Business today is conducted in global ways and has increasingly digitalized the world whereby e-commerce becomes significant when approaching companies to be and remain successful thus reaching a bigger market. The Alibaba group currently is considered the most significant e-commerce in the world founded by Jack Ma in 1999 (Clark, 2016). Alibaba's Group mission is to create accessible ways of conducting business in anywhere globally, and their vision is to help in building the future's infrastructure in commerce. Alibaba has had remarkable growth since it was listed in the New York Exchange with its initial public offering is the largest of its kind. Due to its rapid growth, it is essential to have a clear understanding of the factors and aspects which matter during entry into foreign markets and how to encounter possible problems that may occur. This paper highlight describes and analyzes Alibaba Group's entry into the market of United States.
Alibaba company in the United States is acting as a venture capital firm, that invests in the known local companies with high brand loyalties, to efficiently acquire resources and the enter the market. Alibaba is, however, experiencing difficulties in competing with the American giants at their home consumer market and therefore want to learn and observe the newest trends to become the forefront in the United States market (Clark, 2016). 11 Main was their first registered online marketplace and from this the company has been able to gain direct access to the American consumer market, to study the customer's behavior and their interests.
Key Drivers Affecting the Market Entry
The factors considered when entering and expanding in U.S market were cultural, logistics, legal and regulatory matters, language, bad brand recognition, lack of trust and currency fluctuations. These factors can be of importance to other Chinese companies, considering entering the American market.
Expansive Growth in the Chinese E-Commerce Market
The Chinese e-commerce market forecasts to observe tremendous development in ensuing years. According to a research conducted by an e-marketer, the market is estimated to grow to over $1 trillion by the end year 2018 (He, 2015). This e-commerce market is said to be bigger than all the other joined markets of Britain, Japan, France, Germany, and the U.S. The rising penetration of the internet and the growth of online shopping popularity are the leading causes of the surge in demand. Alibaba being positioned as the lead player in the Chinese e-commerce market, it is expected to leverage the growth in demand within this market heavily.
The international trade market has risen over the years, and it is expected to accelerate its push in the future due to its substantial cash reserves and strong brand image. Alibaba has firmly positioned itself in Russia and Brazil thus entering the United States proves to be the problem because of its rising market shares. It has had investments with other major companies located in the U.S such as ShopRunner and Zulily; companies touted to be Amazon competitors. Alibaba has therefore flexed to be the second largest retail shop in the United States.
Alibaba Company has hired many Chinese born in America having them as American's top executives as well as women. According to Jack Ma, the founder of Alibaba, he thinks that women tend to have other people's interest at heart and are therefore crucial in any business. Presently, there are over 100 million buyers purchasing goods from Alibaba because of the absence of other players in the Chinese market reaching the American companies. This should be considered by the American companies despite them thinking of Alibaba as a threat rather than an opportunity (Cavusgil, Knight, Riesenberger, Rammal, & Rose, 2014).
Challenges Experienced during Entry in the Market
Alibaba has experienced growth over the years, and presently they are facing problems for instance, ways of finding how to assimilate their new platforms into the already existing multipart business model, ways of thinking big and for everybody as they maintain their proximity to the customer (He, 2015). Additionally, it has become a challenge for the Alibaba Company to get the right people, who can be able to deal with company's complexity while sharing the company's value.
Low Monetization Rates on Mobile
The Chinese e-market has witnessed fast growth in the mobile platform user base. This has resulted in an increase in shares of the mobile platform in the Alibaba's gross sale products. This is, however, detrimental in the e-markets revenue growth considering a mobile has a lower monetization rate compared to the desktop monetization due to the screen differences in size (Cavusgil et al., 2014). Eventually, the mobile monetization rates are expected to increase because of the quality improvement and mobile ads target ability.
The other issue affecting Alibaba's entry into the U.S market is the counterfeit products sourced from China. The company has had several criticisms from China's regulatory authority for not being able to curtail the illegal activities in the marketplace (Kshetri, 2016). American based Footwear Company has also expressed concerns that pertain to the sale of counterfeit products in the consumer to consumer market place. Kering which is a luxury brand owning leading brands such as Saint Laurent has also filed cases against Alibaba for counterfeiting and trademark infringement. Due to such controversies, this has diluted Alibaba's image, therefore, making it difficult for the e-market to gain access to the United States.
The Chinese have a liking for the authentic U.S branded products and have a trade assurance program from the dealers (Kshetri, 2016). Alibaba is refining to have a balance in protecting the buyers and the sellers in the United States marketplace by offering buyer protection. This trade assurance program ensures that the buyers are more comfortable while using this platform whereby each supplier is scrutinized and approved after a thorough trade history and qualifications.
In conclusion, this paper has highlighted a general idea and knowledge base which is valued for prospective market entries and the workers located in the U.S market. The results can be used by other E-market companies interested to enter and operate in the U.S market. Presently, there are over 100 million buyers purchasing goods from Alibaba because of the absence of other players in the Chinese market reaching the American businesses. This should be considered by the American companies despite them thinking of Alibaba as a threat rather than an opportunity. Alibaba's business goal is to, however, make it simple for the sellers in the marketplace make a sale transaction with no difficulties. Therefore, it is at the best interests of China and U.S to cooperate and make it work since the e-market company has the required resources in carrying out the business successfully.
Cavusgil, S. T., Knight, G. A., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business: The new realities (1st ed.). Pearson Australia.
Clark, D. (2016, April 15). 'Alibaba: The House That Jack Ma Built,? by Duncan Clark. Retrieved from https://www.nytimes.com/2016/04/17/books/review/alibaba-the-house-that-jack-ma-built-by-duncan-clark.html
He, C. (2015). Alibaba Group's Market Entry and Expansion in The United States. Lund University Publications Student Papers. Retrieved from https://lup.lub.lu.se/student-papers/search/publication/7454883
Kshetri, N. (2016). Institutional and economic factors affecting the development of the Chinese cloud computing industry and market. Telecommunications Policy, 40(2-3), 116-129. doi:10.1016/j.telpol.2015.07.006
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Does Alibaba Make a Successful Entry into the United States Market? Free Essay Answers. (2022, Jun 03). Retrieved from https://speedypaper.com/essays/does-alibaba-make-a-successful-entry-into-the-united-states-market-free-essay-answers
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