How Alibaba affects China’s Economic Growth 

Alibaba was founded in the late 1990s when Chinese consumers primarily purchased food and household goods from street markets; logistics systems lagged far behind those of developed countries; roads were largely unpaved or congested with a mix of cars, bicycles, motorcycles, carts, and pedestrians; most transactions were cash-based; the use of credit cards online was feared, and Chinese markets (especially online) were heavily regulated by strict government rules. In fact, Alibaba was not only a filler for institutional voids, but it thrived in them. Alibaba has developed into one of the top e-commerce companies in the world, with a market capitalization and revenue that are roughly comparable to those of Amazon.

More ever, Alibaba offered alternatives to traditional marketplaces where buyers and sellers could interact and transact business. It overcame a weak logistics system by developing a sophisticated information platform to reach both urban and rural customers.

The company also succeeded in convincing customers of the reliability and security of its payment options. Following that, Alibaba developed a tracking system that efficiently collected and utilized customer data. It now plans to use the data it gathered to create demand-driven entertainment and to expand into brick-and-mortar stores through its alliance with Suning, one of the largest consumer electronics retail chains in China.

Alibaba’s success has been attributed to a number of factors, including the enormous size and quick growth of the Chinese market, as well as a capital infusion by Goldman Sach and SoftBank, an inventive fusion of Chinese and Western business systems. Here are the major reasons that enhance Alibaba’s e-commerce business in China.

China’s initial steps to grow Alibaba’s business:

  •   Industrial Growth:

China’s first economic development step, like that of the majority of nations, was to expand its heavy industry. China currently leads the world in manufacturing and produces nearly half of all steel. 

Coal, iron ore, salt, oil, gas, and gold are all mined in China. China is moving toward more renewable resources and has increased its use of natural gas in recent years in an effort to lessen its reliance on coal. Due  to industrial growth, Alibaba’s founder Jack Ma invest in getting more revenues     

  •     Consumerism in China:

After economic liberalization, China, which once experienced rationing and shortages of consumer goods, can now be a haven for those with money and a penchant for high-end goods. In addition to wholesale trade, retail in China contributed $1.8 trillion to the country’s gross domestic product (GDP).

Through this Alibaba (BABA) benefited greatly in businesses like retail and e-commerce.

In short, due to some of these reasons, Alibaba has grown admirably from its modest beginnings as a small e-Marketplace to its present status as a vast e-Marketplace. Due to this quick growth, it has been exposed to more competition. China’s role in the global market is shifting from that of a top manufacturing hub and exporter to that of a potent buyer of goods from around the world.

Sharing is unity:

Leave a Comment