Tuesday, July 20, 2010

Alibaba forecasts drop in Chinese export growth

In the midst of a week-long tour of the U.K., Alibaba.com CEO David Wei has made some interesting statements. The online B2B giant is forecasting a significant slowdown of China's export growth in the second half of this year. With some 47 million registered users Alibaba.com is actually in quite a strong position to monitor the demand for products from China. The good news is that despite a significant forecast drop, the company still expects double digit export growth in 2010.

"Chief Executive David Wei said international inquiries were down for the Chinese manufacturers using Alibaba and he expected export growth to fall from 30% to 10% by the end of this year."

Wei also revealed that Alibaba shares its data with the Chinese government which is not surprising, but interesting to see this fact stated so explicitly:

"Alibaba monitors the transactions taking place among its business users and sends monthly reports to the Chinese government about international demand for Chinese products.

Alibaba.com as 47 million registered users - of which 12 million are based outside of China. Its online payment platform, Alipay, has 330 million registered users. Monitoring activity on those two platforms alone would give Alibaba solid insights into the state of the Chinese export machine.

No doubt Beijing will soon be asking Alibaba what should be done about the yuan revaluation.


Paul Woodward said...

Very interesting Mark. What impact might this have on the focus of the key B2B media groups operating out of China like Alibaba, Global Sources, etc.? Does this signal more domestic focus or will the exporters need them even more to achieve the sales they need?

Mark Cochrane said...

Hi Paul: Suppliers promoting their products on Alibaba and Global Sources typically sign one year contracts, so it would have to be a long, sustained drop in exports before these suppliers would change their marketing spend (i.e. switching to Alibaba's domestic site or perhaps deciding not to renew their contact with Alibaba at all.)

To me, the more interesting bit of this story is sheer power and magnitude of the data that Alibaba has at its disposal. Predicting Chinese export growth is just one application. Alibaba is now in a position provide accurate credit information on suppliers, identify which product segments are getting the most attention on the buy-side or supply-side. And then when you add in the data the group has through other wholly-owned companies such as Alipay and Taobao. The list is staggering. The company is in a position in grow in any direction it chooses.