With the possibility of slowing the business in China because of the pollution control, some companies place their assets into the alternative branches of economy. The issue with the leading Chinese E-commerce company Alibaba Group is that it is determined to improve its positions on the both Chinese media marking. Its business strategy and model now is not restricted to the field of E-commerce but is gaining the momentum on both Chinese and international markets.
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Company’s current situation: growth, elasticity of demand, competition on the international market
Alibaba Group is one of the most the world’s most successful e-commerce companies. The founder former CEO and now executive chairman of the company Jack Ma started his business in 1999 connecting the Chinese manufacturers with consumers all over the world through the medium of his website Alibaba.com. Alibaba Group today is far from being exclusively Chinese or even Asian-oriented retailer, it provides services for customers from around the globe, and has the intention to pursue other branches.
This year the company’s sales reached the phenomenal success, as its traditional Chinese Singles’ Day turned out to be the international event (Bryan par. 3). The amounts of sales and the number of retailers who joined to the event resulted in the fact that “the cross-border gross merchandise volume generated in the first two minutes this year exceed the total cross-border GMV generated during the entire 24 hour period last year” (Bryan par.5).
Despite the fact that it is only an annual event and does not correlate directly with the amounts of sales transactions made every day, the important moment of this situation is that a significant part of the merchandise was retailed on the international market. It makes the case for the Alibaba Group to prove its abilities to compete on the global scale.
With the objective “to make over 50% of its revenue outside of China”, there are two main economic strategies that Alibaba should consider, such as engaging more Chinese consumers to buy goods manufacturing abroad, and encouraging foreign markets to consume the Chinese products (Bryan par. 8). That is why, the Alibaba’s investment in buying the stake in one of the biggest Chinese English-language newspapers The South China Morning Post should be considered and analyzed in the context of its objective for globalization and their current economic model.
Influencing sales through media: the role of advertising and search for new markets
The Chinese manufacturers are facing the danger of slowing in the business because of the pollution control. In these circumstances, the E-commerce company, such as Alibaba Group, is to look for both international manufacturers, and demand among foreign consumers, living both in and outside China.
The South China Morning Post is considered to be the most influential newspaper for the English-speaking elite in Hong-Kong. Although it is read by the fewer audience than some Chinese-language daily newspapers, the intended readership appear to be a much more high-ranking group of the society. That is why it means that Alibaba Group is not only starting to work on the media market since the company already owns the stake at the Chinese mainland’s newspaper Business News, but bring the company into the political spotlight.
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The level of objectivity and political freedom that the newspaper with its current directory would allow, in many ways, would reflect on the overall freedom of press in China, that is why “SCMP Group would put Mr. Ma and his giant Chinese E-commerce company in a sensitive — and very real — political spot” (Yuan par. 3).
However, another more obvious and nonetheless important reason for Alibaba Group to gain the stake in the newspaper business is finding new content for attracting new customers to the shopping website (The Wall Street Journal par. 1). It is not only obvious advertising opportunities that the Group is looking for but generally, gaining more influence in both traditional and social media.
According to The Wall Street Journal, The South China Morning Post is one of the most trusted media in Hong-Kong. It makes it especially important for Alibaba Group to own the controlling share in precisely this newspaper since Hong-Kong and South-Eastern Asian market remains one of the regions to which Alibaba is trying to extend (Yuan par. 1).
From the position of the Alibaba Group’s economic model, it is important to start working on some regional adjustments since the mainland China’s readers and the buyers of The South China Morning Post exist in the different social and economic circumstances, have different demands and tastes.
In a lot of ways, creating different strategies and approaches both luring the customers to the shopping website and representing the Chinese current affairs and events in the media, are for Alibaba Group a testing ground before affirming on the global stage. The results of how the public will respond to the new version of The South China Morning Post controlled by Alibaba Group will define the efficiency of their regional approach to the consumers through the traditional media.
Possible challenges and criticism
Despite the financial success of the Singles’ Day and gradual but confident expansion to the media market, Alibaba Group is facing a lot of criticism. Some economists are considering the possibility that the perspective from which the newsfeed in The South China Morning Post will be presented may turn into somewhat one-sided, with the emphasis on “the wider views of China’s rise as a global economic power” (Carew par. 1).
The Economist reflects a lot on the advancements made by Jack Ma and his company in all kind of media and film-related industries, and Alibaba Group’s growing dominance. For example, today it has controlling shares in China Vision Media (now called Alibaba Pictures that controlled the production of the latest Mission Impossible), social media video network Youku Tudou, and stakes at Huayi Brothers and digital-media company Wasu Media rumored to be engaged in negotiations with Netflix (The Economist par. 3).
Comparing to this scale and the assets of Jack Ma in e-commerce, the states in traditional media appear to be of a lesser importance. However, The Economist draws a fair point by contrasting Mr. Ma with the former owner of The South China Morning Post, Rupert Murdoch. The later used to keep his media assets separately from his stakes in film and TV projects (The Economist par. 4). While the Chinese E-commerce magnate is on a streak of adding new social, online, and traditional media, film and video industries assets as a part of Alibaba Group. All his assets are the parts of the integrated system of the business strategy to which Alibaba sticks. In such a way, the company promotes a certain degree of unification and integrity among its assets in different market spheres.
Thus, gaining the controlling stake of The South China Morning Post may not be the biggest achievement Mr. Ma this year’s list, since the print newspapers are not in the most stable position right now, and the orientation of the Hong-Kong and South-Eastern Asia audience is not common for Alibaba Group.
However, there is one strategic point in this situation. Even though on the mainland’s China English is not a common language and certainly not the one for the newspapers, traditional media, such as The South China Morning Post are “still seen by foreign business people as a gateway to China” (The Economist par. 4). One turn of events is that with numerous assets in the “modern” forms of business, Jack Ma would be able to refine and modernize The South China Morning Post, according to the demands of the technological and online newspapers age.
However, there is a much less optimistic scenario, in which political power gained over the ownership of the newspaper’s controlling stake will be used to discourage the existing level of freedom of speech in Hong-Kong (The Economist par. 6). It will, in its turn, lead to economic consequences.
Nevertheless, in my opinion, the amount of influence obtained by Alibaba Group due to The Post can only be called successful, if the company finds its way of improving the status of the paper as must-read business source in South-Eastern Asia since much attention is now carried away from the traditional media to the online ones.
In conclusion, the significant growth in the foreign market merchandise, extending assets in film, social and traditional media industries, including those that are international or Western-oriented, integrating those media as a platform for e-commerce website advertising, indicate the Alibaba Group’s becoming a significant international competitor on the global business market.
Bryan, Bob. “Alibaba just proved it’s more than just some Chinese company.” Business Insider. 2015. Web.
Carew, Rich. “Alibaba To Buy South China Morning Post.” The Wall Street Journal. 2015. Web.
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The Economist. “Alibaba’s Media Investments: Mission Improbable.” The Economist. 2015. Web.
The Wall Street Journal. “Why Alibaba Wants To Buy A Stake In A Newspaper.” The Wall Street Journal. 2015. Web.
Yuan, Li. “Alibaba Newspaper Deal Would Test Political Sensitivities.” The Wall Street Journal. 2015. Web.