digitalization among the member countries due to which process of e-commerce and internet economy is now at fast track, removing all physical, socio-economic hurdles, geopolitical limitations and geostrategic barriers to create a true virtual reality in the world. More than 150 countries have been included in the BRI which keeps on increasing by each passing day.
EDnewws reports that today’s world is dependent more on the internet economy than ever before. China’s growing technological expertise along its BRI and digital Silk Road is expected to set benchmarks for the rest of the world to follow.
Interestingly, President Xi’s ambitious BRI started down the digital Silk Road long before the rest of the world began talking about connected smart cities and technology driven solutions. Thus BRI has become pioneer of massive digitalization in the world.
In this regard, China continues to expand its digital footprint in sectors as diverse as cloud computing, 5G, surveillance technology and virtual currency which is now creating Chinese technological dominance. It is already leading the world in artificial intelligence, blockchain, and quantum technology publications and patents.
China has already launched the biggest “blockchain” ecosystem in the world, connected to over 100 city nodes, and was the first country to launch widespread pilots of a digital fiat currency the “Digital Currency Electronic Payment (DCEP) system”.
Ultimately, these advancements in technologies allow China to more efficiently promote the progress of BRI, increase the bonding between China and BRI countries, and push BRI’s hard projects in the member countries.
Obviously, Alibaba is the ecommerce market leader in China and is investing strongly into new markets and territories. It is the world's largest global e-commerce platform, bigger than Amazon (AMZN) and JD.com (JD) combined based on GMV.
It provided China a “dominant” position and an increasing presence across Southeast Asia meaning it is well placed to benefit from economic progress in the region; and strong free cash flow and a solid balance sheet providing ample resources to continue to make strategic acquisitions and/or returns to shareholders.
Moreover, Alibaba is an e-commerce giant which serves 1.31 billion annual active consumers across the many platforms and businesses in the Alibaba Ecosystem. Total Gross Merchandise Value ("GMV") transacted in the Alibaba Ecosystem in FY22 was RMB 8.3 trillion ($1.3 trillion), making it the largest retail commerce business in the world.
Alibaba reports its business across a number of segments: China commerce, International commerce; Local consumer services; Cainiao; Cloud; Digital media and entertainment; and Innovation initiatives and others.
Alibaba's China Commerce segment is primarily Taobao and Tmall. Together, these constitute the world's largest digital retail business in terms of GMV for the twelve months ended 31 March 2022.
Interestingly, the Alimama Company monetizes its broad user base and insights into customer behaviors. Alimama offers paid marketing services to merchants, retailers and promoters allowing them to advertise across its many platforms. This marketing is not confined to the Alibaba ecosystem, with affiliate programs allowing its users to directly market to consumers on other platforms outside of Alibaba.
In addition to ads within the Alibaba ecosystem, the company offers wider distribution through the Taobao Ad Network and Exchange ("TANX"), one of the largest real-time online bidding marketing exchanges in China. TANX helps publishers to monetize their media inventories both on mobile apps and web properties, automating the buying and selling of tens of billions of marketing impressions on a daily basis.
In addition to its operating businesses, Alibaba has a portfolio of equity (listed and private) and debt investments with a total value of RMB 239 billion as of 30 June 2022.
In the 19th Party Congress in 2017, China reoriented its focus on becoming a Science and Technology Superpower. However, to translate this goal into reality, AI was made an integral part of this groundbreaking development. While producing digital capital, this tech trio has managed to successfully revolutionise China’s entertainment industry, e-commerce, and e-finance in which services of Alibaba is commendable.
The Digital Silk Road is comprised of myriad tech projects, ranging from advancing 5G networks, laying fiber optic cable, constructing data centers, satellite navigation, quantum computing, smart cities, artificial intelligence, e-payments.
The integration of the digitalisation aspect in BRI’s infrastructure has worked as a Victorian formula for China, providing it with a competitive edge in the market be it in trade, technology, or Industry 4.0.
Chinese financial technology firms that use technology to facilitate innovation in financial services have been fast in fulfilling this unmet demand in several BRI countries, most notably in Southeast Asia and Africa.
The inculcation of digital services that is, telecommunications, the Internet of Things (IoT), smart cities and e-commerce in the BRI, is rooted in the White Paper on BRI, laid out by China in 2015. The Paper explicitly called out for the construction of cross-border optical cables, communication networks, and international connectivity links to build up an ‘Information Silk Road’, that would facilitate and expand information exchange and cooperation.
To conclude, Alibaba was founded in 1999. It has become one of the greatest e-commerce platforms. It initially began with the B2B marketplace for China, to facilitate small and big businesses that were exporting Chinese products globally.
It is made up of myriad initiatives, i.e., core commerce, cloud computing, mobile payments, Ali cloud, digital media, and entertainment.
In general it is e-commerce dominating China’s retail market, where it operates as a middle man between the buyer and the seller. However, it operates through two online portals, i.e., the Taobao for consumer to consumer commerce and the Tmall for business to consumer sales.
In this connection, Alibaba involvement in the BRI member countries increased its profitability ratios. The countries from BRI resultantly doubled the sales in 2018 where 57 percent of orders were coming from the BRI countries. Initially, it took 70 days for packages to deliver to other countries from China but after its successful implementation, the delivery time has been minimised to 10 days.
The opportunities for Alibaba group opened up through the BRI are highly notable as it adds around 60 percent of the world’s population to its seller list along with global economic output accounting for 30 percent. Thus, with the alliance that is created by Alibaba and BRI has successfully expanded Chinese digitalization drive.
Moreover, Alibaba has also introduced the electronic World Trade Platform (eWTP). The eWTP is a counter-hegemonic discourse that, based on the economic and technological power of Alibaba and its support of the BRI, attempts to globalize a China-centered and privately led global digital trade order to challenge the previous wave of US-led globalization.
Alibaba's sales of import goods from the BRI countries increased by 120 percent last year almost double the 68 percent pace of growth in 2017.
It seems that trio of BRI, Alibaba and Alimama is now further consolidating the befitting role of China in the field of digitalization and caravans of greater regional connectivity, e-commerce, digitalized currency/financial payment system and big data have geared up infrastructure development, smart cities, green energy, human security and above all ICT, AI among the BRI member countries.
It seems that western “aliens” are fleeing and strategic alliance of the BRI, Alibaba and Alimam is on the “rollercoaster”.
Written by Dr. Mehmood Ul Hassan Khan
Executive Director: The Center for South Asia & International Studies (CSAIS)
Regional Expert: China, CPEC & BRI
