Alibaba is coming to Australia

Alibaba’s founder Jack Ma. Image: ChinaFotoPress / Getty Images.

When US internet giants mention Australia in passing – let alone actually visit the country or establish operations here – they are usually showered with media coverage.

But when China’s most valuable internet company, Alibaba, announced plans to open an office in Australia last week, it barely registered a whimper.

Alibaba, the e-commerce colossus which processed transactions worth $US149 billion in the December quarter alone, said at an event in Hangzhou last week it would open an Australian office “later this year”.

And The Australian Financial Review has learned it has already made one senior hire for that office: James Hudson, the chief executive of the NSW branch of the Australia-China Business Council, will join the business next month. James O’Loghlin, a New Zealand-born entrepreneur, has also joined the company, it said this week.

It is a significant development for the Australian retail sector. Yet as the Prime Minister and a 1000-strong business delegation swept through the world’s second-largest economy last week, far more trivial announcements, such as the Australian Football League’s plan to play a regular season game in the country next year, captured all the attention.

Alibaba, founded by entrepreneur Jack Ma and listed on the New York Stock Exchange with a market value of nearly $US200 billion, has had a senior executive, Maggie Zhou, in charge of the Australia and New Zealand region for at least two years. But she travels between China and Australia and has been based primarily in Hangzhou.

The company signalled that the move to establish an Australian office is designed to help local brands tap into the gigantic Chinese market, where Alibaba has 407 million active buyers on its platforms. However, the decision to establish a fully-fledged office in Australia will fuel speculation it sees an opportunity for Australian consumers to buy products on its sites.

“We see a lot of potential in the Australian market as Alibaba continues its globalisation efforts,” the company said in an emailed statement. It declined to provide any further details on its plans.

“We aim to have dedicated country operations to work closely with Australian merchants and partners, and it is our plan to establish an office in Australia in late 2016 to better help local brands and merchants to access to the Chinese consumer market.”

Australia ranked as the fifth top-selling country into China during the company’s global shopping festival last year, Alibaba said.

A number of Australian retailers, including Woolworths, Bellamy’s, Blackmores and Chemist Warehouse, have signed up to officially sell products on Tmall, Alibaba’s Chinese language platform used by businesses to sell goods to consumers on the mainland. Many well-known Australian products are sold on Alibaba properties by consumers to other consumers.

Last November, the company’s “Singles Day” promotion in China was blamed for creating a severe shortage of Australian baby formula products, including Bellamy’s.

Shadow networks of Chinese students and relatives, known as “daigou”, were said to be buying up organic baby formula at Australian supermarkets and reselling them at higher prices on Alibaba sites, forcing the likes of Woolworths to implement quotas.

The move also signals Alibaba’s intention to expand globally and assuage investor concerns over its international footprint. Alibaba shares are down 15 per cent since the company listed on the New York Stock Exchange in late 2014, underperforming the 5 per cent rise in the broader US market over that period.

Last year the company said it would expand into France, Germany and Italy. It has already established a foothold in the US.

This story first appeared in The Australian Financial Review. Read it here or follow the Financial Review on Facebook.

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