Empowering SMEs Worldwide:The Alibaba StoryBrian A. WongSenior DirectorInternational Business Development and Marketing

WSIS follow-up and implementation: Action Line Facilitation meeting "E-business“

May 2008

An Unlikely Story. . .

Tea HouseHangzhou, China

Big SME* market

In China : 42 million SMEs

In Europe: 23 million SMEs

In US: 22 million SMEs

Critical to global economy and trade

In China: 58% of GDP, 68% of import and export volume, 75% of employment

In Europe: over 50% of GDP, 60% of employment, over 100 million jobs

In US: over 50% of GDP, 67% of export volume, 67% of employment

* SME means all employer firms, self-employment nonincorporated and incorporated.

All About SMEs!

SMEs are the driving force in many economies…

Engine for job creation;

Positive role in poverty alleviation;

Cover almost all (productive) sectors;

Are a main source for new products;

Diversify the economy and introduce flexibility

The Importance of SMEs in Developing Countries

Source: International Trade Centre www.tradeforum.org/news/fullstory.php/aid/234/E-Trade_Opportunities:_Are_Developing_Countries_Ready_.html

UNCTAD Information Economy Report 2007-2008

Challenges in Developing Countries for Ecommerce

Few fully utilize Internet and e-commerce: ICT not used in sales prospects or purchasing efficiencies.

Lack of online payment logistics: perceived difficulties in introducing online financing and payment, and customs collection and taxation applications.

Lack of trust on demand side. Lack of awareness even among TPOs: less than half TPOs

canvassed indicated a specific e-trade component in their national export development strategies.

But are they fully utilizing the technological tools available to prosper in the global economy?

A New Gateway to Global Trade

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Challenges Solutions

The advent of eMarketplaces has helped to address many of these issues. . .

Lack of sales prospects or purchasing efficiencies.

• Online market research• User forums/knowledge sharing• Robust global online company database

Lack of online payment, logistics, etc.

• On-Offline partnerships (introducing relevant third party services in the export value chain)

Lack of trust • Introducing trust building mechanisms (authentication and verification, inspection services, etc.)

Lack of awareness and limited TPO support

• Public-Private partnership (TPOs/TAs/IOs) to support e-commerce

• Education campaign s (e-business champion event etc.) and trainings to target SMEs directly

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A Hangzhou Teahouse• A marketplace provides the “cups, tea and scenic

surroundings” to facilitate match-making between buyers and sellers

• Customers bring the products and ideas• User generated content (Web 2.0)

For members, by members, of members

“Small is beautiful”

E-Marketplaces: The Alibaba Approach

Jack Ma Chairman of Alibaba.com

. . . and Alibaba.com developed a particularly unique (yet simple) model

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Traditional Sources of Supplier InformationReferral (colleagues, associates)Trade showsIndustry magazines, trade journals

Industry associationsTrade directoriesExisting suppliers

Search/ Discovery Negotiate TransactEvaluate

Average sourcing cycle: 3.3 – 4.2 months52% of time spent searching for/identifying appropriate suppliers

18% of time spent on RFQ development/ RFQ response

20% of time spent on screening/sorting proposals

10% of time spent on contract negotiations

Source: The Aberdeen Group

Traditional Sourcing Work Flow

It addressed a key “pain point” for many buyers around the world. . .

Low entry barrier Reduce business costs and time, particularly search Streamline supply- and export-distribution chains Brand building using cost effective media

eMarketplaces: a Window of Opportunities for SMEs

The eMarketplace Value Proposition:

eMarketplaces empower SMEs to become global players without the resources of a multi-national corporation

. . . and in the process helped empower SME suppliers all over the world

Goal 8: Develop a Global Partnership for Development

Target 18: In cooperation with the private sector, make available the benefits of new technologies, especially information and communications

Aligned objectives within public-private partnershipAlibaba’s objective is consistent with the UN Millennium Development Goals (MDGs)

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Alibaba’s Vision

让天下没有难做的生意To Make It Easy To Do Business Anywhere

商人都要用阿里巴巴To Be an Essential Partner to All

Businesspeople

建立一家持续发展 “ 102 年”的公司To Build a Company that Lasts “102 Years”

Marketplace

Community

Long Term Vision

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SMEs Spend More Marketing Dollars Online

Online Share of SME Marketing BudgetGrowing SME Usage of Online B2B Marketplaces

1.0 1.73.1

5.4

8.8

11.7

16.0

22.0

30.6

36.3

41.0

0

15

30

45

2002 2004 2006 2008E 2010E 2012E

MM

Source: iResearch

CAGR = 45.0%

2.1%

10.8%

20.4%

0%

5%

10%

15%

20%

25%

2002 2006 2012E

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Global network at your fingertips

e-marketplace

e-marketplace

Retail shops

Manufacturers

Trading agents Global Buyers

Manufacturers

Trading agents Global Suppliers

Export

Import

A truly global network for importers and exporters of raw materials, component parts and finished goods

