Alibaba Expands in Europe, Sees Rising Demand for British Goods

Bloomberg
By Ziying Wu
14 September 2009

Alibaba.com Ltd., the operator of China's biggest trading Web site, is attracting more sellers from Europe and has 1.4 million users in the region after increasing its marketing amid the recession.

Suppliers from developed countries such as the U.K. have started seeking markets in Asian countries, especially China, as demand at home eroded amid the worst recession since World War II, Maggie Choo, Alibaba's director for Europe, the Middle East and Africa, said in an interview in London. The company in April opened its London head office as a gateway for its push into other European markets.
 
"Many U.K. suppliers are using our platform to seek business opportunities in Asia, which is a significant shift," Choo said.

Alibaba spent more than 1 million pounds ($1.6 million) on marketing in the U.K. alone since starting a European ad campaign in August, Choo said. There has been "better value" in such spending during the recession, she said. The Hangzhou, east China-based company also benefited from the economic crisis as businesses cut marketing budgets and turned to online promotion instead of going to trade shows, according to Choo.

Sourcing enquiries directed to Alibaba.com's U.K. customers, mostly small- or medium-sized companies, rose "sharply" from a year earlier, Choo said. "This shows a strengthening demand around the world for British goods and services," she said.

Agricultural products, home furniture, food and beverages are among the most-purchased British goods, according to Alibaba. The Web site has more than 450,000 users in the U.K.

European Strategy

"Europe, especially the U.K., is a strategic market for us," said Choo. The company's bright orange animated advertisements now play on media boards in London, including ones at London Bridge and Liverpool Street train stations.

The trading site that matches suppliers and buyers all over the world, added 3 million customers globally in three months, bringing the total number of users to 43 million, and that of paying members to 531,000, said Choo. Most of the suppliers are from Asia while most of the buyers are from U.S. and Europe.

"During an economic downturn, everything is cheaper, acquiring customers is cheaper, marketing is cheaper," Chief Executive Officer David Wei said in a Bloomberg Television interview on Aug. 14. "It's the best time to invest."
Three-Year Plan

In Europe, Alibaba has just begun to implement a three- year plan. In the first year it will raise brand awareness, in the second it will look for mergers and acquisitions, and in the third it will focus on revenue growth, Choo said.

"Global expansion is our strategy and we are constantly looking at merger and acquisition opportunities," Choo said, declining to give further details.
 
Alibaba's second-quarter net income fell 34 percent to 260.7 million yuan ($38.2 million) after the company boosted marketing spending. Sales advanced 24 percent to 908.3 million yuan as Alibaba attracted more businesses to list their products on its Web site after introducing lower-priced services.
 
By the end of last week, Alibaba had climbed 266 percent in Hong Kong trading this year to HK$20.40, giving the company a market value of HK$102.8 billion ($13.3 billion).