Recession? Alibaba moves pay off in UK, Europe
Updated: 2009-09-15 07:37
(HK Edition)
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HONG KONG: Alibaba.com Ltd, the operator of the biggest trading website on the mainland, is attracting more sellers from Europe and has 1.4 million users in the region after increasing its marketing despite the recession.
Suppliers from mature economies such as that of the UK have started seeking markets in Asian countries, especially China's mainland, as demand at home has eroded during 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 UK 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 UK 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-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 UK 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 website has more than 450,000 users in the UK.
"Europe, especially the UK, 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 the US 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 August 14. "It's the best time to invest."
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 website after introducing lower-priced services.
Bloomberg News
(HK Edition 09/15/2009 page3)