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World’s No.1 Online B2B Marketplace for International & Domestic Trade

Note:1. Company data as of Dec 31, 2007

Alibaba.com represents a phenomenon which is changing the way SMEs around the world conduct business

Sellers

International Marketplace4.4 million registered users (1)

China Marketplace 23.2 million registered users (1)

Across more than 200 countries

Companies of all sizes

Diverse end markets

Typically SMEs

Ten to a few thousand employees

5,000+ product categories in 30+ industries

Buyers

Recognition by Global Thought Leaders In a Different League from Its Peers…

Forbes Magazine“Best of the Web”

2000 - 2006

US Entrepreneur Magazine

“Best Website for Entrepreneurs”

June 2004

Far Eastern Economic Review“Best Global B2B

Marketplace”2000

HBS Case Studies2000 and 2001

Business for Diplomatic Action

CIA’s World Fact Book

Economist Intelligence Unit

The World Bank’s Doing Business Database

U.S. Department of Commerce’s International Trade Administration

“Best sites for global entrepreneurs”

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A Premier Global Brand

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Alibaba.com’s International Marketplace

South America 3%

India 8%

China 7%

South East Asia 13%

EU 9%UK 6%

US 18%

Middle East 4% Australia 3%

Canada 3%

With over 4.4 million registered members from 200 countries & regions, it’s truly a global community

Search

Alibaba International - B2BAlibaba China - B2B Taobao – C2C & B2C Shop

Choose

Transact

Pay

Integrated eCommerce Platform

China Wholesalers

Overseas Buyers/Importers Consumers

Exporters China Wholesalers Retailers/ Power Sellers

One Stop Services for SME Exporters

SMEs

www.alibaba.com(International Marketplace)

Export to Globe

Export to

China

www.alibaba.co.jp(Japan Marketplace)

Export to Japan

www.alibaba.com.cn(China Marketplace)

New

Alibaba.com partnerships

and is looking for more partners including public-private partnership!

Alibaba.com cooperates with leading organizations all over the world. . .

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Success Story: Pakistan Seller

• Amazingly, I got orders within five days from Europe after joining! I was really surprised to see such quick results with Alibaba

• After joining TrustPass, I started getting about 20 per week.

• Now, our customers cover from Italy, France, China, America, Ireland and Spain.

Member: Mr. Hammad KanwalCompany: FASHIONS CARE Type: ManufacturerSize: 11-50 peopleCountry: [Pakistan]Products: T-shirts, polo shirts, denim jeans, cotton gloves

“With Alibaba, we are worldwide!"

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Success Story: Sellers(TrustPass members)

We have been associated with Alibaba for two years, and since that time we have had a significant amount of serious enquiries. There is not a single day that goes by when we don't get enquiries routed through Alibaba. Alibaba's service is also an invaluable source of commercial news that not only provides information but also forecasts the rising trends in the global market. Being a TRUSTPASS member has seriously added more credibility to our business and increased our number of fraud-prevented customer inquiries.

As a TrustPass member from India, we are extremely happy with the services Alibaba provides. We received our first buyer form Alibaba and there have been many more since. Today, we receive 80% of our business through Alibaba and we believe that this will only increase in future.

Member: Mr. Moola Ram PotaliaCompany: TOWN AART Country: [India]

“80% of Our Business Comes From Alibaba!

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Success Story: Big Buyers

“The Woolworths China Sourcing Event was a great success. It allowed the Woolworths sourcing team to meet many quality new suppliers. Alibaba was very professional in its preparation and management of the day, leveraging its extensive knowledge of quality suppliers to target the right companies to meet our long-term sourcing needs.“

Alibaba.com Holds Private Sourcing Event for Woolworths Limited

Woolworths Limited is the largest retailer in Australia, serving customers across the nation for over 80 years. Woolworths is one of Australia's top companies by market capitalization, with sales reaching A$42.5 billion in the 2006/2007 financial year.

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Success Story: SME Buyers

"I have discovered Alibaba.com at Ambiente 2004 where the Alibaba team introduced me the company. I have since been using the website on a regular base (at least once per week) and I think it's a great sourcing tool.

I find Alibaba very professional and easy to use. I searched and found many suppliers and I have also posted buy leads attracting quick and good quality responses from the suppliers."

Customer: Mr Fernando LomelyCompany: Genesis Ferran S.A. De C.V.Country: Mexico

"I have also posted buy leads attracting quick and good quality responses from the suppliers."

•04/07/23 19:06 •24

Roadshow video “I’m an Alibaba member!” – 2mins

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Thank you!

Brian@alibaba-inc.com